The 2022 tax rules for SSDI were the same as they had been for decades

In 2022, Social Security Disability Insurance (SSDI) followed the same tax rules that have been in place since 1984. Whether your SSDI was taxable depended on your combined income — a calculation that includes your SSDI payments plus other income sources, plus half of your SSDI benefits themselves. If that combined income exceeded certain thresholds, you owed federal income tax on a portion of your benefits.

For 2022, those thresholds were $25,000 for single filers and $32,000 for married couples filing jointly. These dollar amounts have not changed since 1984, which means their real value has shrunk over time due to inflation. Many people who would never have been taxed on SSDI in the 1980s now find themselves owing tax because their other income or the threshold itself has not kept pace with the cost of living.

The tax calculation itself is complex and involves two separate formulas, each of which can tax a different portion of your benefits. Most people end up paying tax on 50 percent of their SSDI, but some pay tax on up to 85 percent. The IRS publishes a worksheet each year to help you figure out whether you owe tax and how much.

Key Takeaways

  • In 2022, SSDI was taxable if your combined income (SSDI plus other income plus half your SSDI) exceeded $25,000 for single filers or $32,000 for married couples filing jointly.
  • The tax thresholds have remained frozen at 1984 levels, so more people are affected by SSDI taxation now than in the past.
  • You may owe tax on 50 percent or up to 85 percent of your SSDI, depending on how much combined income you had.
  • The IRS provides a worksheet each year to calculate your taxable amount, and you can request a transcript of your SSDI earnings from the Social Security Administration to verify the amount reported to the IRS.

How the combined income calculation worked in 2022

The IRS does not straightforward add up your SSDI and other income. Instead, it uses a specific formula called combined income, which is your adjusted gross income plus nontaxable interest plus half of your SSDI benefits. This formula was designed to capture your total economic resources, not just your earned or reported income.

For example, if you received $15,000 in SSDI in 2022 and had $12,000 in other income (such as part-time work, pension, or interest), your combined income would be $12,000 plus half of $15,000, which equals $19,500. This is below the $25,000 threshold for single filers, so none of your SSDI would be taxable. But if you had $18,000 in other income instead, your combined income would be $25,500, which exceeds the threshold by $500, and some of your SSDI becomes taxable.

The threshold amounts themselves — $25,000 and $32,000 — have not changed since Congress set them in 1984. Because inflation has reduced the purchasing power of those dollars, more people cross the threshold now than would have in the 1980s, even if their real income has not increased.

The two-tier tax formula that applied in 2022

Once your combined income exceeded the threshold, the IRS used a two-step formula to determine how much of your SSDI was taxable. The first tier taxed up to 50 percent of your benefits. The second tier, which kicked in if your combined income was very high, could tax up to an additional 35 percent of your benefits, for a total of up to 85 percent.

In the first tier, you took the amount by which your combined income exceeded the threshold and multiplied it by 50 percent. That result was compared to 50 percent of your total SSDI benefits for the year. Whichever was smaller became the amount of SSDI taxable in the first tier. For most people, this was where the calculation stopped.

The second tier applied only if your combined income exceeded a higher threshold: $34,000 for single filers and $44,000 for married couples filing jointly in 2022. If you crossed that threshold, you calculated the excess over the second threshold, multiplied it by 85 percent, and added that to the amount from the first tier — up to a maximum of 85 percent of your total SSDI. This second tier was designed to capture people with very high incomes, but it also affected people with modest incomes if they had significant nontaxable interest or other sources of combined income.

Which types of income counted toward the threshold in 2022

Not all income counted the same way. Your adjusted gross income (AGI) was the starting point, which included wages, self-employment income, taxable interest, taxable dividends, capital gains, and taxable pensions or annuities. Nontaxable interest — such as interest from municipal bonds — also counted toward combined income, even though it was not taxable itself.

Some types of income did not count. Supplemental Security Income (SSI) did not count toward the SSDI tax threshold, because SSI and SSDI are separate programs with separate rules. Veterans' benefits, workers' compensation, and certain other government payments also did not count. If you were unsure whether a particular income source counted, the IRS worksheet or a tax professional could help you determine its status.

