Most people receiving SSDI do not report it as income on their federal tax return

Social Security Disability Insurance (SSDI) benefits are not taxable income for most recipients. The Internal Revenue Service (IRS) treats SSDI differently from wages or other income sources. You will not owe federal income tax on your SSDI payments in most cases, and you do not have to report them on Form 1040.

However, your situation may be different if you have other income sources. If your SSDI is your only income, you almost certainly will not owe taxes. If you also earn wages, have investment income, or receive other types of benefits, part of your SSDI could become taxable. The rule depends on your "combined income," which is a specific calculation the IRS uses.

You should still file a tax return even if you owe no tax, because you may be may have access to to refundable tax credits like the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit. These credits can put money in your pocket even if you paid no taxes during the year.

Key Takeaways

  • SSDI payments themselves are not taxable income and do not go on your tax return in most cases.
  • Your SSDI can become partially taxable only if your combined income (SSDI plus other income) exceeds a threshold set by the IRS, which varies by filing status.
  • You should file a tax return even if you owe no tax, because you may receive refundable credits that result in a refund.
  • If you have both SSDI and earned income from work, you may may have access to for the Earned Income Tax Credit, which can be worth hundreds or thousands of dollars.

How the IRS calculates whether your SSDI is taxable

The IRS uses a formula called combined income to determine if any of your SSDI becomes taxable. Combined income is not the same as your total income. It is calculated by taking your adjusted gross income (AGI), plus nontaxable interest, plus half of your SSDI benefits.

Once you have that number, the IRS compares it to two thresholds. If you file as single, the first threshold is $25,000. If you file as married filing jointly, it is $32,000. If your combined income is below these thresholds, none of your SSDI is taxable. If it is above the first threshold, up to 50 percent of your SSDI may be taxable. If it is above a second threshold ($34,000 for single filers, $44,000 for married filing jointly), up to 85 percent of your SSDI may be taxable.

These thresholds have not changed since 1984. They do not adjust for inflation, so more people become subject to SSDI taxation each year as wages and other income rise.

When SSDI becomes taxable: examples with different income sources

If your only income is SSDI, your combined income is half your SSDI amount. For example, if you receive $15,000 in SSDI per year, your combined income is $7,500. This is well below the $25,000 threshold, so you owe no tax on your SSDI.

If you have SSDI and earned income from work, both count toward combined income. Suppose you receive $15,000 in SSDI and earn $12,000 from part-time work. Your combined income is $12,000 (wages) plus $7,500 (half of SSDI) equals $19,500. Still below $25,000, so no SSDI tax.

If you receive $15,000 in SSDI and have $20,000 in taxable interest or investment income, your combined income is $20,000 plus $7,500 equals $27,500. This exceeds the $25,000 threshold by $2,500. Up to 50 percent of your SSDI ($7,500) may be taxable, but the actual amount taxed is the lesser of: (1) 50 percent of the excess over the threshold ($1,250), or (2) 50 percent of your SSDI ($7,500). In this case, $1,250 of your SSDI becomes taxable.

Other income sources that affect SSDI taxation

Earned income from work is the most common source, but several other income types count toward combined income. Taxable interest, capital gains, rental income, and self-employment income all count. Distributions from traditional IRAs and 401(k) plans count as well. Nontaxable interest (such as from municipal bonds) also counts toward combined income, even though it is not itself taxable.

Some income sources do not count. Supplemental Security Income (SSI) does not count. Veterans benefits do not count. Workers' compensation does not count. Railroad Retirement benefits have their own rules and are handled separately.

If you are unsure whether a particular income source counts, the safest approach is to report all income to a tax professional or use IRS Publication 915, which walks through the calculation step by step.

What to do if part of your SSDI is taxable

If your combined income exceeds the threshold, you have two options. You can pay estimated taxes throughout the year to cover the tax you will owe, or you can have taxes withheld from your SSDI payments.

To request withholding, you file Form W-4V with the Social Security Administration. You can choose to have 7, 10, 12, or 22 percent of your monthly SSDI payment withheld for federal taxes. You can change your withholding at any time by filing a new Form W-4V. This approach is simpler than calculating estimated taxes yourself, because Social Security handles the withholding and sends it to the IRS on your behalf.

If you do not request withholding and do not pay estimated taxes, you may owe a penalty when you file your return, even if you ultimately owe little or no tax. The penalty is calculated based on how much you underpaid throughout the year.

Filing a return when you have SSDI and other income

You must file a federal tax return if your gross income exceeds the standard deduction for your filing status. The standard deduction changes each year. For 2024, it is $14,600 for single filers and $29,200 for married filing jointly. If you are 65 or older, the standard deduction is higher: $18,350 for single filers and $32,550 for married filing jointly.

Even if your income is below the standard deduction, you should file if you have earned income and think you might may have access to for the Earned Income Tax Credit. The EITC is a refundable credit, meaning you can receive money back even if you owe no tax. For 2024, the maximum credit is $3,995 for filers with one may have access to child, $6,568 for those with two may have access to children, and $3,733 for those with three or more may have access to children.

When you file, report your SSDI on line 5b of Form 1040 if any of it is taxable. If none of it is taxable, you do not report it at all. Social Security will send you a Form SSA-1099 showing your SSDI benefits; keep this for your records, but do not attach it to your return.

State taxes and SSDI

Most states do not tax SSDI benefits. However, a few states have their own rules. Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont tax SSDI under certain circumstances. The rules vary by state and change periodically.

If you live in one of these states, contact your state tax authority or a tax professional to find out whether you owe state tax on your SSDI. Some states exempt SSDI entirely for residents over a certain age, or for recipients with income below a threshold. Do not assume you owe state tax without checking your specific state's rules.

Frequently Asked Questions

Do I have to report SSDI on my tax return if it is not taxable?

No. If none of your SSDI is taxable, you do not report it on your return. You do not need to list it anywhere. Keep your Form SSA-1099 for your records, but do not attach it to your return or mention SSDI on Form 1040.

What if I received SSDI for only part of the year?

Your combined income calculation uses only the SSDI you actually received. If you started SSDI in June, you count only the six months of benefits you received, not a full year. The same applies if your benefits ended or changed during the year. Your Form SSA-1099 will show the exact amount you received.

Can I reduce my combined income by making charitable donations?

No. Charitable donations reduce your taxable income, but they do not reduce your combined income for SSDI taxation purposes. Combined income is calculated before deductions. The only way to lower your combined income is to reduce your actual income sources.

If I work part-time and earn money, will that reduce my SSDI?

That is a separate question from taxation. Work can affect your SSDI benefits under Social Security's work incentive rules, but that is different from whether your SSDI is taxable. Consult Social Security directly about how your specific earnings affect your benefit amount. A tax professional can help you understand the tax side.

What happens if I do not file a return when I should have?

If you owed tax and did not file, the IRS can assess penalties and interest. If you were may have access to to a refund or refundable credits and did not file, you lose that money — the IRS does not send refunds without a return. You can file back returns for prior years, and it is never too late to claim a refund you are owed.