Whether you pay taxes on SSDI depends on your total income, not just your benefits

Social Security Disability Insurance (SSDI) may or may not be taxed. The answer depends on your combined income—which includes your SSDI payments, wages, interest, dividends, and other money you receive. If your combined income stays below a certain threshold, you owe no federal income tax on your SSDI. If it rises above that threshold, a portion of your SSDI becomes taxable.

The threshold is low. For a single filer in 2024, it is $25,000. For married couples filing jointly, it is $32,000. These numbers have not changed since 1984, even though the cost of living has risen significantly. This means more people with SSDI end up owing taxes than in the past, even if their actual income has not increased much.

The calculation itself is done on your federal tax return using IRS worksheets. You do not calculate it separately or send it to Social Security. If you file taxes, the IRS determines whether any of your SSDI is taxable based on the information you report.

Key Takeaways

  • Your SSDI is taxed only if your combined income (SSDI plus all other income) exceeds $25,000 for single filers or $32,000 for married couples filing jointly.
  • Combined income includes wages, self-employment income, interest, dividends, rental income, pensions, and other benefits—not just SSDI.
  • If you are over the threshold, only a portion of your SSDI becomes taxable, not all of it; the IRS uses a formula to determine how much.
  • You calculate SSDI tax on your federal income tax return using IRS worksheets; Social Security does not withhold it automatically unless you request it.
  • State income tax treatment of SSDI varies by state; some states do not tax SSDI at all, while others follow federal rules.

How the combined income threshold works

The IRS calls this threshold your combined income, and it is calculated in a specific way. Start with your adjusted gross income (AGI), add any tax-exempt interest you earned, and add half of your SSDI benefits. That total is your combined income for tax purposes.

Example: You receive $1,500 per month in SSDI ($18,000 per year) and earn $10,000 from part-time work. Your combined income is $10,000 + (half of $18,000) = $10,000 + $9,000 = $19,000. Since $19,000 is below $25,000, none of your SSDI is taxed.

If you are married and file jointly, you use the same calculation but with both spouses' income combined, and the threshold is $32,000. If you are married but file separately, the threshold drops to $0—meaning any SSDI at all becomes taxable if you file separately. This is why married couples almost always file jointly if either spouse receives SSDI.

What counts as income for this calculation

Combined income includes far more than just SSDI. The IRS counts wages from work, self-employment income, interest from savings accounts and bonds, dividends from investments, rental income, pension payments, distributions from retirement accounts, and income from other Social Security benefits (such as retirement or survivor benefits).

Some types of income do not count. Supplemental Security Income (SSI) is not included in the combined income calculation—only SSDI is. Gifts and inheritances do not count. Loans do not count. Refunds of taxes you paid do not count. Workers' compensation does not count. Some veterans' benefits do not count.

This distinction matters because a person might have $30,000 in total income but only $20,000 in combined income for SSDI tax purposes. For example, if you received $5,000 in workers' compensation and $25,000 in wages, your combined income would be $25,000 (the wages only), not $30,000.

How much of your SSDI becomes taxable

If your combined income exceeds the threshold, not all of your SSDI is taxed—only a portion. The IRS uses a two-tier formula to calculate this.

At the first tier, if your combined income exceeds the threshold by up to $9,000 (for single filers; $12,000 for married filing jointly), up to 50 percent of the excess becomes taxable. At the second tier, if your combined income exceeds the threshold by more than $9,000, an additional amount becomes taxable at a rate of up to 85 percent. The total taxable amount cannot exceed 85 percent of your SSDI benefits.

Example: You are single and receive $20,000 in SSDI per year. You also earn $35,000 in wages. Your combined income is $35,000 + $10,000 (half of SSDI) = $45,000. The threshold is $25,000, so you are $20,000 over. The first $9,000 of that excess means up to $4,500 is taxable (50 percent of $9,000). The remaining $11,000 of excess means up to $9,350 is taxable (85 percent of $11,000). Your total taxable SSDI is $4,500 + $9,350 = $13,850, which is less than the 85 percent cap of $17,000. You would owe income tax on $13,850 of your $20,000 SSDI.

Whether Social Security withholds taxes from your SSDI

Social Security does not automatically withhold federal income tax from your SSDI payments. You receive the full amount each month unless you request withholding.

If you know you will owe taxes on your SSDI, you can ask Social Security to withhold a portion of your monthly payment. You do this by completing Form W-4V (Voluntary Withholding Request) and sending it to your local Social Security office or mailing it to Social Security. You can choose to have 7 percent, 10 percent, 15 percent, or 25 percent of your benefit withheld.

Many people choose to have taxes withheld to avoid a large tax bill at the end of the year. Others prefer to keep the full payment and pay taxes when they file their return. There is no requirement to have taxes withheld; it is entirely your choice.

State income tax and SSDI

Whether your state taxes SSDI depends on your state's tax law. Thirteen states do not tax SSDI at all: Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, and Ohio. If you live in one of these states, you owe no state income tax on your SSDI, regardless of your income level.

Other states follow federal rules and tax SSDI the same way the IRS does. A few states have their own thresholds or formulas that differ from federal rules. If you live in a state with income tax and are unsure how it treats SSDI, contact your state tax authority or check your state's tax website.

Some people receive SSDI in one state but live in another (for example, if they moved after explore). You generally owe taxes to the state where you live, not the state where you receive benefits.

Reporting SSDI on your tax return

Social Security sends you a Form SSA-1099 each January showing the total SSDI you received in the previous year. You use this form to report your SSDI on your federal tax return. The form goes in Box 5, and you report it on line 5b of Form 1040 (the main federal income tax form).

If any of your SSDI is taxable, you report the taxable portion on line 5b as well. You calculate which portion is taxable using IRS Worksheet 1 or Worksheet 2 (depending on your situation) in the instructions for Form 1040. These worksheets walk you through the combined income calculation and the two-tier formula.

If you do not usually file taxes because your income is below the filing threshold, you may still need to file if you have SSDI that is taxable. The IRS considers SSDI when determining whether you must file, even if other income would not require it.

Frequently Asked Questions

Can I reduce my SSDI taxes by earning less money?

Yes. Since combined income determines whether SSDI is taxed, earning less wages or other income lowers your combined income and may bring you below the threshold. However, if you are working, reducing your earnings may affect your SSDI benefits under Social Security's work incentive rules, so check with Social Security before making changes to your work.

What if I owe taxes but cannot pay them all at once?

The IRS offers payment plans for people who cannot pay their full tax bill when ready. You can request a short-term extension (up to 180 days) or a long-term installment agreement. Contact the IRS or work with a tax professional to set up a plan.

Do I have to file taxes if my only income is SSDI?

If SSDI is your only income and it is below the filing threshold ($14,600 for single filers under 65 in 2024), you do not have to file. However, filing may be worth it if you are due a refund from taxes withheld or if you may have access to for the Earned Income Tax Credit or other refundable credits.

Does receiving SSDI affect my Medicare or Medicaid?

SSDI itself does not reduce Medicare or Medicaid benefits. However, if you have other income that is taxable, that income might affect your Medicaid in some states. Check with your state Medicaid office about how your specific income affects your coverage.

What if Social Security made an error on my SSA-1099?

Contact Social Security directly to report the error. You can call 1-800-772-1213 or visit your local Social Security office. Social Security will issue a corrected form if needed. Keep the corrected form with your tax records.