What portion of your SSDI is taxed depends on your other income

The amount of your Social Security Disability Insurance (SSDI) that gets taxed is not a fixed percentage. Instead, it depends on your combined income—a calculation that includes your SSDI, wages, interest, dividends, and certain other money you receive. The IRS uses a formula with two income thresholds to decide whether any of your SSDI is taxable and, if so, how much.

For 2024, if you file as single and your combined income is below $25,000, none of your SSDI is taxed. If it falls between $25,000 and $34,000, up to 50 percent of your SSDI may be taxable. If it exceeds $34,000, up to 85 percent of your SSDI may be taxable. For married couples filing jointly, the thresholds are $32,000 and $44,000. These thresholds do not adjust for inflation, so they have remained the same since 1984.

The actual calculation is complex—it involves adding half your SSDI to your other income, then comparing that sum to the thresholds—but the result is straightforward: you either owe federal income tax on some of your SSDI or you do not. Most people receiving SSDI alone, without other substantial income, pay no federal tax on their benefits.

Key Takeaways

  • Your SSDI is taxed only if your combined income (SSDI plus wages, interest, and other sources) exceeds $25,000 for single filers or $32,000 for married couples filing jointly.
  • If you are below the threshold, you owe no federal tax on your SSDI, even if you file a return.
  • If you are above the threshold, the IRS formula may tax up to 50 percent of your SSDI at the first threshold or up to 85 percent at the second threshold.
  • State income tax on SSDI varies by state; some states do not tax SSDI at all, while others tax it the same way the federal government does.
  • You can request that the Social Security Administration withhold federal income tax from your SSDI payments to avoid a large bill at tax time.

How the IRS calculates taxable SSDI

The IRS uses a two-tier system. First, it adds half your SSDI to all your other income (wages, self-employment income, interest, dividends, rental income, and certain other sources). This sum is your provisional income. Then it compares your provisional income to two thresholds.

If your provisional income is below the first threshold ($25,000 single / $32,000 married filing jointly), none of your SSDI is taxable. If it falls between the first and second threshold ($25,000–$34,000 single / $32,000–$44,000 married), up to 50 percent of your SSDI becomes taxable. If it exceeds the second threshold, up to 85 percent becomes taxable. The exact amount taxed at each tier is determined by a formula that compares your excess income above the threshold to the amount of SSDI you received.

For example, a single person with $30,000 in provisional income would have $5,000 above the first threshold. Half of that excess ($2,500) would be added to the amount potentially taxable under the second tier. The result is that roughly 50 percent of their SSDI would be taxable—but the precise figure depends on how much SSDI they actually received that year.

What counts as income for the tax calculation

The IRS includes most forms of income in the provisional income calculation. Wages from work count in full. Self-employment income counts in full. Interest and dividends count in full. Taxable pensions, annuities, and distributions from retirement accounts count in full. Rental income, capital gains, and income from a business all count.

Some income does not count. Supplemental Security Income (SSI) is not included. Veterans' benefits are not included. Workers' compensation is not included. Certain railroad retirement benefits are not included. Municipal bond interest is not included. The key is that the IRS is looking at income that would normally be taxable or that represents a return on assets.

If you are working while receiving SSDI, your wages push your provisional income higher and may trigger taxation of your SSDI. This is one reason the Social Security Administration offers work incentives—programs like Impairment Related Work Expenses (IRWE) and Plans to Achieve Self-Support (PASS) that can reduce your countable earnings and help you keep more of your benefits without triggering a higher tax bill.

State income tax on SSDI

Federal tax rules do not explore to state income tax. Each state sets its own rules. Thirteen states do not tax income at all: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and five others. Of the states that do tax income, most follow the federal rule and do not tax SSDI. However, a handful of states tax SSDI the same way the federal government does, and a few have their own rules.

Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, and Utah all tax SSDI to some degree. The rules vary. Some use the same federal thresholds; others use different ones. Some tax SSDI only if your total income exceeds a certain level. Some offer exemptions for people over a certain age or with income below a certain threshold.

