You may owe federal income tax on your SSDI benefits, depending on your total income and filing status

Whether you file taxes and whether you owe tax on your SSDI are two separate questions. The Social Security Administration sends you a Form SSA-1099-SM each January showing how much SSDI you received that year. The IRS then uses a formula called the "combined income" test to decide if any of your benefits count as taxable income.

Combined income means your adjusted gross income plus nontaxable interest plus half of your Social Security or SSDI benefits. If your combined income exceeds a threshold that depends on your filing status, some or all of your benefits become taxable. For a single filer in 2024, that threshold is $25,000. For married filing jointly, it is $32,000. These thresholds have not changed since 1984 and do not adjust for inflation.

The practical result: if you have little or no other income, you probably owe no tax on your SSDI. If you work, have investment income, or receive other benefits, you may owe tax on a portion of your SSDI even if you would not owe tax on that other income alone.

Key Takeaways

  • You receive a Form SSA-1099-SM each January showing your annual SSDI; the IRS uses this to calculate whether your benefits are taxable.
  • The combined income test determines taxability: if your adjusted gross income plus nontaxable interest plus half your benefits exceeds $25,000 (single) or $32,000 (married filing jointly), some benefits become taxable.
  • You may owe tax on SSDI even if you have no other income, if you also receive Social Security retirement or spousal benefits.
  • You are not required to file a tax return solely because you received SSDI, but filing may result in a refund if taxes were withheld or if you have credits you can claim.
  • State income tax treatment of SSDI varies: most states do not tax SSDI, but a few do, and some tax it only under certain conditions.

How the combined income test works in practice

Start with your adjusted gross income (AGI) — the number on line 11 of your Form 1040. Add any nontaxable interest you earned, such as interest from municipal bonds. Then add half of the total Social Security and SSDI benefits you received during the year. That sum is your combined income.

If combined income is $25,000 or less (single) or $32,000 or less (married filing jointly), none of your benefits are taxable. You owe no federal income tax on the SSDI itself, though you may owe tax on other income.

If combined income exceeds the threshold, you calculate taxable benefits using one of two formulas. The first formula taxes up to 50 percent of benefits above the first threshold. The second formula taxes up to 85 percent of benefits above a second threshold ($34,000 for single filers, $44,000 for married filing jointly). The IRS applies whichever formula results in the lower tax. Most people fall under the 50 percent rule; the 85 percent rule applies only when combined income is substantially higher.

Example: You are single, receive $18,000 in SSDI, and earn $12,000 from part-time work. Your AGI is $12,000. Combined income is $12,000 + $0 + (½ × $18,000) = $21,000. This is below $25,000, so no benefits are taxable. You owe no federal tax on the SSDI, though you may owe tax on the $12,000 in wages depending on your standard deduction.

When SSDI and Social Security retirement benefits are both received

If you receive both SSDI and Social Security retirement benefits — which can happen if you converted from SSDI to retirement at full retirement age, or if you receive benefits as a spouse or survivor — the combined income test applies to the total of both. You cannot exclude one and tax the other.

This matters because it can push you over the threshold even if your SSDI alone would not. For instance, if you receive $12,000 in SSDI and $8,000 in retirement benefits, your combined income calculation includes half of the $20,000 total, not half of each separately.

The Form SSA-1099-SM you receive shows SSDI and any other Social Security benefits separately, but for tax purposes they are treated as a single income stream under the combined income test.

Work income and SSDI taxation

Earnings from work increase your combined income dollar-for-dollar, which can push you over the threshold and make your SSDI taxable. This is separate from the substantial gainful activity (SGA) rules, which can end your SSDI if you earn too much. The SGA threshold for 2024 is $1,550 per month; the taxation threshold is much lower.

If you are in a work incentive program such as Plan to Achieve Self-Support (PASS) or using impairment-related work expenses (IRWE), those deductions reduce your countable earnings for SGA purposes but do not reduce your gross income for the combined income test. Your tax liability is based on your actual earnings, not your countable earnings under SSDI rules.

Self-employment income counts toward combined income at your net profit (after business expenses), not gross revenue. If you are self-employed, you will also owe self-employment tax on that income, which is separate from income tax on your SSDI.

