Whether your SSDI is taxed depends on your total income, not just your benefits

Social Security Disability Insurance (SSDI) payments may or may not be taxable. The IRS taxes a portion of your benefits only if your combined income exceeds a certain threshold. Combined income is not just your SSDI—it includes wages, interest, dividends, and other income sources, plus half of your SSDI benefits themselves. Most people receiving SSDI pay no federal income tax on their benefits, but some do.

The tax rule applies the same way to SSDI as it does to retirement Social Security benefits. If you are under full retirement age and working, you may also face a separate earnings limit that reduces your SSDI payment itself—that is a different rule from taxation and is covered elsewhere. This section covers only whether the IRS taxes what you receive.

Key Takeaways

  • You owe federal income tax on SSDI only if your combined income (half your SSDI plus all other income) exceeds $25,000 as a single filer or $32,000 as a married couple filing jointly.
  • If you exceed the threshold, up to 85 percent of your SSDI can be taxed, but the exact amount depends on how far over the limit you go.
  • Most states do not tax SSDI, but a handful do—you must check your state's rules separately.
  • You do not receive a Form 1099-SSA automatically; you must request it from Social Security, and the IRS does not send you a bill—you report the taxable amount on your tax return.

The federal income tax thresholds for SSDI

The IRS uses two thresholds to determine whether any of your SSDI is taxable. If your combined income is below the first threshold, none of your SSDI is taxed. If it is above the first threshold but below the second, up to 50 percent of your benefits can be taxed. If it exceeds the second threshold, up to 85 percent can be taxed.

For a single filer in 2024, the first threshold is $25,000 and the second is $34,000. For married couples filing jointly, the first threshold is $32,000 and the second is $44,000. For married couples filing separately, the thresholds are much lower—usually $0 and $9,000—which makes filing separately almost always worse if one spouse receives SSDI. These thresholds do not adjust for inflation; Congress has not changed them since 1983.

Combined income is calculated as your adjusted gross income (AGI) plus nontaxable interest plus half your SSDI benefits. If you have a pension from work not covered by Social Security, part of that pension counts as nontaxable income for this calculation. If you receive tax-exempt bond interest, that counts too. The half-SSDI rule means that even if you have no other income, you are already partway to the first threshold just from your SSDI alone.

How much of your SSDI actually gets taxed

The calculation is not straightforward. If you are between the first and second threshold, the IRS taxes the lesser of (a) 50 percent of your SSDI, or (b) 50 percent of the amount by which your combined income exceeds the first threshold. If you are above the second threshold, the calculation is more complex and can result in up to 85 percent of your benefits being taxed.

A concrete example: suppose you are single, your SSDI is $1,200 per month ($14,400 per year), and you have $15,000 in other income. Your combined income is $15,000 plus half of $14,400, which is $7,200, totaling $22,200. This is below the first threshold of $25,000, so none of your SSDI is taxed. Now suppose your other income is $20,000 instead. Your combined income is $20,000 plus $7,200, totaling $27,200. You are $2,200 over the first threshold. The taxable amount is the lesser of (a) 50 percent of $14,400 ($7,200), or (b) 50 percent of $2,200 ($1,100). So $1,100 of your SSDI is taxable.

The IRS publishes a worksheet in the instructions to Form 1040 that walks through this calculation. If your situation is complex—for instance, if you have both SSDI and retirement Social Security, or if you are married filing separately—the worksheet becomes harder to follow, and many people use a tax preparer or software to get it right.

State income tax on SSDI

Most states do not tax SSDI at all. However, a small number do. Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont all tax SSDI under their state income tax systems, though some offer partial exemptions or credits that reduce or eliminate the tax for lower-income recipients.

The rules vary by state. Some states use the same federal thresholds; others have their own. Some states exempt SSDI entirely for people over a certain age or below a certain income level. If you live in one of these states, you will need to check your state's tax instructions or contact your state revenue department to understand what you owe. A tax preparer familiar with your state can also walk you through it.