You can find your state's specific rule by contacting your state's department of revenue or by checking the state tax agency website. If you live in a state that taxes SSDI and you expect to owe state tax, you can also request that Social Security withhold state income tax from your payments, though not all states participate in this program.

Withholding taxes from your SSDI payments

If you know you will owe federal or state income tax on your SSDI, you can ask Social Security to withhold money from your monthly payment. This works the same way as withholding from a paycheck: you choose a percentage (10, 15, 25, or 30 percent) or a fixed dollar amount, and Social Security deducts it before sending you the rest.

To set up withholding, you complete Form W-4V (Voluntary Withholding Request) and submit it to your local Social Security office, by mail, or online through your my Social Security account. You can change your withholding amount at any time, and you can stop withholding at any time. Withholding does not reduce your actual SSDI benefit—it only reduces the amount you receive each month, with the withheld amount going to the IRS.

Many people use withholding to avoid a large tax bill in April. If you do not withhold and you owe tax, you will have to pay it when you file your return. If you underpay, you may owe penalties and interest. Withholding is voluntary, but it can make tax time simpler.

When you must file a tax return despite receiving SSDI

You must file a federal income tax return if your gross income exceeds the standard deduction for your filing status. For 2024, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly. Your gross income includes your SSDI in full, even if none of it is taxable.

This means that if you receive $15,000 in SSDI and have no other income, you must file a return because your gross income exceeds $14,600—even though none of your SSDI is taxable and you will owe no tax. Filing is still required because the IRS needs to verify that you do not owe tax.

If you have wages or other income in addition to SSDI, the threshold is lower. A single person with $10,000 in SSDI and $5,000 in wages has $15,000 in gross income and must file. The rules are the same for state income tax, though the thresholds vary by state.

How work incentives can reduce your tax burden

If you are working while receiving SSDI, your wages increase your provisional income and may cause your SSDI to be taxed. The Social Security Administration offers work incentives designed to reduce your countable earnings and help you keep more of your benefits. Two of the most common are Impairment Related Work Expenses (IRWE) and Plans to Achieve Self-Support (PASS).

IRWE allows you to deduct certain work-related expenses from your earnings before Social Security counts them toward your benefit reduction. For example, if you pay for a personal assistant, specialized equipment, or medical devices that you need to work, those costs can be deducted. This lowers your countable earnings, which in turn lowers your provisional income for tax purposes, potentially reducing the amount of your SSDI that is taxable.

PASS is a more formal plan that lets you set aside income and resources to reach a work goal—such as starting a business or getting a degree. Money set aside under a PASS is not counted as income, so it does not increase your provisional income. Both programs require documentation and approval from Social Security, but they can significantly reduce your tax burden if you are working.

Frequently Asked Questions

Do I have to pay taxes on my SSDI if I live on my own and have no other income?

No. If your only income is SSDI and it is below $25,000 (for single filers), none of it is taxable. You may still need to file a return to verify that you do not owe tax, but you will owe no federal income tax on your benefits.

What if I earn money from part-time work while on SSDI?

Your wages count as income for the tax calculation. They increase your provisional income, which may cause some of your SSDI to become taxable. However, work incentives like IRWE can reduce your countable earnings and lower your tax burden. Contact your local Social Security office to learn which incentives you may use.

Can I withhold taxes from my SSDI if I think I will owe money?

Yes. Complete Form W-4V and submit it to Social Security. You can choose to withhold 10, 15, 25, or 30 percent of your payment, or a fixed dollar amount. You can change or stop withholding at any time.

Does my state tax my SSDI the same way the federal government does?

No. Thirteen states do not tax income at all. Most other states do not tax SSDI. However, about ten states do tax SSDI, and their rules vary. Contact your state's department of revenue to learn your state's specific rule.

What if I receive other benefits besides SSDI, like SSI or veterans' benefits?

SSI and veterans' benefits do not count as income for the SSDI tax calculation. However, other income—such as wages, interest, pensions, or rental income—does count. Add up all sources of income except SSI and veterans' benefits to determine your provisional income.