Most people on SSDI pay no state income tax on their benefits
Social Security Disability Insurance (SSDI) is not taxable income under federal law, and most states do not tax it either. However, a small number of states tax SSDI as income, and a few others tax it only under specific circumstances. Whether you owe state tax depends entirely on which state you live in, not on your income level or how much SSDI you receive.
The federal government treats SSDI differently from regular wages. When you file your federal tax return, you do not report SSDI as taxable income. Some states follow the federal rule exactly. Others have their own tax codes that treat SSDI separately, and a handful tax it like any other income.
If you moved to a new state after you started receiving SSDI, your tax obligation may have changed. If you are unsure whether your state taxes SSDI, contact your state tax authority directly—they can tell you in one call whether you owe anything.
Key Takeaways
- Thirty-seven states do not tax SSDI benefits at all, and the federal government does not tax them either.
- Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Hampshire, Rhode Island, Utah, and Vermont tax SSDI as regular income.
- Illinois taxes SSDI only if your total income (including SSDI) exceeds a threshold set by state law, which changes yearly.
- Your state tax obligation does not depend on how much SSDI you receive—it depends on whether your state has chosen to tax it.
- You can find your state's rule by calling your state department of revenue or checking their website for "SSDI" or "Social Security disability".
Which states tax SSDI and which do not
Eleven states tax SSDI as ordinary income with no exceptions: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Hampshire, Rhode Island, Utah, and Vermont. If you live in one of these states and receive SSDI, you will owe state income tax on those benefits the same way you would on wages.
Illinois has a different rule. It taxes SSDI only if your total income—including SSDI, wages, pensions, and other sources—exceeds a threshold. That threshold is set by state law and changes each year. For tax year 2024, you would owe Illinois tax on SSDI only if your total income was above the limit. Check the Illinois Department of Revenue website or call them to learn the current threshold for your filing year.
The remaining 38 states do not tax SSDI. This includes large states like California, Florida, New York, and Texas. If you live in any other state, you owe no state income tax on your SSDI benefits.
How to find out what your state requires
The fastest way to know whether you owe state tax on SSDI is to contact your state's department of revenue directly. Most states have a phone line and a website. Search online for "[your state] department of revenue" or "[your state] tax authority" and look for a phone number or a search box on their site.
When you call or email, ask: "Does [state name] tax Social Security Disability Insurance benefits?" Be specific about SSDI—some states tax Social Security retirement benefits differently than they tax SSDI. Write down the answer and ask whether there are any income thresholds or exceptions. If the person on the phone gives you a rule, ask them to confirm it in writing or direct you to the page on their website that explains it.
If you have already filed a state return and reported SSDI as income when you did not owe tax, or failed to report it when you did, contact your state tax authority to ask about amending your return. Most states allow you to file an amended return for prior years, though the number of years you can go back varies by state.
What to do if you live in a state that taxes SSDI
If your state taxes SSDI, you will report it on your state income tax return the same way you report other income. The amount you owe depends on your total income and your state's tax brackets and rates, not on the SSDI amount alone.
You will receive a Social Security Benefit Statement (Form SSA-1099) each January from the Social Security Administration. This form shows how much SSDI you received in the prior year. Use this amount when you fill out your state return. Keep a copy for your records.
If you also have other income—from work, a pension, or investments—add that to your SSDI when you calculate your total income for your state return. Your state tax liability is based on the total, not on SSDI alone. Some people on SSDI also work part-time; in that case, you will report both your wages and your SSDI on your state return.
Federal tax treatment of SSDI (and why it matters for state taxes)
The federal government does not tax SSDI benefits. When you file your federal Form 1040, you do not include SSDI as income. This is different from Social Security retirement benefits, which can be partially taxable if your total income is high enough.
Some states have written their tax codes to follow the federal rule exactly—if it is not taxable federally, it is not taxable in the state. Other states have written their own rules that treat SSDI differently. A state's decision to tax SSDI is a state choice, not a federal requirement.
This matters because it means you cannot assume your state follows the federal rule. You have to check your specific state's law. Two people receiving the same SSDI amount in different states may owe very different amounts of state tax.
What happens if you move to a different state
If you moved from a state that does not tax SSDI to one that does, your tax obligation changes when ready. You become a resident of the new state on the day you move, and you owe tax under that state's rules from that point forward.
For the year you move, you may owe tax to both states for part of the year. This is called a part-year resident return. You will report income earned or received while you lived in each state on the appropriate state return. Contact both your old state and your new state's tax authority to learn how to file. Most states have instructions for part-year residents on their websites.
If you moved from a state that taxes SSDI to one that does not, you will not owe tax on SSDI in your new state going forward. However, you may still owe tax to your old state for the part of the year you lived there.
Frequently Asked Questions
Do I have to file a state tax return if I only receive SSDI?
That depends on your state and your total income. In states that do not tax SSDI, you generally do not have to file a state return if SSDI is your only income. In states that do tax SSDI, you must file a return and report it. Some states have a minimum income threshold below which you do not have to file. Call your state tax authority to learn the filing requirement for your situation.
Will I owe state tax if I also have a part-time job?
Yes, if you live in a state that taxes SSDI. You will report both your wages and your SSDI on your state return, and you will owe tax based on your total income. The amount of tax depends on your state's tax brackets and rates. If you live in a state that does not tax SSDI, you will owe tax only on your wages, not on the SSDI portion.
Can I deduct SSDI from my state taxes?
No. SSDI is not deductible on any state tax return. In states that tax SSDI, you report it as income and pay tax on it. In states that do not tax SSDI, you do not report it at all. There is no deduction or credit that reduces the amount of SSDI you report.
What if I disagree with my state's decision to tax my SSDI?
You can file a protest or appeal with your state tax authority if you believe you were assessed incorrectly. Contact your state's tax authority to learn the process and important date for filing an appeal. You may also want to speak with a tax professional or legal aid organization in your state, especially if the amount owed is large.
Does the federal government ever tax SSDI?
No. The federal government does not tax SSDI benefits under any circumstances. This is different from Social Security retirement benefits, which can be partially taxable if your total income exceeds certain thresholds. SSDI is always tax-free at the federal level.