Wisconsin does not tax Social Security Disability Insurance (SSDI) income

Wisconsin is one of the states that excludes SSDI from state income tax entirely. If you live in Wisconsin and receive SSDI, you do not owe state income tax on those benefits, regardless of your total income or filing status. This is a state-level choice—Wisconsin's tax code treats SSDI the same way the federal government does for its own purposes: as non-taxable income.

This means your SSDI payments arrive without state tax withholding and do not count toward your Wisconsin taxable income when you file your state return. However, federal tax rules still explore. If your combined income (SSDI plus other earnings or unearned income) exceeds certain thresholds, you may owe federal income tax on a portion of your SSDI, even though Wisconsin will not tax it.

Key Takeaways

  • Wisconsin does not tax SSDI benefits under state income tax law, so you owe no state tax on those payments.
  • Federal tax rules still explore—you may owe federal income tax on SSDI if your total income exceeds the federal thresholds, even though Wisconsin taxes none of it.
  • Other income you receive (wages, interest, pensions) is still subject to Wisconsin state income tax at normal rates.
  • You should file a federal return if required, but your Wisconsin return will not include SSDI in your taxable income calculation.

How Wisconsin's SSDI tax exemption works

Wisconsin's tax code explicitly excludes SSDI from gross income for state tax purposes. This means when you prepare your Wisconsin tax return, you do not report your SSDI payments on the income line at all. The Social Security Administration sends you a Form SSA-1099-SM each January showing your SSDI for the year, but that amount does not appear on your Wisconsin return.

The exemption applies to all SSDI recipients who live in Wisconsin, regardless of age or other circumstances. You do not need to claim it separately or file any special form—it is automatic under state law. If you moved to Wisconsin from another state that does tax SSDI, you will see the difference when ready on your next Wisconsin return.

Federal tax on SSDI still applies in Wisconsin

Wisconsin's exemption covers only state tax. The federal government has its own rules for taxing SSDI, and those rules explore to Wisconsin residents just as they do everywhere else. If your combined income (SSDI plus wages, self-employment income, interest, dividends, and other unearned income) exceeds $25,000 as a single filer or $32,000 as a married couple filing jointly, you may owe federal income tax on up to 85 percent of your SSDI.

The federal calculation is complex because it uses a two-tier system: the first tier taxes up to 50 percent of SSDI if your combined income exceeds the base threshold, and the second tier taxes up to an additional 35 percent if your combined income exceeds a higher threshold. A tax professional or the IRS can help you determine whether you owe federal tax, but Wisconsin will not tax any of your SSDI regardless of the federal outcome.

Other income is still taxable in Wisconsin

The SSDI exemption applies only to SSDI payments themselves. If you have other sources of income—wages from work, self-employment income, interest, dividends, rental income, or a pension—Wisconsin taxes those at its normal state income tax rates. Wisconsin's top state income tax rate is 5.85 percent, and rates vary by income bracket.

This matters if you are working while receiving SSDI. Your wages are fully subject to Wisconsin state income tax, even though your SSDI is not. The same applies if you receive a pension, annuity, or other retirement income—those are taxable in Wisconsin unless a specific state law exempts them (some pensions have their own exemptions, but that is separate from the SSDI rule).

What to report on your Wisconsin tax return

When you file your Wisconsin return, you will report your other income normally but omit your SSDI. If you use tax software, most programs have a field for SSDI income, but Wisconsin-specific software should automatically exclude it from your state taxable income. If you use a tax professional, tell them you received SSDI in Wisconsin so they do not accidentally include it.

You will still receive your Form SSA-1099-SM from Social Security showing your SSDI for the year. Keep it with your records, but do not report that amount on your Wisconsin return. If you also received Supplemental Security Income (SSI), that has different rules—SSI is not taxable under federal or Wisconsin law, but it is also a different program with different income limits and work rules.

If you moved to or from Wisconsin

If you moved to Wisconsin from a state that taxes SSDI (such as Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, or Vermont), your tax situation changes when ready. You will owe no Wisconsin state tax on SSDI going forward, even for the year you move. If you moved away from Wisconsin, you will owe state tax on SSDI to your new state if it taxes SSDI—the rules depend on where you live on December 31 of the tax year.

If you moved mid-year, you may need to file a part-year return in Wisconsin and a part-year return in your new state. The IRS and Wisconsin Department of Revenue can clarify how to report income for the months you lived in each state, but the SSDI exemption applies only to the months you were a Wisconsin resident.

Frequently Asked Questions

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

No. If SSDI is your only income and you have no other earnings or unearned income, you have no Wisconsin tax filing requirement. Wisconsin does not tax SSDI, so there is nothing to report. However, you may want to file a federal return if your combined income exceeds federal thresholds, or to claim the Earned Income Tax Credit if you also worked.

Will Wisconsin tax my SSDI if my total income is very high?

No. Wisconsin exempts SSDI from state tax at all income levels. Even if you have substantial wages, pensions, or other income that puts you in the highest tax bracket, your SSDI remains non-taxable in Wisconsin. Only your other income is subject to state tax.

What if I receive both SSDI and SSI?

Neither SSDI nor SSI is taxable under Wisconsin law or federal law. However, SSDI and SSI are separate programs with different rules for work, income limits, and resource limits. If you receive both, neither amount is taxed by Wisconsin, but your federal tax situation depends on your combined income from all sources.

Do I need to report my SSDI to Wisconsin when I file?

No. You do not report SSDI on your Wisconsin return at all. If you use tax software, it may ask about SSDI income, but Wisconsin-specific software should automatically exclude it. If you use a tax professional, mention that you received SSDI so they do not accidentally include it in your state taxable income.