Massachusetts does not tax Social Security Disability Insurance (SSDI) benefits

Massachusetts exempts SSDI from state income tax. If SSDI is your only income, you will not owe Massachusetts state tax on it. This exemption applies whether you file as single, married, or head of household.

The exemption covers the full SSDI payment you receive each month from Social Security. It does not matter how much you earn from work or other sources — the SSDI portion itself is never taxable in Massachusetts.

However, other income you receive may still be taxable at the state level. If you have wages, self-employment income, interest, or dividends, Massachusetts will tax those according to its standard rates. Only the SSDI itself is protected.

Key Takeaways

  • Massachusetts does not tax SSDI benefits under state law, even if you have other income.
  • You must still report SSDI on your federal tax return, where it may be partially taxable depending on your total income.
  • If you receive both SSDI and Supplemental Security Income (SSI), only the SSDI portion is exempt from Massachusetts tax; SSI is also exempt.
  • Earned income from work does not affect the Massachusetts exemption for SSDI, though it may affect your federal tax situation.

How the Massachusetts exemption works on your tax return

When you file your Massachusetts Form 1 (the state income tax return), you report all income you received during the year. SSDI appears on your Social Security statement as box 5 of Form SSA-1099-SM. You do not subtract it or claim it as a deduction — you straightforward do not include it in your Massachusetts taxable income.

The exemption is automatic. You do not need to file a special form or claim a credit. If you use tax software or work with a tax preparer, make sure they know you received SSDI so they exclude it from your state return. Many preparers are familiar with this rule, but it is worth confirming.

If you received SSDI for only part of the year — for example, you started receiving it in June — the exemption still covers the full amount you received during those months you were may be able to access.

Federal tax treatment is different from Massachusetts tax treatment

Massachusetts and the federal government have different rules. While Massachusetts exempts SSDI entirely, the federal government may tax up to 85 percent of your SSDI benefits if your combined income exceeds certain thresholds. Combined income includes your SSDI, half of your SSDI, plus all other income (wages, interest, dividends, and tax-exempt interest).

For 2024, if you are single and your combined income exceeds $25,000, some of your SSDI becomes taxable at the federal level. If you are married filing jointly, the threshold is $32,000. These thresholds have not changed since 1983 and do not adjust for inflation.

This means you could owe federal income tax on SSDI while owing nothing to Massachusetts. You must file a federal return if your combined income exceeds the threshold, even if no tax is ultimately due. Your Massachusetts return is separate and follows Massachusetts rules only.

What counts as income for the Massachusetts exemption

Only SSDI benefits themselves are exempt. Other types of Social Security payments are treated differently. If you receive Supplemental Security Income (SSI), that is also exempt from Massachusetts tax, but SSI is a different program with different rules.

If you receive a Social Security retirement or survivor benefit instead of SSDI, Massachusetts taxes that income like any other income. The exemption applies only to SSDI specifically. You can tell which benefit you receive by looking at your Form SSA-1099-SM — SSDI appears in box 5, and the form will identify the benefit type.

Earned income from work, even if you are receiving SSDI, is fully taxable in Massachusetts. If you work and earn $15,000 while receiving $12,000 in SSDI, Massachusetts taxes the $15,000 but not the $12,000.

Reporting SSDI on your Massachusetts return

You report SSDI on Schedule 1 of your Massachusetts Form 1 return. On line 1a, you enter your total federal adjusted gross income (AGI) from your federal return. Then you make adjustments specific to Massachusetts. One of those adjustments is to subtract SSDI that you included in your federal AGI.

The line for this subtraction is labeled "Social Security Benefits Excluded" or similar, depending on which year's form you are using. You enter the amount of SSDI you received. This reduces your Massachusetts taxable income to zero if SSDI is your only income.

If you use tax software, the program should handle this automatically once you enter that you received SSDI. If you file by hand or work with a preparer, provide them with your Form SSA-1099-SM so they have the exact amount.

What happens if you work while receiving SSDI

Working does not change the Massachusetts tax treatment of SSDI. Your SSDI remains exempt from Massachusetts tax regardless of how much you earn. However, your work income is fully taxable in Massachusetts, and it may affect your federal tax situation.

If you are using a work incentive program like the Student Earned Income Exclusion or Plan to Achieve Self-Support (PASS), those programs affect your federal benefits and federal taxes, not your Massachusetts taxes. Massachusetts still exempts your SSDI from state tax.

Some people worry that earning income will cause them to lose the SSDI exemption. It will not. The exemption is based on receiving SSDI, not on how much money you have or earn from other sources.

If you move to or from Massachusetts

If you move out of Massachusetts, you will no longer file a Massachusetts return, and the exemption no longer applies to your state taxes. Some states tax SSDI, and some do not. You will need to follow the rules of your new state.

If you move into Massachusetts from another state, you become subject to Massachusetts tax rules starting the year you establish residency. You will file a part-year Massachusetts return for the year you move, reporting only income earned while you were a Massachusetts resident.

If you are unsure whether you are a Massachusetts resident for tax purposes, contact the Massachusetts Department of Revenue. Residency rules can be complex if you split time between states or recently moved.

Frequently Asked Questions

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

No. If SSDI is your only income, you have no Massachusetts tax filing requirement. Massachusetts has no income tax filing requirement for people with no taxable income. However, you may still want to file if you are due a refund of taxes withheld or if you are claiming a tax credit.

Will receiving SSDI affect my Massachusetts property tax or other state benefits?

SSDI does not count as income for Massachusetts property tax relief programs or most state benefit programs. However, some programs have their own rules. Contact the specific program to ask whether SSDI counts toward their income limits.

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

The exemption covers SSDI you received during the months you were may be able to access. If you started receiving SSDI in September, you report only the SSDI from September through December on your tax return, and that amount is exempt from Massachusetts tax.

Can I claim SSDI as a dependent on someone else's return?

No. SSDI is your own income, not income of the person claiming you as a dependent. However, SSDI does not count as earned income for the purpose of determining whether you can be claimed as a dependent. The rules for being claimed as a dependent depend on your relationship to the other person and their income, not on your SSDI.

Do I need to report SSDI to Massachusetts if I also receive SSI?

Both SSDI and SSI are exempt from Massachusetts tax. You report them the same way — by subtracting them from your federal AGI on your Massachusetts return. If you receive both, subtract the total of both programs.