You may have to file taxes on SSDI, depending on your total income and filing status

Whether you file taxes on Social Security Disability Insurance depends on how much money you receive from all sources combined, not on SSDI alone. The Internal Revenue Service (IRS) uses a formula called combined income to decide if your SSDI is taxable. Combined income includes your SSDI benefits plus half of those benefits plus any other income—wages, interest, pensions, or other benefits.

If your combined income exceeds a threshold that depends on your filing status, a portion of your SSDI becomes subject to federal income tax. For 2024, those thresholds are $25,000 for single filers and $32,000 for married couples filing jointly. These thresholds have not changed since 1984 and do not adjust for inflation each year.

Many people on SSDI have little or no other income and fall below these thresholds, so they owe no federal tax on their benefits. But if you work part-time, receive a pension, have investment income, or are married to someone with earnings, you may cross the threshold and owe tax on a portion of your SSDI.

Key Takeaways

  • You calculate combined income by adding your SSDI benefits, half your SSDI benefits, and all other income; if this total exceeds $25,000 (single) or $32,000 (married filing jointly), some of your SSDI is taxable.
  • Up to 85 percent of your SSDI can be taxed, but only if your combined income is high enough; most people on SSDI pay no federal tax on their benefits.
  • You must file a federal tax return if your gross income (including taxable SSDI) meets the IRS threshold for your age and filing status, even if no tax is owed.
  • State income tax rules vary; some states tax SSDI and some do not, regardless of federal rules.
  • The Social Security Administration sends Form SSA-1099 each January showing how much SSDI you received; use this to calculate your tax liability.

How the IRS calculates whether your SSDI is taxable

The IRS uses a two-tier system. In the first tier, if your combined income is between the base threshold ($25,000 single / $32,000 married) and $34,000 (single) or $44,000 (married), up to 50 percent of your SSDI becomes taxable. In the second tier, if your combined income exceeds those upper amounts, up to 85 percent of your SSDI becomes taxable.

The math is specific. You take the amount by which your combined income exceeds the base threshold, multiply it by 0.50, and that is how much SSDI is taxable in tier one. If you also cross into tier two, you add 85 percent of the amount over the tier-two threshold. The total taxable SSDI cannot exceed 85 percent of your total SSDI for the year.

Example: A single person receives $15,000 in SSDI and earns $12,000 from part-time work. Combined income is $15,000 + $7,500 (half of SSDI) + $12,000 = $34,500. This exceeds $25,000 by $9,500. Fifty percent of $9,500 is $4,750, so $4,750 of the SSDI is taxable. The person's gross income for tax purposes is $12,000 (wages) + $4,750 (taxable SSDI) = $16,750.

When you must file a federal tax return

You must file a federal tax return if your gross income meets the threshold for your age and filing status, even if you owe no tax. For 2024, a single person under 65 must file if gross income is $14,600 or more. A single person 65 or older must file if gross income is $18,150 or more. Married couples filing jointly have higher thresholds.

Gross income includes taxable SSDI plus all other income. If you are below the threshold, filing is optional, but you may still want to file to claim a refundable tax credit like the Earned Income Tax Credit (EITC) if you have work income.

You will receive Form SSA-1099 from the Social Security Administration by January 31 each year. This form shows the total SSDI you received. Use this amount, plus any other income, to determine whether you must file and to calculate your taxable SSDI using the IRS formula.

State income tax on SSDI

Federal rules do not bind state tax authorities. Some states do not tax SSDI at all, regardless of your income level. Other states follow the federal formula. A few states tax SSDI but offer a deduction or exemption that reduces or eliminates the tax.

States that do not tax SSDI include California, Florida, Illinois, Louisiana, Mississippi, New York, North Carolina, Ohio, Pennsylvania, and Texas. However, state tax law changes, so confirm the current rule for your state by checking your state revenue department's website or asking a tax preparer familiar with your state.

