Most SSDI recipients do not have to report their benefits as income on a federal tax return

Social Security Disability Insurance (SSDI) benefits are not taxable income under federal law. This means you do not include SSDI payments in your gross income when you file Form 1040 or any other federal tax form. The Internal Revenue Service (IRS) treats SSDI the same way it treats regular Social Security retirement benefits — the money itself is not subject to federal income tax.

However, SSDI can affect whether other income you receive becomes taxable. If you have earnings from work, investment income, or other sources alongside SSDI, those other sources may push you into a tax bracket where a portion of your SSDI becomes taxable. This is the main situation where SSDI touches your tax return, even though the SSDI itself remains non-taxable.

State income tax rules vary. Some states do not tax SSDI at all. Others tax SSDI the same way the federal government does — meaning it is not taxable unless you have other substantial income. A small number of states tax SSDI differently, so you need to check your specific state's rules if you file a state return.

Key Takeaways

  • SSDI payments themselves are never taxable income on your federal tax return, so you do not report the SSDI amount as income.
  • If you have other income (wages, self-employment, interest, dividends), that income is reported normally, and it may trigger taxation of a portion of your SSDI.
  • The IRS uses a formula based on your "combined income" to determine whether any SSDI becomes taxable; combined income includes non-taxable SSDI plus all other income.
  • State tax rules for SSDI vary by location, so you must check whether your state taxes SSDI if you file a state return.
  • You may still need to file a federal return even if you owe no tax, because filing can result in a refund of taxes withheld from other income sources.

How the IRS determines if any SSDI becomes taxable

The IRS uses a calculation called combined income to decide whether any portion of your SSDI is taxable. Combined income is not the same as your total income. It is calculated as: your adjusted gross income (AGI) plus non-taxable interest plus one-half of your SSDI benefits.

If your combined income falls below a certain threshold, none of your SSDI is taxable. The thresholds are $25,000 for a single filer and $32,000 for married filing jointly. If your combined income exceeds these thresholds, up to 50 percent or 85 percent of your SSDI may become taxable, depending on how much you exceed the threshold.

Example: You are single and receive $1,200 per month in SSDI ($14,400 per year). You also earn $15,000 from part-time work. Your combined income is $15,000 (wages) plus $7,200 (half of SSDI) = $22,200. This is below $25,000, so none of your SSDI is taxable. You report only the $15,000 in wages on your return.

If the same person earned $20,000 instead, combined income would be $20,000 plus $7,200 = $27,200. This exceeds $25,000 by $2,200. In this case, up to 50 percent of the excess ($1,100) could become taxable, meaning up to $1,100 of the SSDI would be reported as income on the return.

When you must file a federal tax return despite receiving SSDI

You are not required to file a federal return based on SSDI income alone. However, you may be required to file if you have other income. The IRS sets filing thresholds based on your filing status and age. For 2024, a single person under 65 must file if their gross income is $14,600 or more. The threshold is higher if you are 65 or older, and different if you are married or have dependents.

Even if you are not required to file, you should consider filing if taxes were withheld from other income (such as wages or a pension). Filing allows you to claim a refund of those withheld taxes. You may also be may have access to to refundable tax credits, such as the Earned Income Tax Credit (EITC), which can result in a refund even if you owe no tax.

To determine whether you must file, add up all your income sources except SSDI. Compare that total to the filing threshold for your situation. If you are unsure, the IRS Interactive Tax Assistant tool on IRS.gov can help you determine your filing requirement.

Reporting other income on your return when you receive SSDI

Report all income other than SSDI on your tax return using the standard forms and schedules. If you have W-2 wages from an employer, report them on Form 1040 using the information from your W-2. If you are self-employed, you must file Schedule C (Profit or Loss from Business) and Schedule SE (Self-Employment Tax) to report business income and calculate self-employment tax.

Interest and dividend income are reported on Schedule B (Interest and Ordinary Dividends). Capital gains from the sale of stocks, real estate, or other assets are reported on Schedule D (Capital Gains and Losses). Rental income is reported on Schedule E (Supplemental Income and Loss).

Once you have reported all other income, the IRS automatically calculates whether any portion of your SSDI becomes taxable based on your combined income. You do not calculate this yourself — the IRS does it when processing your return. However, if you want to estimate in advance whether any SSDI will be taxable, you can use the combined income formula described above.

State income tax and SSDI

Thirty-nine states do not tax SSDI at all. These states follow the federal rule that SSDI is not taxable income. If you live in one of these states, you do not report SSDI on your state return regardless of your other income.

Eleven states tax SSDI under certain conditions. Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont all have rules that may tax SSDI if your income exceeds a threshold. The thresholds and rules vary by state. For example, some states use the same combined income threshold as the federal government ($25,000 single, $32,000 married), while others use different amounts or different calculation methods.

Check your state's tax agency website or contact them directly to learn the rules for your state. If you live in a state that taxes SSDI and your combined income exceeds the state threshold, you will need to report the taxable portion of SSDI on your state return as well as your federal return.

What to do if you receive a notice about SSDI and taxes

If the IRS sends you a notice about your SSDI and taxes, read it carefully to understand what it says. Common notices include requests for more information about your income, corrections to the amount of SSDI the IRS thinks you received, or adjustments to the amount of SSDI the IRS determined to be taxable.

Respond to the notice within the important date stated on it. If you disagree with the IRS's information, you can file a response explaining why. Include copies of documents that support your position, such as a Social Security statement showing the amount of SSDI you received, or pay stubs showing your wages.

If you need help understanding the notice or responding to it, you can contact the IRS directly at 1-800-829-1040, or you can seek help from a tax professional or a free tax preparation service. The IRS Volunteer Income Tax information (VITA) program offers free tax help to people with low to moderate income, including SSDI recipients.

Frequently Asked Questions

Do I have to report SSDI on my tax return at all?

No. SSDI itself is never reported as income on your federal tax return. You only report other income sources, such as wages, self-employment income, or investment income. The IRS then calculates whether any portion of your SSDI becomes taxable based on your combined income.

What if I earned money from work while receiving SSDI?

Report the work income on your tax return using the appropriate form (W-2 for wages, Schedule C for self-employment). The work income counts toward your combined income, which determines whether any SSDI becomes taxable. You may owe federal income tax on the work income, and a portion of your SSDI may also become taxable if combined income is high enough.

Can I get a refund if I file a tax return while receiving SSDI?

Yes. If taxes were withheld from your wages or other income, filing a return allows you to claim a refund of those withheld taxes. You may also be may have access to to refundable credits such as the Earned Income Tax Credit, which can result in a refund even if you owe no tax.

Does receiving SSDI affect my may be able to access for other tax credits?

SSDI itself does not disqualify you from tax credits. However, your total income (including other sources) determines whether you meet the income limits for credits like the Earned Income Tax Credit or the Child Tax Credit. Check the income limits for each credit to see if you may have access to.

What if I live in a state that taxes SSDI?

You must follow your state's rules for reporting SSDI on your state tax return. Most states that tax SSDI use a combined income threshold similar to the federal threshold. If your combined income exceeds your state's threshold, you report the taxable portion of SSDI on your state return in addition to your federal return.