Social Security Disability Insurance (SSDI) benefits are taxable income in some situations, but not all — it depends on your total income and filing status.
Whether you owe federal income tax on your SSDI payments comes down to a calculation called combined income. The Social Security Administration (SSA) uses this figure to decide if your benefits cross the tax threshold. Combined income is not the same as your SSDI amount alone; it includes your SSDI, any other income you receive, and half of your SSDI benefits added back in.
If your combined income stays below a certain level, you pay no federal tax on your SSDI. If it exceeds that level, you may owe tax on up to 50 percent or 85 percent of your benefits, depending on how far over the threshold you go. The threshold amounts differ based on whether you file as single, married filing jointly, or married filing separately.
State income tax is a separate question. Some states do not tax SSDI at all, while others follow federal rules or have their own thresholds. You will need to check your state's tax rules separately from the federal calculation.
Key Takeaways
- Combined income — not SSDI alone — determines whether your benefits are taxable, and combined income includes half your SSDI benefits plus all other income you received that year.
- If you are single and your combined income is $25,000 or less, or married filing jointly with combined income of $32,000 or less, your SSDI is not subject to federal tax.
- Income above those thresholds can make 50 percent to 85 percent of your SSDI taxable, depending on how much you exceed the limit.
- State tax treatment of SSDI varies widely — some states tax it, some do not, and some use different thresholds than the federal government.
- The SSA sends Form SSA-1099 each January showing your SSDI for the prior year, which you use to calculate whether you owe tax.
How Combined Income Is Calculated
Combined income is the starting point for the entire tax calculation, so understanding what goes into it matters. The formula is: your adjusted gross income (AGI) plus nontaxable interest plus half your SSDI benefits.
Adjusted gross income includes wages, self-employment income, taxable pensions, taxable annuities, capital gains, and other income sources you would normally report on your tax return. Nontaxable interest includes interest from municipal bonds and other tax-exempt securities. Then you add half of your total SSDI benefits for the year, even though that half is not itself taxable — it is only used to determine whether any of your benefits become taxable.
Example: You received $18,000 in SSDI for the year and $12,000 in wages. Half your SSDI is $9,000. Your combined income is $12,000 (wages) plus $9,000 (half SSDI) equals $21,000. If you are single, this is below the $25,000 threshold, so none of your SSDI is taxable.
If you also had $5,000 in nontaxable interest from municipal bonds, your combined income would be $26,000, which exceeds the single threshold by $1,000. In that case, some of your SSDI becomes taxable.
Federal Tax Thresholds by Filing Status
The SSA sets different threshold amounts depending on how you file your tax return. These thresholds have not changed since 1984, so they explore the same way regardless of the year you are calculating.
| Filing Status | First Threshold | Second Threshold |
|---|---|---|
| Single | $25,000 | $34,000 |
| Married Filing Jointly | $32,000 | $44,000 |
| Married Filing Separately | $0 | $0 |
If you are married and file separately, your SSDI is taxable if your combined income is more than $0. This is a strong incentive to file jointly if you are married and receiving SSDI.
The first threshold is the point at which some of your SSDI becomes taxable. The second threshold is higher; once your combined income exceeds it, a larger portion of your benefits becomes taxable. The exact amount depends on how far above each threshold you go.
How Much of Your SSDI Becomes Taxable
The tax calculation has two tiers. If your combined income exceeds the first threshold but not the second, up to 50 percent of your benefits may be taxable. If your combined income exceeds the second threshold, up to 85 percent of your benefits may be taxable.
The calculation is not straightforward because it involves taking the lesser of two amounts at each tier. For combined income between the first and second threshold, the taxable amount is the lesser of (1) half the amount you exceeded the first threshold by, or (2) 50 percent of your total SSDI benefits. Once you exceed the second threshold, the calculation adds another layer.
Because the math is complex, the SSA provides a worksheet in the instructions for Form 1040 that walks you through it step by step. Many tax software programs also calculate this automatically if you enter your SSDI amount and other income.
