Most people on SSDI pay no federal income tax on their benefits
You do not owe federal income tax on your SSDI payments in most cases. Social Security Disability Insurance is one of the few income sources that the federal government treats this way. However, there is a specific situation where part of your benefits can become taxable, and some states tax SSDI differently than the federal government does.
The key factor is your combined income — a calculation that includes your SSDI, other income you receive, and certain non-taxable income added back in. If your combined income stays below a certain threshold, you owe nothing. If it crosses that threshold, a portion of your SSDI becomes subject to federal tax.
Because the rules differ between federal and state taxes, and because your situation depends on what other income you have, it helps to know exactly how the IRS counts your money and what your state requires.
Key Takeaways
- SSDI is not taxable unless your combined income exceeds $25,000 (single filer) or $32,000 (married filing jointly), at which point up to 85% of your benefits may be taxed.
- Combined income includes your SSDI, wages, interest, dividends, and half of any other Social Security benefits you receive.
- A handful of states — Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont — tax SSDI as income even when the federal government does not.
- You do not file a tax return solely because you receive SSDI, but you must file one if your other income crosses the threshold for your filing status.
- The IRS does not automatically withhold taxes from SSDI, so if you owe taxes, you typically pay them when you file your annual return.
How the IRS calculates whether your SSDI is taxable
The IRS uses a two-step process. First, it adds up your combined income. This number includes your SSDI, plus any wages you earn, plus interest and dividends, plus half of any other Social Security benefits you receive (such as retirement or survivor benefits). It also includes certain non-taxable income like municipal bond interest.
Once the IRS knows your combined income, it compares that number to a threshold. For a single filer in 2024, the threshold is $25,000. For married couples filing jointly, it is $32,000. For married couples filing separately, it is $0 — meaning any combined income at all can trigger taxation.
If your combined income is below the threshold, your SSDI is not taxable. If it is above the threshold, the IRS taxes up to 50% of your benefits, or up to 85% of your benefits, depending on how far above the threshold you go. The exact calculation is complex, but the result is that only a portion of your SSDI becomes taxable, not all of it.
Examples of combined income that might trigger taxation
Suppose you are a single filer receiving $1,200 per month in SSDI ($14,400 per year). You also work part-time and earn $15,000 in wages. Your combined income is $14,400 + $15,000 = $29,400. Because $29,400 exceeds the $25,000 threshold, part of your SSDI becomes taxable.
Now suppose you are married, filing jointly, and you and your spouse receive a combined $2,000 per month in SSDI ($24,000 per year). You have no other income. Your combined income is $24,000, which is below the $32,000 threshold. Neither of you owes federal tax on your SSDI.
If you receive both SSDI and Social Security retirement benefits, remember that half of the retirement benefit counts toward combined income. If you receive $800 per month in SSDI and $600 per month in retirement benefits, your combined income calculation includes $800 + (600 ÷ 2) = $1,100 per month from Social Security alone, before adding any other income.
States that tax SSDI differently
Most states follow the federal rule: SSDI is not taxable income. However, Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont tax SSDI as regular income, regardless of your combined income level.
If you live in one of these states, you may owe state income tax on your SSDI even if the federal government does not tax it. Each state has its own rules about filing thresholds and tax rates, so the amount you owe depends on where you live and your total income.
If you live in a state that taxes SSDI and you are unsure whether you must file a state return, contact your state's department of revenue or tax commission. They can tell you whether your income crosses the filing threshold for your state.
When you must file a federal tax return
You do not file a federal tax return solely because you receive SSDI. You file only if your other income — wages, self-employment income, interest, dividends, and so on — meets the filing threshold for your age and filing status.
For 2024, a single person under 65 must file if their income is $14,600 or more. A single person 65 or older must file if their income is $18,150 or more. A married couple filing jointly must file if their combined income is $29,200 or more (both under 65) or $30,750 or more (at least one age 65 or older).
These thresholds explore to your earned income and unearned income (interest, dividends, and so on), not to your SSDI. If you have no income other than SSDI, you do not file a federal return. If you have wages or other income that crosses the threshold, you file a return — and on that return, you report whether any of your SSDI is taxable.
How to report SSDI on your tax return
If you file a federal tax return and some of your SSDI is taxable, you report it on Form 1040 using a worksheet in the instructions. The Social Security Administration sends you a Form SSA-1099 each January, which shows the total SSDI you received in the previous year. You use this form and the IRS worksheet to calculate how much of your benefits are taxable.
The calculation is not something you do in your head — it requires the worksheet and usually a calculator or tax software. If you use tax software or file with a tax professional, they can walk you through it or do it for you.
If you do not file a return but you think some of your SSDI might be taxable, you can still file voluntarily. Some people do this to claim refundable credits like the Earned Income Tax Credit, even if they do not owe tax.
What happens if you do not pay taxes you owe
The IRS does not automatically withhold taxes from your SSDI payments. If you owe taxes, you pay them when you file your annual return, usually by April 15. If you cannot pay the full amount, you can set up a payment plan with the IRS.
If you do not file a return when you owe taxes, the IRS may eventually contact you. Penalties and interest accrue over time, so filing and paying as soon as you can is less costly than waiting.
If you are unsure whether you owe taxes, a tax professional or your local IRS office can review your situation. Many communities offer free tax preparation through the IRS Volunteer Income Tax information (VITA) program, which serves people with low to moderate income.
Frequently Asked Questions
Can I reduce my combined income to keep my SSDI from being taxed?
Not by choice. Combined income includes income you actually receive, so you cannot straightforward decide not to count it. However, if you have control over when you receive income — for example, if you are self-employed — you might be able to time income across tax years. A tax professional can advise whether this makes sense for your situation.
Does my spouse's income count toward my combined income threshold?
Only if you file jointly. If you are married and file separately, your combined income is calculated using only your own income. However, married couples filing separately face a $0 threshold, meaning any combined income can trigger taxation. Most married couples file jointly to avoid this.
What if I receive both SSDI and SSI?
SSI (Supplemental Security Income) is never taxable, and it does not count toward your combined income for SSDI tax purposes. Only your SSDI, plus other income sources, determines whether your SSDI is taxable.
Do I owe taxes if I receive SSDI but do not work?
Not on your SSDI alone. If your only income is SSDI and you have no interest, dividends, or other income, you owe no federal tax and do not file a return. If you live in a state that taxes SSDI, check your state's rules.
How often do the income thresholds change?
The federal thresholds ($25,000 and $32,000) have not changed since 1984. They are not adjusted for inflation. State thresholds vary by state and may change year to year.