You may owe federal income tax on your SSDI benefits, but most recipients do not

Whether you file taxes on your Social Security Disability Insurance (SSDI) depends on your total income for the year, not on SSDI alone. The Social Security Administration does not withhold taxes automatically from SSDI payments. You decide each year whether to file a return based on your other income — wages, interest, pensions, or other benefits.

The threshold that triggers a tax filing requirement is low. For 2024, if you are single and have any income beyond your SSDI, you may owe taxes. If you are married filing jointly, the threshold is higher. The exact amount depends on whether you have earned income (wages) or unearned income (interest, dividends, other benefits), and whether you are over 65.

The IRS uses a formula called the "combined income" test to determine whether part of your SSDI is taxable. Combined income is your adjusted gross income plus nontaxable interest plus half of your SSDI benefits. If that total exceeds a certain threshold — $25,000 for single filers, $32,000 for married filing jointly — some of your SSDI becomes subject to federal income tax.

Key Takeaways

  • SSDI is not automatically taxable, but it becomes taxable if your combined income (other earnings plus half your SSDI) exceeds $25,000 (single) or $32,000 (married filing jointly).
  • Social Security does not withhold taxes from SSDI payments, so you must decide whether to file a return or request voluntary withholding.
  • You receive a Form SSA-1099-SM each January showing your total SSDI for the prior year, which you use to calculate whether any is taxable.
  • If you owe taxes on SSDI, you can request that Social Security withhold a percentage from your monthly payment to cover the liability.
  • State income tax rules vary; some states do not tax SSDI at all, while others follow federal rules.

How the combined income test works

The combined income formula is the key to understanding whether you owe federal tax on SSDI. Start with your adjusted gross income (AGI) — this is your total income minus certain deductions. Add to that any nontaxable interest you earned (such as interest from municipal bonds). Then add half of your SSDI benefits for the year.

If that combined total is below $25,000 (or $32,000 if married filing jointly), none of your SSDI is taxable. If it exceeds that threshold, up to 85 percent of your SSDI may be subject to federal income tax, depending on how far over the threshold you go.

Example: You are single and received $15,000 in SSDI for the year. You also earned $12,000 in wages. Your combined income is $12,000 (wages) plus $7,500 (half of SSDI) = $19,500. This is below $25,000, so none of your SSDI is taxable. You would owe tax only on the $12,000 in wages.

Another example: You are single and received $15,000 in SSDI. You earned $12,000 in wages and received $5,000 in pension income. Your combined income is $12,000 + $5,000 + $7,500 = $24,500. Still below $25,000, so no SSDI is taxable.

What form you receive and when

Each January, Social Security mails you a Form SSA-1099-SM (or provides it online through your My Social Security account). This form shows the total SSDI you received in the prior calendar year. You use this amount to calculate your combined income and determine whether any SSDI is taxable.

The form arrives by January 31 so you have time to gather it before filing your return. If you do not receive it by early February, you can request a replacement copy by calling Social Security at 1-800-772-1213 or by visiting your local Social Security office.

Keep this form with your tax records. If the IRS questions your return, you will need to show that the SSDI amount came from Social Security, not from another source.

Requesting voluntary tax withholding from your SSDI payment

If you know you will owe taxes on your SSDI, you can ask Social Security to withhold a percentage of your monthly payment. This is voluntary — Social Security does not do it automatically. Withholding reduces the amount you receive each month but can prevent a large tax bill at filing time.

To request withholding, complete Form W-4V (Voluntary Withholding Request). You can submit it online through your My Social Security account, by mail, or in person at your local Social Security office. You choose the withholding rate: 7, 10, 15, or 22 percent of your monthly benefit.

Social Security will begin withholding the following month. If you want to change or stop withholding, submit a new Form W-4V. There is no penalty for changing your withholding rate during the year.

State income tax on SSDI

State tax treatment of SSDI varies widely. Some states do not tax SSDI at all. Others follow the federal combined income test. A few states tax SSDI differently — for example, taxing it only if your income exceeds a higher threshold, or exempting it entirely for recipients over a certain age.

Check your state's tax agency website or contact them directly to learn whether your state taxes SSDI. If you live in a state that does tax SSDI and you owe state tax, you can also request voluntary withholding for state taxes using Form W-4V. The withholding goes to your state, not to the federal government.

If you moved to a new state during the year, you may owe tax to both your old state and your new state, depending on when you moved and each state's rules. Your tax preparer or state tax agency can advise you on how to file.

Filing your return if you owe taxes on SSDI

If your combined income exceeds the threshold and some of your SSDI is taxable, you must report it on your federal tax return. Use Form 1040 or Form 1040-SR (for taxpayers 65 and older). You will also need Schedule 1 to report the taxable portion of your SSDI.

The IRS provides a worksheet in the instructions to Form 1040 to calculate how much of your SSDI is taxable. The calculation is complex if you have multiple income sources, so many people use tax software or hire a tax preparer to do it correctly.

You can file your return online using free tax software (IRS Free File, if you may have access to by income), by mail, or through a tax preparer. The important date is April 15 of the year following the tax year, though you can request an extension.

What happens if you do not file when you owe taxes

If you owe federal income tax and do not file a return, the IRS may eventually contact you. Penalties for late filing and late payment can add up quickly. If you owe a small amount, filing late is still better than not filing at all — the penalty for filing late is usually smaller than the penalty for not filing.

If you cannot pay the full amount you owe, you can still file your return and pay what you can. The IRS offers payment plans for amounts you cannot pay in full. Contact the IRS or work with a tax preparer to set up a plan.

If you have not filed returns for prior years and believe you may owe taxes, the IRS has a process for filing back returns. A tax preparer or the IRS Taxpayer Advocate Service can help you catch up.

Frequently Asked Questions

Do I have to file taxes if I only receive SSDI and no other income?

No. If SSDI is your only income for the year, you do not have to file a federal income tax return. Your combined income would be zero (or half your SSDI if you had nontaxable interest), which is below the $25,000 threshold. However, if you had taxes withheld from your SSDI, you should file to get a refund.

What if I earned wages and received SSDI in the same year?

You must count both toward your combined income. Add your wages plus half your SSDI. If the total exceeds $25,000 (single) or $32,000 (married filing jointly), part of your SSDI becomes taxable. You owe tax on both the wages and the taxable portion of SSDI.

Can I reduce my SSDI taxes by claiming dependents or deductions?

Yes. Deductions and credits reduce your adjusted gross income, which lowers your combined income and may reduce the amount of SSDI that is taxable. Standard deduction amounts vary by age and filing status. If you are 65 or older, your standard deduction is higher than for younger filers.

What if I disagree with the SSDI amount shown on my Form SSA-1099-SM?

Contact Social Security when ready. Call 1-800-772-1213 or visit your local office with your payment records. Social Security will investigate and issue a corrected form if there was an error. Do not file your tax return until you have confirmed the correct amount.

Do I owe taxes on Supplemental Security Income (SSI) instead of SSDI?

No. SSI is not taxable income, and you do not report it on your federal tax return. However, if you receive both SSDI and SSI, only the SSDI counts toward the combined income test. SSI remains nontaxable.