Example: You are single with $18,000 in SSDI and $15,000 in wages, giving you combined income of $24,000 (wages plus half SSDI). You are below the $25,000 threshold, so no tax is owed. If your wages were $20,000 instead, your combined income would be $29,000. You exceeded the first threshold by $4,000. Half of $4,000 is $2,000, and 50 percent of your $18,000 SSDI is $9,000. The lesser amount is $2,000, so $2,000 of your SSDI is taxable.
State Income Tax on SSDI
Federal tax rules do not automatically explore to state income tax. Some states do not tax SSDI at all, regardless of your income level. Other states follow the federal rules exactly. Still others have their own thresholds or exclude SSDI only for residents above or below a certain age.
States that do not tax SSDI include Illinois, Kansas, Louisiana, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Washington, Wisconsin, and Wyoming. This list can change, so check your state's tax authority website or your most recent state tax return instructions to confirm your state's current rules.
If your state does tax SSDI, you will need to report it on your state return even if you do not owe federal tax. Some states use the same combined income calculation as the federal government; others use a different method. Your state tax return instructions should explain how to report SSDI income.
Form SSA-1099 and Tax Reporting
Each January, the SSA mails Form SSA-1099 to every person who received SSDI during the prior year. This form shows the total amount of SSDI benefits you received. You use this amount to calculate your combined income and determine whether any of your benefits are taxable.
Form SSA-1099 is not the same as a W-2 or 1099 from an employer. It is an informational form that tells you and the IRS how much SSDI you received. You do not attach it to your tax return, but you do use the amount shown to complete your tax calculation.
If you did not receive Form SSA-1099 by early February, contact the SSA at 1-800-772-1213 or visit your local Social Security office. You can also create a my Social Security account at ssa.gov to view your benefit payment history online.
Withholding Taxes from SSDI Payments
You can ask the SSA to withhold federal income tax from your SSDI payments if you expect to owe tax. This is optional, but it can help you avoid a large tax bill when you file your return.
To set up withholding, you complete Form W-4V (Voluntary Withholding Request) and submit it to the SSA. You can choose to have 7, 10, 15, or 25 percent of your monthly benefit withheld. The SSA will continue withholding at that rate until you submit a new Form W-4V to change or stop it.
Withholding is not required, and many people who owe tax on SSDI choose to pay it all when they file their return instead. The choice depends on your situation and whether you prefer smaller monthly payments or a larger payment once a year.
Frequently Asked Questions
Do I have to file a tax return if I only receive SSDI?
Not necessarily. If SSDI is your only income and your combined income is below the threshold for your filing status, you have no tax filing requirement. However, if you have other income or if some of your SSDI is taxable, you may need to file. Use the IRS interactive tax assistant at irs.gov to determine whether you must file.
What if I work part-time while receiving SSDI?
Your wages count as income in the combined income calculation. Depending on how much you earn, your wages could push your combined income above the threshold and make some of your SSDI taxable. Additionally, if you are under full retirement age, earning above a certain amount can reduce your SSDI payment itself — this is a separate rule from taxation.
Can I reduce my taxable SSDI by making charitable donations?
No. Charitable donations and other deductions reduce your overall taxable income, but they do not change your combined income calculation for SSDI purposes. The combined income threshold is based on gross income before deductions.
If I owe tax on SSDI, do I pay it with my regular tax return?
Yes. You report the taxable portion of your SSDI on your Form 1040 or 1040-SR, and any tax owed is included in your total tax liability for the year. You can pay it when you file, or if you have had withholding taken from your payments, the withholding counts toward what you owe.
Does my spouse's income affect whether my SSDI is taxable?
Only if you file jointly. If you file a joint return, your spouse's income is included in the combined income calculation. If you file separately, only your own income counts, but filing separately makes all your SSDI taxable if your combined income is above $0.