Is Social Security Disability Taxable?

Many people receiving Social Security Disability Insurance (SSDI) don’t need to pay any income tax on their benefits. If your only source of income is SSDI, you won’t pay tax on it even if you earned the highest possible benefit. You’ll also never owe tax on Supplemental Security Income (SSI).

However, you may have to pay tax on up to 85% of your SSDI if you earned money from other sources and your total income was above a certain amount. In some cases, your spouse’s income may be enough to push you over the threshold so that you pay tax on your SSDI.

We’ll explain when and where you may owe tax on your Social Security disability checks, plus how to avoid a big bill come tax season.

Is SSDI taxable?

SSDI is taxable income on your federal taxes, but only if the value of your SSDI benefits plus your other income is worth more than a certain amount. Even then, you only owe tax on some of your SSDI payments.

If your only source of income is SSDI, your income will be below the threshold and you won’t have to pay any federal income tax on your SSDI benefits.

The IRS calls the income level at which you do have to start paying tax your “base amount” and it varies by filing status. 

Again, if your income is below the threshold, you won’t pay any federal income tax on your SSDI.

Related article: 15 Tax Credits and Deductions for People With Disabilities

How much of my SSDI is taxable?

If your total income is above $32,000 for a married couple or $25,000 for single filers and everyone else, you’ll pay tax on up to 85% of your SSDI benefits. Exactly how much you pay depends on your income. But even if your income is way above the threshold, not all of your disability benefits are taxable.

What’s my total income?

The IRS determines your total income by taking half of your annual SSDI payments and adding all of your other income for the year. If you’re filing jointly, you need to consider income for you and your spouse.

Total income = ½ of annual SSDI + all other annual income

Income threshold for tax on SSDI

What counts as other income?

In addition to half of your SSDI benefits, the IRS considers all other income you earned, such as W-2 income, wages from a part-time job, investment gains, stock dividends, bank interest, retirement income from a 401(k) or traditional IRA, and tax-exempt interest.

If you’re filing a joint return, the IRS includes your spouse’s income in the calculation, even if they didn’t receive SSDI or Social Security benefits.

To learn more about what counts as income, see the IRS instructions for Form 1040.

Is SSI taxable?

No, your SSI payments aren’t taxable for federal or state taxes, even if you receive SSDI and SSI at the same time.

Is Social Security disability back pay taxable?

Yes, your back pay benefits are taxed the same as the rest of your disability pay. For SSDI, you’ll owe income tax on back pay the same way as your monthly checks. SSI back pay isn’t taxable because SSI isn’t taxable.

Do I have to pay state taxes on disability?

Most states don’t tax SSDI benefits, but 12 states do and most of them use a different calculation to find how much of your SSDI is taxed. SSI is not taxable at the state level.

Here are the 12 states that tax some of all of your SSDI payments:

• Colorado

• Connecticut

• Kansas

• Minnesota

• Missouri

• Montana

• Nebraska

• New Mexico

• Rhode Island

• Utah

• Vermont

• West Virginia

Of the states that do tax SSDI, only two — Minnesota and Montana — use the same system as the IRS to determine how much of your benefits are taxable. Some states use a similar calculation but offer other deductions and credits to help decrease your tax bill. Other states use their own system entirely and you may not owe tax unless your income is above $75,000.

Check with your state’s tax department to understand how much tax you could owe. Keep in mind that your state probably doesn’t have a separate policy for disability benefits and will tax your SSDI the same way it taxes Social Security retirement benefits.

How to avoid a big tax bill on SSDI

If your income meets the taxable threshold and you’re concerned about owing a large tax bill, you can request for the Social Security Administration (SSA) to withhold some money from each of your monthly checks. That withholding will go to the IRS to pay your taxes.

Another option is to make quarterly estimated tax payments to the IRS or to your state’s tax department.

Talk to a tax professional for more information on when and how much you should withhold from your SSDI benefits.

Where to get help applying for SSDI or SSI

If you’re in the process of applying for SSDI, you can get help by working with a disability lawyer. It may seem strange to involve a lawyer, but the application is long and most applicants either get denied and need to go through multiple rounds of appeals. A lawyer can help you navigate the complicated process and offer advice on how to boost your odds of approval.

Disability lawyers also don’t charge anything up front and you only have to pay them if you actually win benefits.

For help finding a lawyer or to see if a lawyer could help your claim, start with our 2-minute SSDI eligibility quiz. Our team will reach out to learn more and match you with an experienced attorney from our network. Getting matched is free, you don’t need to work with our lawyers if you don’t want to, and you never pay anything until after you win benefits.

FAQs about Social Security disability and taxes

Do I have to file taxes on SSDI?

For 2023 taxes, you generally don’t need to file a federal tax return if your income is below the standard deduction — $27,700 for married couples and $13,850 for single filers. Otherwise you may need to file and you may need to pay tax on your SSDI benefits. You may want to file even if you don’t need to in order to claim certain tax credits.

Is Social Security disability income taxable by the IRS?

Yes, Social Security disability income is taxable if your total income exceeds $32,000 if you’re married filing jointly or $25,000 if filing as single or with another filing status. How much tax you pay depends on your income, but up to 85% of your SSDI benefits could be taxable.

How do I know if my SSDI is taxable?

Some of your SSDI is taxable if your total income (half of your SSDI plus all other income) is more than $25,000 for single filers or $32,000 for joint filers. If your income is below those thresholds, you won’t pay tax on SSDI. If your only income source is SSDI, you won’t pay tax on it.

Are Social Security benefits considered earned income?

Yes, Social Security benefits (including SSDI) are earned income according to the IRS and you’ll need to pay tax on them if you earn above a certain amount. Similarly, SSDI benefits count as income for SSI. (See what else counts as SSI income.)

Will SSDI recipients get the child tax credit in 2023?

SSDI recipients can receive the child tax credit (CTC) as long as they have a qualifying child and meet the income requirements — 2023 income of $400,000 or less for married couples and $200,000 or less for other filers. For more, see the IRS’ child tax credit guide.