New York does not tax SSDI benefits, even if your federal return does

If you live in New York and receive Social Security Disability Insurance (SSDI), the state will not tax those benefits as income. This is true regardless of how much you earn from work or other sources, and regardless of whether you owe federal income tax on part of your SSDI.

New York treats SSDI the same way it treats regular Social Security retirement benefits — both are excluded from state taxable income. This means you will not report your SSDI on your New York State tax return, even if you file one.

The federal government may tax part of your SSDI depending on your total income, but New York will not. If you are unsure whether you owe federal tax on your benefits, that is a separate question from what New York requires.

Key Takeaways

  • New York State does not tax SSDI benefits under any circumstances.
  • You do not report SSDI income on your New York State tax return.
  • Federal tax on SSDI is separate from New York State tax, and the two follow different rules.
  • If you work while receiving SSDI, New York taxes only your wages, not your benefits.
  • Supplemental Security Income (SSI) is also not taxed by New York, though it is a different program from SSDI.

The difference between federal and state tax on SSDI

The federal government taxes SSDI based on your "combined income" — a formula that adds your adjusted gross income, tax-exempt interest, and half of your SSDI benefits. If that total exceeds a threshold (currently $25,000 for a single filer or $32,000 for married filing jointly), you may owe federal tax on up to 85 percent of your benefits.

New York State has its own tax code and chose not to tax SSDI at all. This means you could owe federal tax on your benefits while owing nothing to New York. The two tax systems do not speak to each other — you calculate them separately on separate forms.

When you file your federal return, you will report your SSDI on Form 1040 and calculate whether any is taxable. When you file a New York State return (if you must), you will not include SSDI as income at all.

When you must file a New York State tax return

You must file a New York State return if your income exceeds the state filing threshold for your age and filing status. However, SSDI does not count toward that threshold — only other income does.

For example, if you are single and under 65, you must file if your income from wages, self-employment, or other non-SSDI sources is $4,800 or more (as of 2024; this amount changes yearly). If you earn $3,000 from part-time work and receive $2,000 in SSDI, only the $3,000 counts. You would not be required to file a New York return based on those numbers.

Even if you do not have to file, you may want to file anyway if you paid New York State income tax through withholding and are owed a refund. SSDI is never withheld, so this would explore only to income from work.

SSDI and New York State tax credits

Because SSDI is not taxable in New York, it does not reduce your ability to claim certain state tax credits. For instance, if you are may be able to access for the Earned Income Tax Credit (EITC) based on wages you earned, your SSDI will not count against the income limits for that credit.

The same applies to other New York credits tied to income, such as the Child and Dependent Care Credit or the Empire State Child Tax Credit. SSDI is invisible to these calculations — only your other income matters.

If you are unsure whether a particular credit applies to you, the New York Department of Taxation and Finance website lists the income thresholds for each one. You can check whether your non-SSDI income falls within the range.

What to do if you receive both SSDI and SSI

Some people receive both SSDI and Supplemental Security Income (SSI) — a different federal program for people with low income and limited resources. New York taxes neither program.

SSI is also excluded from New York State taxable income, so if you receive both, neither amount appears on your state return. This is true even though SSI and SSDI are administered by the same agency (Social Security Administration) and sometimes appear on the same payment stub.

On your federal return, SSI is treated differently from SSDI — SSI is never taxable at the federal level, while SSDI may be. But at the state level, New York does not distinguish between them.

Reporting SSDI on your New York return

If you file a New York State return, you will not see a line for SSDI income. The return asks for wages, self-employment income, interest, dividends, and other sources — but not Social Security or SSDI.

If you use tax software to file, the program may ask whether you received Social Security or SSDI. Answer yes if you did, but the software will not add it to your New York taxable income. It may use that information only to calculate your federal return.

If you file by hand using the paper forms, straightforward skip any sections about Social Security income. New York's instructions do not ask for it because it is not taxed.

If you move to or from New York

If you move out of New York, your SSDI tax treatment depends on your new state. Some states, like Pennsylvania and Illinois, also do not tax SSDI. Others tax it the same way the federal government does. A few have their own rules that fall in between.

If you move into New York from another state, you do not owe back taxes to New York on SSDI you received before you arrived. New York taxes only income earned or received while you are a resident.

When you move, update your address with Social Security so your 1099-SSA form (which reports your annual SSDI) goes to the correct state. This does not change your tax obligation, but it helps may support your records are accurate.

Frequently Asked Questions

Do I have to file a New York State return if I only receive SSDI?

No. SSDI does not count toward New York's income filing threshold, so if SSDI is your only income, you do not have to file a state return. You may still want to file a federal return if you owe federal tax on your benefits or if you are owed a refund.

Will New York tax my SSDI if I work part-time?

No. New York will not tax your SSDI under any circumstances. It will tax your wages from the part-time job, but not your benefits. You may have to file a state return if your wages exceed the filing threshold, but the SSDI portion is never taxed.

What if I owe federal tax on my SSDI but live in New York?

You will owe the federal tax but not the New York State tax. File your federal return reporting the taxable portion of your SSDI, and file your New York return (if required) without reporting SSDI as income. The two returns follow different rules.

Does New York tax SSI the same way it taxes SSDI?

Yes. New York does not tax SSI either. If you receive both programs, neither amount is taxable in New York. However, SSI is never taxable at the federal level, while SSDI may be, so your federal return will treat them differently.

Where can I find New York's current income filing threshold?

The New York Department of Taxation and Finance publishes filing thresholds each year on its website. The threshold depends on your age and filing status and changes annually. Check the current year's instructions before deciding whether you must file.