In 2022, many people with modest SSDI payments found themselves owing tax because they had other income sources they had not considered. A person receiving $1,200 per month in SSDI ($14,400 per year) plus $15,000 in part-time work income would have a combined income of $22,200 — still below the threshold. But the same person with $20,000 in part-time work income would have a combined income of $27,200, which exceeds the threshold by $2,200, and would owe tax on some portion of their SSDI.

How to report SSDI on your 2022 tax return

The Social Security Administration sent you a Form SSA-1099 in January 2023 showing the total SSDI you received in 2022. You reported this amount on your federal tax return using Form 1040 and the associated worksheets. The IRS worksheet (included in the Form 1040 instructions) walked you through the combined income calculation and told you how much of your SSDI was taxable.

You reported the taxable portion of your SSDI on line 5b of Form 1040 in 2022. The full amount of SSDI you received went on line 5a, and the taxable portion went on line 5b. If none of your SSDI was taxable, you left line 5b blank. Many people made mistakes on this calculation because the formula is not intuitive, and the IRS worksheet itself can be confusing if you have multiple income sources.

If you did not file a return because you thought your income was too low, you may have missed the fact that combined income — not just earned income — determines whether SSDI is taxable. Some people with very little earned income still owed tax because they had nontaxable interest or other combined income sources that pushed them over the threshold.

State taxes on SSDI in 2022

Federal tax rules and state tax rules are separate. In 2022, most states did not tax SSDI at all, but a few did. Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont all taxed SSDI in some form, though most had their own thresholds and formulas that differed from the federal rules.

Some states taxed SSDI only if your income exceeded a certain level, while others taxed it at a lower threshold than the federal government. A few states taxed SSDI the same way the federal government did. If you lived in one of these states in 2022, you may have owed state income tax on your SSDI even if you did not owe federal tax, or vice versa. Your state tax return instructions or a tax professional in your state could tell you the specific rules that applied to you.

Why the 2022 thresholds had not changed since 1984

Congress set the SSDI tax thresholds in 1984 as part of a broader Social Security reform. At that time, the thresholds were intended to tax only people with substantial other income. Over the following decades, inflation eroded the value of those dollar amounts, but Congress never adjusted them. This means that the thresholds have become increasingly strict over time, catching more people with modest incomes.

Advocates for people with disabilities have argued that the frozen thresholds are unfair and that Congress should index them to inflation, as it does with other parts of the Social Security program. However, as of 2022, no change had been made. This remains a point of ongoing debate in disability policy, because the current system can discourage people from working or earning other income, since doing so may push them over the threshold and trigger SSDI taxation.

Frequently Asked Questions

Did I have to file a tax return in 2022 if I only received SSDI?

Not necessarily. If SSDI was your only income, you did not have to file a return unless you had other income that required filing. However, if you had other income sources — even nontaxable interest — you may have owed tax on your SSDI and needed to file to report it. The IRS worksheet helped you determine whether you had a filing requirement.

What if I made a mistake on my 2022 SSDI tax calculation?

You could file an amended return using Form 1040-X. If the IRS had already assessed tax based on your original return, an amended return could result in a refund. The statute of limitations for amending a return is generally three years from the original filing date, so you had until early 2026 to amend your 2022 return.

Does working part-time affect whether my SSDI is taxable?

Yes. Part-time work income counts toward your combined income, which determines whether your SSDI is taxable. The more you earn, the more likely you are to exceed the threshold and owe tax on your SSDI. This is one reason some people on SSDI are cautious about increasing their work hours.

Can I request a transcript showing how much SSDI the Social Security Administration reported to the IRS?

Yes. You can request a Form SSA-1099 transcript from the Social Security Administration to verify the amount they reported. You can also request an IRS tax transcript showing what the IRS received. Comparing these documents can help you spot errors if you believe the amount reported was incorrect.