Massachusetts does not tax SSDI benefits at the state level

If you receive Social Security Disability Insurance (SSDI) and live in Massachusetts, your state income tax return does not include SSDI as taxable income. Massachusetts is one of the states that excludes SSDI from state taxation entirely. This means you will not owe Massachusetts state income tax on your SSDI payments, regardless of how much you receive or what other income you have.

However, this does not mean SSDI is tax-free everywhere. The federal government may tax your SSDI depending on your total income, and if you move to another state, that state's rules explore. Massachusetts' protection covers only state-level taxation.

Key Takeaways

  • Massachusetts excludes SSDI from state income tax, so you owe no state tax on these payments.
  • The federal government may still tax your SSDI if your combined income exceeds certain thresholds, even though Massachusetts does not.
  • If you work or have other income sources, you must report those to Massachusetts, but not your SSDI.
  • Moving out of Massachusetts means your SSDI may become subject to that state's income tax rules.

How Massachusetts treats SSDI on your state return

When you file your Massachusetts state income tax return (Form 1, the Massachusetts Resident Income Tax Return), you do not report SSDI as income. The state's tax code excludes disability benefits paid under the Social Security Act, which includes SSDI. This exclusion applies whether you file as single, married, or head of household.

If you use tax preparation software or work with a tax preparer, make sure they know you receive SSDI. Some software programs default to asking about all income sources, and you need to confirm that SSDI is not entered as Massachusetts taxable income. The exclusion is automatic under state law, but the burden is on you to report correctly.

Federal taxation of SSDI is separate from Massachusetts rules

Massachusetts' decision not to tax SSDI does not affect federal taxation. The Internal Revenue Service (IRS) uses different rules. If your combined income—including SSDI, wages, interest, and other sources—exceeds certain thresholds, the IRS will tax up to 85 percent of your SSDI benefits at the federal level.

For 2024, the IRS thresholds are $25,000 for single filers and $32,000 for married couples filing jointly. These are the "combined income" limits, which include your SSDI plus half your SSDI plus all other income. If you are below these thresholds, no federal tax applies to your SSDI. If you are above them, you may owe federal tax even though Massachusetts owes you nothing.

You will report any federal tax owed on your federal return (Form 1040), not on your Massachusetts return. Some people receive a Social Security Benefit Statement (Form SSA-1099) that shows SSDI received; this form is for federal reporting only.

Other income you receive must still be reported to Massachusetts

While SSDI itself is excluded, any other income you have is still taxable in Massachusetts. If you work part-time or full-time, you report wages to Massachusetts. If you have interest from a savings account, rental income, or self-employment income, those are all taxable at the state level.

This matters because your other income may push you into a tax bracket where you owe state tax, even though the SSDI portion is protected. For example, if you receive $1,500 per month in SSDI and earn $15,000 per year from part-time work, you report only the $15,000 to Massachusetts—but you do owe state tax on it.

What happens if you move out of Massachusetts

If you move to another state, that state's tax rules explore to your SSDI. Some states, like New York and Illinois, also exclude SSDI from state taxation. Other states tax SSDI the same way the federal government does. A few states have their own rules that fall somewhere in between.

Before you move, check the tax rules of your new state. You can find this information on the state revenue department's website or by contacting them directly. If you move mid-year, you may need to file a part-year return in both Massachusetts and your new state, and the rules for which state taxes what income can be complex.

Reporting SSDI on your Massachusetts return: what to do

On your Massachusetts Form 1, you will see a line for "Disability Income Exclusion" or similar language depending on the year's form. You do not enter your SSDI amount here; instead, you leave it blank or enter zero. The form itself acknowledges that disability benefits are excluded, so following the form's instructions will get you to the right answer.

If you are filing electronically through MassTax or using tax software, the program should guide you through income sources. When asked about SSDI, select the option that indicates you receive it but that it is excluded from Massachusetts taxation. Do not skip the question—answering it correctly ensures your return is processed without delay.

Keep a copy of your Social Security Benefit Statement (Form SSA-1099) with your tax records, even though you do not report it to Massachusetts. If the IRS or Massachusetts ever questions your return, this document proves how much SSDI you received.

Frequently Asked Questions

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

No. If SSDI is your only income, you have no Massachusetts tax filing requirement because SSDI is not taxable income in the state. However, if you have any other income—wages, interest, rental income—you must file if that income exceeds the filing threshold for your filing status.

Will the IRS tax my SSDI if I live in Massachusetts?

Massachusetts' exclusion does not affect federal taxation. The IRS will tax your SSDI if your combined income exceeds $25,000 (single) or $32,000 (married filing jointly). You owe federal tax on SSDI based on IRS rules, not Massachusetts rules.

What if I work part-time and receive SSDI?

You report your wages to Massachusetts and owe state tax on them. Your SSDI is still excluded. Your combined income (wages plus SSDI) may also trigger federal taxation of your SSDI under IRS rules, so you may owe both state tax on wages and federal tax on SSDI.

Can I deduct my medical expenses from my SSDI on my Massachusetts return?

No. Because SSDI is not taxable income in Massachusetts, you cannot deduct expenses against it. Medical expense deductions explore only to taxable income. If you have other taxable income, you may be able to deduct medical expenses against that, but the rules are strict and most people do not benefit.

What if I moved to Massachusetts from another state that taxes SSDI?

Once you are a Massachusetts resident, only Massachusetts rules explore to your state taxes. Your SSDI is excluded going forward. If you moved mid-year, you may have owed tax to your previous state for the months you lived there; that is handled on a part-year return filed with that state.