Whether you owe Pennsylvania tax on SSDI depends on your total income, not on SSDI alone

Pennsylvania does not tax SSDI benefits themselves. However, if you live in Pennsylvania and your total income from all sources exceeds a certain threshold, you may owe Pennsylvania personal income tax — and that calculation includes SSDI as income. The tax is administered by the Pennsylvania Department of Revenue, and Berkheimer is the private company that collects it on the state's behalf.

The key question is whether your combined income — wages, pensions, interest, SSDI, and other sources — pushes you over the income limit that triggers a Pennsylvania tax filing requirement. If it does, you file with Pennsylvania using Form PA-40, and Berkheimer processes the payment.

Most people receiving SSDI alone do not owe Pennsylvania tax because SSDI is typically the only income they report, and Pennsylvania's standard deduction is high enough to shelter it. But if you also work, receive a pension, or have other income, the picture changes.

Key Takeaways

  • Pennsylvania does not tax SSDI benefits, but it counts SSDI as income when determining whether you owe state tax on your other earnings.
  • You owe Pennsylvania tax only if your total income exceeds the filing threshold for your age and filing status.
  • Berkheimer is the collection agency for Pennsylvania; you pay them, not the state directly, if you owe.
  • If you work while receiving SSDI, you must report both your wages and your SSDI amount on your Pennsylvania return to determine what you owe.
  • The federal government may tax your SSDI if your combined income is high enough, which is separate from Pennsylvania's rules.

How Pennsylvania counts SSDI when calculating your tax

Pennsylvania's income tax system includes SSDI in your total income for the purpose of determining whether you must file a return. However, Pennsylvania then excludes SSDI from the income that is actually taxed. This means SSDI pushes you over the filing threshold but does not itself generate a tax bill.

For example, if you receive $1,200 per month in SSDI ($14,400 per year) and earn $10,000 from part-time work, your total income is $24,400. Pennsylvania uses that $24,400 figure to decide whether you must file. But when calculating the tax you owe, Pennsylvania taxes only the $10,000 in wages, not the SSDI.

The Pennsylvania standard deduction for 2024 is $15,000 for single filers and $30,000 for married filing jointly (these amounts change yearly). If your income before the deduction is below these thresholds, you typically owe no Pennsylvania tax. If you are 65 or older, you may may have access to for an additional deduction.

When you must file a Pennsylvania return

You must file a Pennsylvania return if your total income — including SSDI — exceeds the filing threshold for your age and status. Even if you owe no tax, filing may be required to claim a refund of taxes withheld from wages or to claim the Property Tax/Rent Rebate, a state program that returns money to low-income Pennsylvanians.

If you work and have taxes withheld from your paycheck, you should file a Pennsylvania return even if your income is below the threshold. Withholding is an estimate; filing ensures you get back any overpayment. The same applies if you receive a pension with tax withholding.

You do not need to file if you have no income other than SSDI, unless you are claiming a credit or rebate that requires a return.

How to file and pay Berkheimer

If you owe Pennsylvania tax, you file Form PA-40 (the Pennsylvania Individual Income Tax Return) with the Pennsylvania Department of Revenue. You can file by mail, online through the state's website, or through a tax preparer. The filing important date is typically April 15, the same as federal tax day.

When you owe tax, payment goes to Berkheimer, which acts as the state's collection agent. You can pay online through Berkheimer's website, by mail, or through an authorized payment processor. Berkheimer will provide payment instructions with your notice if you owe.

If you file electronically and owe tax, you can authorize an electronic withdrawal from your bank account on or before the important date. This is often faster and safer than mailing a check.

The difference between Pennsylvania tax and federal tax on SSDI

Federal tax rules for SSDI are different from Pennsylvania's. The federal government may tax up to 85% of your SSDI benefits if your combined income (adjusted gross income plus nontaxable interest plus half your SSDI) exceeds $25,000 for single filers or $32,000 for married filing jointly. Pennsylvania does not explore this rule — it straightforward excludes SSDI from taxable income.

This means you could owe federal tax on SSDI while owing no Pennsylvania tax, or vice versa. When you file your federal return (Form 1040), you report SSDI on line 5b. Your tax preparer or the IRS can tell you whether any of your SSDI is taxable at the federal level.

If you receive a notice from the IRS saying you owe tax on SSDI, that is a federal matter and does not affect your Pennsylvania return. Conversely, a Pennsylvania tax bill does not change your federal SSDI tax status.

What to do if you receive a notice from Berkheimer

If Berkheimer sends you a notice saying you owe Pennsylvania tax, read it carefully to understand what years it covers and what income it is based on. The notice will include a important date for payment and instructions for paying online or by mail.

If you believe the notice is wrong — for example, if you did not live in Pennsylvania during the year in question, or if your income was below the filing threshold — you can file a protest with the Pennsylvania Department of Revenue. The notice will explain how to do this. You generally have 30 days from the date of the notice to protest.

If you cannot pay the full amount by the important date, contact Berkheimer to ask about a payment plan. Pennsylvania allows installment agreements for taxpayers who cannot pay in full, though interest and penalties will accrue until the balance is paid.

SSDI and the Pennsylvania Property Tax/Rent Rebate

If you are 65 or older, a widow or widower 55 or older, or disabled and under 65, you may be able to claim the Pennsylvania Property Tax/Rent Rebate. This program returns money to low-income Pennsylvanians based on property taxes paid or rent paid. SSDI counts as income for this program, but the income limits are high enough that many SSDI recipients may have access to.

To claim the rebate, you must file a Pennsylvania return (Form PA-40) even if you owe no tax. The rebate is claimed on Schedule SP. If you may have access to, the state will send you a check. This is one reason to file even if your income is below the filing threshold.

Frequently Asked Questions

Does Pennsylvania tax my SSDI directly?

No. Pennsylvania specifically excludes SSDI from taxable income. However, SSDI counts toward your total income when determining whether you must file a return and whether you owe tax on other income like wages or pensions.

I live in Pennsylvania and work part-time while receiving SSDI. Do I owe state tax?

You owe Pennsylvania tax only if your total income (wages plus SSDI) exceeds the filing threshold for your age and status, and then only on the wages, not the SSDI. If your wages alone are below the standard deduction, you likely owe no tax. A tax preparer can review your specific situation.

What if I moved to Pennsylvania after receiving SSDI in another state?

You owe Pennsylvania tax only on income earned while you were a resident. If you moved mid-year, you file a part-year resident return showing only the months you lived in Pennsylvania. Berkheimer or a tax preparer can help you determine your filing requirement.

Can I get help understanding a Berkheimer notice?

Yes. You can contact the Pennsylvania Department of Revenue directly at 717-787-8201 or visit their website for information. Berkheimer's notice will also include a phone number and instructions for requesting a review if you disagree with the amount owed.

Do I need to file a Pennsylvania return if I only receive SSDI and no other income?

Not unless you are claiming a credit or rebate like the Property Tax/Rent Rebate. However, if you have taxes withheld from any source, filing may result in a refund, so it is worth considering even if not required.