Most states do not tax SSDI, but a few do

Whether you owe state income tax on your Social Security Disability Insurance (SSDI) benefits depends on which state you live in. Most states—37 of them—do not tax SSDI at all. However, Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont do tax SSDI as income, though each state has different rules about how much of your benefit is actually taxed.

The federal government does not tax SSDI for most people. You only owe federal tax on SSDI if you have other income above a certain threshold, and even then, only a portion of your benefits may be taxed. State taxes work differently: some states follow the federal rule, while others treat SSDI like any other income.

If you live in a state that taxes SSDI, you may still owe nothing if your total income is below that state's threshold. Each state sets its own income limits, so what you owe in one state might be completely different from what you would owe in another.

Key Takeaways

  • Thirty-seven states do not tax SSDI benefits at all, regardless of how much you receive or what other income you have.
  • Eleven states—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont—tax SSDI as regular income, though each has different rules and thresholds.
  • Even in states that tax SSDI, you may owe nothing if your total income falls below your state's threshold.
  • Your state of residence is what matters, not where you worked or where you receive your benefits.

Which states tax SSDI and how much

The eleven states that tax SSDI do not all tax it the same way. Some treat it like wages, some offer partial exemptions, and some have income thresholds below which no tax is owed. Colorado, for example, taxes SSDI as income but allows a deduction. Connecticut taxes SSDI but only if your total income exceeds a certain level. Minnesota and Missouri both tax SSDI but offer exemptions or deductions for people over a certain age or with income below a threshold.

Kansas, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont also tax SSDI, each with its own rules about deductions, exemptions, or income limits. The amount you actually owe depends on your state's tax rate, your total income, and whether you may have access to for any exemptions or deductions your state offers.

If you move to a different state, your tax situation may change when ready. Someone who pays no state tax on SSDI in Florida might owe taxes on the same benefit amount in Minnesota. This is one reason to check your specific state's rules rather than assuming your tax situation will stay the same.

How to find out what your state requires

Your state's department of revenue or taxation website will have information about whether SSDI is taxed and what the rules are. You can search for "[your state] SSDI tax" or "[your state] disability income tax" to find the official page. Most state tax agencies publish guides specifically about how they treat Social Security and disability benefits.

If you file a state income tax return, the instructions that come with your return will tell you whether to include SSDI as income. If your state does not tax SSDI, the instructions will say so explicitly. If it does, they will explain which forms to use and what deductions or exemptions you might may have access to for.

You can also contact your state's tax department directly by phone or through their website. Many states have staff who can answer questions about whether you need to file a return or pay tax on your specific income situation. Having your SSDI amount and any other income ready when you call will help them give you a faster answer.

When you might owe tax even in a non-taxing state

Even if you live in a state that does not tax SSDI, you might still owe federal income tax. The federal government taxes SSDI only if you have other income—such as wages, self-employment income, interest, or pensions—that pushes your total above a threshold. For 2024, if you are single and your combined income (including half your SSDI) exceeds $25,000, you may owe federal tax on part of your benefits. For married couples filing jointly, the threshold is $32,000.

Combined income is calculated in a specific way: it is your adjusted gross income plus nontaxable interest plus half of your SSDI. If that total exceeds the threshold, you calculate how much of your SSDI is taxable using a formula the IRS provides. You do not owe tax on all of it—only on a portion, up to 85 percent of your benefits.

This federal tax applies regardless of which state you live in. A person in Florida with $30,000 in other income and $15,000 in SSDI would owe federal tax on part of the SSDI, even though Florida does not tax it. The state tax and federal tax are separate calculations.

What to do if you think you owe state tax

If you live in one of the eleven states that tax SSDI and you have received benefits, check whether you have been filing a state income tax return. If you have not filed and your income is above your state's threshold, you may need to file for past years. Each state has different rules about how far back you can go and whether penalties explore for late filing.

Contact your state's tax department or a tax professional who knows your state's rules. They can tell you whether you owe back taxes and what steps to take. Many states offer payment plans if you owe a large amount, and some offer relief programs for people with low income.

If you are currently receiving SSDI and live in a taxing state, you can adjust your withholding or make estimated tax payments to avoid owing a large amount at tax time. Some people have taxes withheld directly from their SSDI payment each month, which works the same way as withholding from a paycheck.

Federal tax withholding from your SSDI payment

You can ask Social Security to withhold federal income tax from your SSDI payment each month. This is optional—Social Security does not withhold automatically. To set up withholding, you fill out Form W-4V and send it to your local Social Security office or submit it online through your my Social Security account.

You choose what percentage to withhold: 7 percent, 10 percent, 15 percent, or 25 percent of your monthly benefit. This reduces the amount you receive each month but means you will owe less (or nothing) when you file your federal return. For people who know they will owe federal tax, withholding can prevent a large bill at tax time.

State tax withholding is not available through Social Security. If you live in a state that taxes SSDI and you want to withhold state tax, you will need to make estimated tax payments directly to your state or adjust your withholding if you have other income (such as wages) that is already being withheld.

Frequently Asked Questions

Does my SSDI count as income for Medicaid or other benefits?

Yes, SSDI counts as income for most means-tested programs like Medicaid, SNAP, and housing information. However, the rules vary by program and by state. Some programs count all of your SSDI; others exclude a portion or have higher income limits for people receiving disability. Contact the specific program to ask how they count your SSDI.

If I move to a different state, do I have to file taxes in both states?

No. You only file a state income tax return in the state where you live on December 31 of that tax year. If you moved during the year, you file in your new state for the full year. You do not file part-year returns in both states unless your old state requires it, which is rare.

Can I deduct my medical expenses from my SSDI income?

Medical expenses are deductible on your federal return only if they exceed a high threshold (7.5 percent of your adjusted gross income in 2024) and only if you itemize deductions rather than taking the standard deduction. Most people do not meet this threshold. State rules vary, so check your state's tax guide.

What if I receive both SSDI and SSI?

SSDI and SSI (Supplemental Security Income) are taxed differently. SSDI follows the rules described here. SSI is never taxed as income, either federally or by any state. If you receive both, only the SSDI portion is subject to tax.

Do I need to report my SSDI to my state even if I do not owe tax?

Most states that do not tax SSDI do not require you to report it on a tax return. However, if you file a return for any reason (to claim a refund, for example), you may need to report all income including SSDI. Check your state's tax return instructions or contact your state tax department to be sure.