Massachusetts does not tax SSDI benefits, but federal tax may still explore to you

Massachusetts has no state income tax on Social Security Disability Insurance (SSDI) payments. This means you will not owe Massachusetts state tax on your SSDI income, regardless of how much you receive or what other income you have. However, this does not mean you are free from all tax obligations—the federal government may tax your SSDI depending on your total income, and you may still owe federal taxes even though Massachusetts does not.

The key difference is that Massachusetts treats SSDI the same way it treats all Social Security income: it is exempt from state taxation. But federal rules are separate and stricter. You need to understand both to know what you actually owe.

Key Takeaways

  • Massachusetts does not tax SSDI benefits at the state level, so you will never owe Massachusetts income tax on your disability payments.
  • The federal government may tax your SSDI if your combined income (SSDI plus other income) exceeds certain thresholds, even though Massachusetts does not.
  • You must file a federal tax return if your income is high enough, even if you owe no Massachusetts tax.
  • If you have other income sources—wages, pensions, investment income—those can push your SSDI into federal taxable territory.

How Massachusetts treats SSDI differently from other income

Massachusetts exempts all Social Security income from state taxation. This includes SSDI, Supplemental Security Income (SSI), and retirement benefits. The exemption is automatic—you do not have to claim it or file a separate form. When you file your Massachusetts tax return (if you must file one), SSDI does not count as income for state purposes.

This is one of the few income sources Massachusetts does not tax. Wages, pensions, interest, and dividends are all taxable in Massachusetts. But Social Security in any form is not. This means your SSDI check arrives untouched by state tax, and you will not see a state tax bill for it.

When the federal government taxes your SSDI

The federal government uses a formula called "combined income" to decide whether your SSDI is taxable. Combined income is your Adjusted Gross Income (AGI) plus nontaxable interest plus half of your SSDI benefits. If your combined income exceeds $25,000 (single filer) or $32,000 (married filing jointly), some of your SSDI becomes taxable at the federal level.

The taxable portion is never your entire SSDI benefit. At most, 85 percent of your benefits can be taxed federally. The exact amount depends on how far your combined income exceeds the threshold. For example, if you are single and your combined income is $27,000, you are $2,000 over the threshold, and a portion of your SSDI (not all of it) becomes subject to federal tax.

Other income sources count toward this threshold. If you have a part-time job, a pension, rental income, or investment earnings, those all push your combined income higher and make it more likely that your SSDI will be taxed federally. Even small amounts of other income can trigger federal taxation of your benefits.

What counts as income for the federal tax test

The federal government counts several types of income when calculating whether your SSDI is taxable. Wages from work count. Pensions and retirement account distributions count. Interest and dividends count. Self-employment income counts. Rental income counts. Nontaxable interest (such as from municipal bonds) also counts toward the combined income threshold, even though it is not taxed itself.

What does not count: Supplemental Security Income (SSI) does not count. Workers' compensation does not count. Veterans benefits do not count. Gifts do not count. The key is that the federal government is looking at your total economic income, not just what you report on your tax return.

If you are married and filing jointly, your spouse's income also counts, even if your spouse does not receive SSDI. This can push a couple over the threshold even if the SSDI recipient's other income is low.

Whether you must file a federal tax return

You must file a federal tax return if your gross income exceeds the standard deduction for your filing status and age. For 2024, the standard deduction is $14,600 for a single person under 65 and $17,550 for a single person 65 or older. If you are married filing jointly, it is $29,200 (both under 65) or higher if either spouse is 65 or older.

SSDI counts toward this threshold. If your SSDI alone is below the standard deduction and you have no other income, you do not have to file. But if you have other income—even a small amount—you may have to file. The IRS recommends filing even if you are not required to, because you may be owed a refund or a tax credit like the Earned Income Tax Credit.

You do not have to file a Massachusetts state return if you have no Massachusetts taxable income. Since SSDI is not taxable in Massachusetts, your SSDI alone will not require you to file a state return. But if you have other income that is taxable in Massachusetts (such as wages), you may have to file a state return even if you do not file federally.

How to report SSDI on your federal tax return

SSDI appears on your Social Security statement as box 5 on Form SSA-1099, which the Social Security Administration sends you by January 31 each year. You report this amount on line 5b of Form 1040 (the main federal tax return form). You also complete a worksheet to calculate how much of your SSDI is taxable, using the combined income formula described above.

If none of your SSDI is taxable (because your combined income is below the threshold), you still report the full amount on line 5b, but you will enter zero on line 5c (taxable Social Security benefits). If some of your SSDI is taxable, you calculate the taxable portion using IRS Worksheet 1 (in the Form 1040 instructions) and enter that amount on line 5c.

You do not report SSDI on your Massachusetts return at all. Massachusetts does not have a line for Social Security income because it is not taxable there. If you file a Massachusetts return, you straightforward skip any Social Security income.

Planning ahead if you have other income sources

If you work part-time, receive a pension, or have investment income, you should track your combined income throughout the year to understand whether your SSDI will be taxed federally. The threshold is not high—$25,000 for a single person—so even modest other income can matter.

Some people in this situation choose to adjust their withholding or make estimated tax payments to avoid a large bill at tax time. Others work with a tax preparer to understand their situation. If you are close to the threshold, even a small change in income (such as taking a few weeks off work) can affect whether your SSDI is taxed.

If you receive SSI in addition to SSDI, the rules are different—SSI is not taxable at either the federal or state level, and it does not count toward the combined income threshold. Make sure you understand which benefit you receive, because the tax treatment is not the same.

Frequently Asked Questions

Will I get a tax bill from Massachusetts for my SSDI?

No. Massachusetts does not tax SSDI at the state level. You will never receive a Massachusetts tax bill for your disability benefits, no matter how much you receive or what other income you have.

Do I have to file a federal tax return if I only receive SSDI?

Only if your SSDI exceeds the standard deduction for your age and filing status. For most people under 65 in 2024, that is $14,600. If your SSDI alone is below that and you have no other income, you do not have to file. However, filing may benefit you if you are owed a refund or a tax credit.

Can my spouse's income make my SSDI taxable?

Yes, if you file jointly. The federal government counts both spouses' income when calculating combined income. Even if you have no other income, your spouse's wages or pension can push the household combined income high enough to tax your SSDI.

What if I work part-time while receiving SSDI?

Your wages count toward the combined income threshold for federal taxation of your SSDI. Even a small part-time job can push you over the $25,000 threshold (single) or $32,000 threshold (married), making some of your SSDI taxable federally. You should track your total income to understand your tax situation.

Is SSI treated the same way as SSDI for taxes in Massachusetts?

No. SSI is not taxable at the federal or state level, and it does not count toward the combined income threshold that determines whether your SSDI is taxed. If you receive both SSI and SSDI, only the SSDI can be taxed federally.