Filing requirements and tax withholding

You are not required to file a federal income tax return solely because you received SSDI. However, you must file if your total income — including SSDI that is taxable under the combined income test — exceeds the standard deduction for your filing status. For 2024, the standard deduction is $14,600 for single filers and $29,200 for married filing jointly.

The Social Security Administration does not withhold federal income tax from SSDI payments automatically. If you expect to owe tax, you can request voluntary withholding by submitting Form W-4V to your local Social Security office. You can choose to withhold 7, 10, 15, or 22 percent of your monthly benefit. Many people use this to avoid a large tax bill at filing time.

If you do not request withholding and you owe tax, you may need to make quarterly estimated tax payments using Form 1040-ES. The IRS charges penalties and interest if you underpay by a large amount. Requesting withholding from your SSDI is usually simpler than managing quarterly payments.

State income tax on SSDI

Most states do not tax SSDI benefits at all. However, a small number of states tax SSDI under certain conditions. Illinois, for example, taxes SSDI only if your income exceeds a threshold and you are not over age 67. Missouri taxes SSDI only if your federal adjusted gross income exceeds $100,000. Vermont and Rhode Island tax SSDI like any other income but offer credits or deductions to offset the tax for lower-income recipients.

If you live in a state that taxes SSDI, you will need to file a state return and calculate your state tax liability separately from your federal liability. Your state tax form may use a different combined income threshold or formula than the federal test. Check your state's tax authority website or speak with a tax preparer familiar with your state's rules.

If you move to a different state during the year, you may owe tax to both your old state and your new state, depending on when you moved and each state's residency rules. This is rare but can happen if you move late in the tax year.

What to do if you receive a tax bill or refund

If you file a tax return and owe tax on your SSDI, you can pay the IRS directly online, by mail, or through an installment agreement. The IRS offers payment plans for amounts you cannot pay in full; you can set up a plan online at IRS.gov or by calling 1-800-829-1040.

If you overpaid tax — either because too much was withheld from your SSDI or because you had a large deduction or credit — you will receive a refund. The IRS typically issues refunds within 21 days of processing your return, though it can take longer if your return is selected for review.

If you cannot afford to pay a tax bill and do not may have access to for an installment agreement, you can request an Offer in Compromise, which allows you to settle your tax debt for less than you owe. This is difficult to obtain and requires detailed financial documentation, but it is an option if you are in genuine hardship.

Frequently Asked Questions

Do I have to file taxes if I only receive SSDI and have no other income?

No, not unless your combined income exceeds the standard deduction for your filing status. If you receive only SSDI and no other income, your combined income is half your SSDI benefits. For most people, this is well below $14,600 (the 2024 standard deduction for single filers), so no return is required. However, filing may be worthwhile if you are owed a refund due to tax credits like the Earned Income Tax Credit.

Can I deduct my medical expenses from my SSDI income?

Medical expenses do not reduce your combined income for the SSDI taxation test. However, if your total medical expenses exceed 7.5 percent of your adjusted gross income, you can deduct the excess on Schedule A (itemized deductions) if you itemize rather than take the standard deduction. This is a separate calculation from the combined income test and may lower your overall tax liability.

What happens if I disagree with the amount of SSDI shown on my Form SSA-1099-SM?

Contact the Social Security Administration directly at 1-800-772-1213 or visit your local Social Security office. Bring your Form SSA-1099-SM and any records of payments you received. Social Security will verify the amount and issue a corrected form if an error is found. Do not file your tax return until the discrepancy is resolved, as the IRS will match your return against Social Security's records.

If I owe tax on my SSDI, does that affect my benefits?

No. Owing income tax does not change your SSDI payment amount or your benefit status. However, if you owe back taxes and do not pay, the IRS can offset your tax refund in future years and may place a lien on your property. The IRS cannot garnish SSDI payments directly, but it can intercept other income or refunds you are owed.

Should I request tax withholding from my SSDI?

If you expect to owe tax on your SSDI — because you work, have investment income, or receive other benefits — requesting withholding can prevent a large bill at tax time. Withholding at 10 or 15 percent is common. If you are unsure, a tax preparer can estimate your liability and recommend a withholding amount. You can change your withholding request at any time by submitting a new Form W-4V.