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

Social Security Disability Insurance (SSDI) is potentially taxable, but only if your combined income exceeds certain thresholds. The IRS does not tax SSDI the way it taxes wages. Instead, the agency uses a formula that counts SSDI along with other income sources — including interest, dividends, pensions, and half of your SSDI benefit itself — to determine whether any of your SSDI is taxable.

For most people receiving SSDI, no tax is owed because their total income stays below the threshold. But if you have other income — a part-time job, a pension, investment earnings, or a working spouse's income — you may cross into taxable territory. The threshold is low enough that even modest additional income can trigger a tax bill.

Key Takeaways

  • SSDI becomes taxable only if your combined income (SSDI plus other sources) exceeds $25,000 as a single filer or $32,000 as a married couple filing jointly.
  • The IRS counts half your SSDI benefit as income when calculating whether you owe tax, even if none of it is actually taxable.
  • If you have earned income from work, a pension, or investment earnings, you are more likely to owe tax on part of your SSDI.
  • You do not have to file a tax return if your income is below the filing threshold, but filing may let you recover taxes withheld or claim the Earned Income Tax Credit.
  • Social Security sends Form SSA-1099 in January showing your annual SSDI payments; use this to complete your tax return or determine whether you must file.

The income thresholds that determine whether SSDI is taxable

The IRS uses two thresholds, called the "combined income" test. Combined income is calculated as your adjusted gross income plus nontaxable interest plus half your SSDI benefit. If your combined income is below the first threshold, none of your SSDI is taxable. If it exceeds the first threshold, some is taxable. If it exceeds the second threshold, up to 85 percent of your SSDI can be taxable.

For a single filer in 2024, the first threshold is $25,000 and the second is $34,000. For married couples filing jointly, the thresholds are $32,000 and $44,000. If you are married filing separately, the first threshold is $0 — meaning any combined income at all can make SSDI taxable. These thresholds do not change year to year, so they have not increased since 1984.

Example: You receive $18,000 in SSDI and have $10,000 in pension income. Your combined income is $10,000 plus half of $18,000 ($9,000), which equals $19,000. This is below $25,000, so none of your SSDI is taxable. But if you had $20,000 in pension income instead, your combined income would be $29,000, which exceeds the first threshold by $4,000. In that case, you would owe tax on part of your SSDI.

How the IRS calculates the taxable portion of SSDI

The calculation is not straightforward, and the IRS provides a worksheet in the instructions to Form 1040. The basic rule is that the taxable amount is the lesser of (1) 85 percent of your SSDI benefit, or (2) the amount by which your combined income exceeds the applicable threshold, plus 85 percent of the excess over the second threshold.

In practice, this means that if your combined income is between the first and second threshold, you pay tax on up to 50 percent of your SSDI. If your combined income exceeds the second threshold, you pay tax on up to 85 percent of your SSDI. The exact percentage depends on how far above the threshold you are.

Because the math is complex, many people use tax software or a tax professional to calculate the taxable amount. The IRS worksheet walks through the steps, but it requires careful attention to detail. If you file electronically, the software will do the calculation for you.

Other income sources that push you over the threshold

Earned income from work is the most common reason SSDI recipients owe tax on their benefits. If you work part-time or full-time while on SSDI, your wages count toward combined income. This is true even if you are using a work incentive like the Plan to Achieve Self-Support (PASS) or Impairment Related Work Expenses (IRWE), which reduce the amount of your SSDI benefit that is withheld — they do not reduce the amount counted for tax purposes.

Unearned income also counts. If you receive a pension, annuity, or distributions from a retirement account, those amounts are included in combined income. Interest and dividends from savings or investment accounts count as well. If you are married and file jointly, your spouse's income is included, even if your spouse does not receive SSDI.

Some income does not count. Supplemental Security Income (SSI) is not included in the combined income calculation. Workers' compensation, certain railroad retirement benefits, and some veterans' benefits may be excluded under specific rules. If you are unsure whether a particular income source counts, the IRS instructions to Form 1040 list the items that are included and excluded.

Whether you must file a tax return if you receive SSDI

You are not required to file a federal income tax return unless 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. For married couples filing jointly, it is $29,200 if both are under 65 and higher if one or both are 65 or older.

SSDI itself does not count toward this threshold — only other income does. So if you receive $20,000 in SSDI and have no other income, you do not have to file. But if you have $15,000 in SSDI and $5,000 in pension income, your gross income is $5,000, which is below the standard deduction, so you do not have to file either.

Even if you are not required to file, you may want to. If your employer withheld federal income tax from your wages, or if you are may have access to to the Earned Income Tax Credit (EITC), filing a return will let you recover the withheld tax or claim the credit. The EITC is available to working people with low to moderate income, and it can result in a refund even if you owe no tax.

How to report SSDI on your tax return

Social Security sends you Form SSA-1099 in January for the prior year, showing the total SSDI you received. You use this form to complete your tax return. The amount on the SSA-1099 goes on line 5b of Form 1040 (or the equivalent line on your state return if you file one).

If you file electronically using tax software, you enter the amount from the SSA-1099, and the software calculates whether any of it is taxable using the combined income worksheet. If you file by paper, you complete the worksheet yourself or have a tax professional do it. Either way, the taxable portion of your SSDI goes on line 5b of Form 1040, and the nontaxable portion is not reported as income.

Keep your SSA-1099 with your tax records. If you file a return and the IRS later questions the amount of SSDI you reported, you will need the form to verify the figure. The SSA-1099 is also useful if you need to prove your income to a lender, landlord, or government program.

State income tax on SSDI

Most states do not tax SSDI benefits, but a few do. As of 2024, Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont tax SSDI under certain conditions. The rules vary by state — some tax SSDI only if your total income exceeds a threshold, others explore their own combined income formula similar to the federal rule, and a few tax it like ordinary income.

If you live in a state that taxes SSDI, you will need to file a state return and calculate the taxable portion under your state's rules. Your state tax return instructions will explain the calculation. If you use a tax professional, they will handle the state calculation as part of preparing your return.

Frequently Asked Questions

Do I have to pay tax on SSDI if I do not work?

Not necessarily. If SSDI is your only income, you owe no federal income tax. But if you have other income — such as interest, dividends, a pension, or a spouse's income — you may owe tax on part of your SSDI. Use the combined income formula to check: add your other income to half your SSDI. If the total exceeds $25,000 (single) or $32,000 (married filing jointly), some SSDI is taxable.

What happens if I work part-time while on SSDI?

Your wages count toward combined income for tax purposes, even if your SSDI benefit is reduced because of your earnings. You may owe tax on part of your SSDI in addition to tax on your wages. Work incentives like PASS and IRWE reduce the amount of SSDI withheld but do not change the amount counted for taxes. Consult a tax professional or use tax software to calculate the total tax you owe.

Can I avoid paying tax on SSDI by not filing a return?

Not if you owe tax. The IRS determines whether SSDI is taxable based on your income, regardless of whether you file. If you do not file and you owe tax, you may face penalties and interest. If you are unsure whether you owe, calculate your combined income or ask a tax professional. Filing protects you and may result in a refund if tax was withheld from other income.

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

The SSA-1099 will show only the SSDI you received during the months you were on the program. Use that amount to calculate combined income. If you started or stopped SSDI mid-year, your combined income may be lower than it would be for a full year, which could keep you below the taxable threshold.

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

Only if you live in one of the states that taxes SSDI and your income exceeds that state's filing threshold. Most states do not tax SSDI at all. Check your state's tax instructions or contact your state tax agency to find out whether SSDI is taxable in your state and whether you must file.