If you live in a state that does tax SSDI, you may still owe no state tax if your income is below your state's threshold, which may differ from the federal threshold. Some states also allow you to exclude a portion of SSDI from taxable income based on age or disability status.

How SSDI interacts with other income sources

Wages from work count as income in the combined income formula and can push you over the threshold. If you are under full retirement age and working, you also face the Social Security earnings test, which reduces your SSDI if you earn above a limit ($23,400 in 2024). The earnings test and tax rules are separate; you can owe tax on SSDI even if the earnings test reduces your payment.

Pension income, including from a government job, counts toward combined income. So does interest, dividends, capital gains, and distributions from retirement accounts. Supplemental Security Income (SSI) does not count toward combined income because SSI is not taxable, but if you receive both SSDI and SSI, you calculate combined income using only the SSDI portion.

If you are married and file jointly, your spouse's income counts toward combined income even if your spouse does not receive SSDI. This can push a couple over the threshold when a single person would not be. Married couples filing separately face a harsher rule: if you file separately and lived with your spouse at any time during the year, all of your SSDI is taxable.

Tax withholding and estimated payments

The Social Security Administration does not withhold federal income tax from SSDI payments automatically. You can request voluntary withholding by completing Form W-4V and submitting it to Social Security, but most people do not. If you owe tax on your SSDI, you will owe it when you file your return.

If you expect to owe a large amount of tax, you may need to make quarterly estimated tax payments to the IRS to avoid penalties. Estimated payments are due April 15, June 15, September 15, and January 15. If your only income is SSDI and you owe a small amount, the IRS may waive the penalty if you file your return and pay by the important date.

Requesting withholding is simpler than making quarterly payments. You can have Social Security withhold 10, 15, 25, or 35 percent of your SSDI payment each month. This money goes to the IRS as a prepayment of your tax liability, and you claim it when you file your return.

Common mistakes and how to avoid them

A frequent error is assuming that because SSDI is a benefit, none of it is taxable. In reality, the IRS taxes SSDI the same way it taxes Social Security retirement benefits. Another mistake is forgetting to include half of your SSDI in the combined income calculation; many people add only their other income and conclude they are below the threshold when they are not.

Some people also overlook small income sources. Interest from a savings account, a small pension, or a part-time job that lasted only a few months all count. If you are unsure whether an income source counts, include it in your calculation to be safe.

If you have not filed taxes in prior years and owe back taxes on SSDI, the IRS can pursue collection, including offsetting your SSDI payment. If you believe you owe back taxes, contact the IRS or a tax professional to discuss a payment plan or other resolution before the IRS initiates collection.

Frequently Asked Questions

Can I request that Social Security withhold taxes from my SSDI payment?

Yes. Complete Form W-4V, select the withholding percentage (10, 15, 25, or 35 percent), and submit it to your local Social Security office or online through your my Social Security account. Withholding begins the month after Social Security receives your request.

What if I owe taxes on SSDI but cannot pay in full?

You can set up a payment plan with the IRS by calling 1-800-829-1040 or filing Form 9465 with your tax return. The IRS also offers an online payment agreement tool. If you cannot pay at all, you may may have access to for Currently Not Collectible status, which pauses collection temporarily while you remain on SSDI.

Do I have to report my SSDI on my tax return if I do not owe tax?

If your combined income is below the threshold, you do not have to file a return and do not report SSDI. If your combined income is above the threshold but you still owe no tax (because your standard deduction is high enough), you must still file and report the taxable portion of your SSDI.

If I am married and my spouse works, do I have to file jointly?

No, but filing separately may result in more of your SSDI being taxable. If you file separately and lived with your spouse during the year, all of your SSDI is taxable. Filing jointly usually results in a lower tax liability when one spouse receives SSDI and the other works.

Does the earnings test affect how much of my SSDI is taxable?

No. The earnings test reduces your SSDI payment if you work and earn above the limit, but the reduced payment is still included in the combined income formula. You can owe tax on SSDI even if the earnings test has reduced your benefit for the month.