If you move to a different state during the year, you may owe tax to both states for the portion of the year you lived in each. State tax is separate from federal tax; owing nothing to the IRS does not mean you owe nothing to your state.

Getting your Social Security tax form and reporting it

Social Security does not automatically send you a Form 1099-SSA (the tax form for Social Security benefits). You must request one. You can do this online through your my Social Security account at ssa.gov, by calling Social Security at 1-800-772-1213, or by visiting your local Social Security office. Request it early in the tax season—January or February—so you have it before you file.

The form shows the total SSDI you received in the year and is sent to both you and the IRS. If you do not request it, Social Security will not send it, but the IRS will still have a record of your benefits from Social Security's own reporting. You are responsible for reporting the correct taxable amount on your tax return regardless of whether you receive the form.

On your federal return, you report SSDI on lines 5a and 5b of Form 1040. Line 5a is the total SSDI you received; line 5b is the taxable portion. The worksheet in the Form 1040 instructions helps you calculate line 5b. If you use tax software, it will ask you for the total and calculate the taxable amount for you. If you use a tax preparer, bring your Form 1099-SSA and any other income documents.

What happens if you do not report SSDI on your taxes

The IRS receives a copy of your Form 1099-SSA from Social Security. If you file a tax return and do not report your SSDI, or if you report it incorrectly, the IRS will eventually notice the discrepancy. This can trigger a notice asking you to explain the difference, or in some cases an audit. If you owe tax and do not pay it, the IRS can assess penalties and interest.

If your income is so low that you are not required to file a tax return at all, you do not need to file one just because you received SSDI. However, if you have other income or if any of your SSDI is taxable, you should file to report it accurately and to claim any refundable credits you may be may have access to to, such as the Earned Income Tax Credit (EITC) if you also work.

SSDI and Medicare premiums: a separate tax-like cost

SSDI itself is not subject to payroll tax (Social Security and Medicare tax), but if you work while receiving SSDI, your wages are. There is a separate issue that affects many SSDI recipients: Income-Related Monthly Adjustment Amounts (IRMAA) for Medicare Part B and Part D premiums.

If your income exceeds certain thresholds, your Medicare premiums increase. IRMAA is not a tax, but it functions like one—your combined income (calculated the same way as for the tax rule above) determines whether your premiums go up. The IRMAA thresholds are different from the income tax thresholds and are adjusted annually for inflation. If you are on SSDI and turn 65 and enroll in Medicare, you will need to understand both the income tax rule and the IRMAA rule, because they can both affect your finances.

Frequently Asked Questions

Do I have to pay federal income tax on all my SSDI?

No. Most SSDI recipients pay no federal income tax on their benefits. You owe tax only if your combined income (half your SSDI plus all other income) exceeds $25,000 as a single filer or $32,000 as a married couple filing jointly. Even then, only a portion of your SSDI is taxable, not all of it.

What counts as income for the SSDI tax calculation?

Wages, self-employment income, interest, dividends, capital gains, pensions, and rental income all count. Nontaxable interest (such as from municipal bonds) and certain other nontaxable income also count for this calculation. Half of your SSDI itself is included in the combined income total. Supplemental Security Income (SSI) does not count.

If I work part-time while on SSDI, will my SSDI be taxed?

Possibly. Your wages count toward combined income. If your wages plus half your SSDI exceed the threshold, some of your SSDI will be taxable. Additionally, if you earn above a certain amount (the substantial gainful activity level, currently $1,550 per month in 2024), your SSDI itself may be reduced or suspended—that is a separate rule from taxation.

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

No. The IRS receives a record of your SSDI from Social Security. If you owe tax and do not file, the IRS can pursue collection. If your income is below the filing threshold, you are not required to file, but if any of your SSDI is taxable, filing is the correct thing to do.

Do I owe state income tax on SSDI?

It depends on your state. Most states do not tax SSDI, but Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont do. Check your state's tax instructions or contact your state revenue department to find out whether you owe state tax on your benefits.