Are Taxes Taken Out of Social Security Disability?

Social Security Disability (SSD) benefits provide financial support to individuals unable to work due to a disability. These benefits aim to replace a portion of lost income. A common question among recipients is whether these benefits are subject to income tax.

Federal Taxation of Social Security Disability Benefits

Social Security Disability benefits can be subject to federal income tax. The taxability of these benefits depends on a recipient’s “provisional income,” a calculation used by the IRS. Provisional income includes your adjusted gross income (AGI), any non-taxable interest income, and one-half of your total Social Security benefits.

Social Security benefits are not subject to federal income tax if provisional income falls below certain thresholds. For single individuals, heads of household, or married individuals filing separately who lived apart all year, this threshold is $25,000. For married couples filing jointly, the threshold is $32,000.

If provisional income exceeds these initial amounts, a portion of the benefits may become taxable. Up to 50% of your Social Security benefits may be taxable if your provisional income is between $25,000 and $34,000 for single filers. For those married filing jointly, up to 50% of benefits are taxable if provisional income is between $32,000 and $44,000.

When provisional income surpasses the second, higher threshold, an even larger portion of benefits becomes taxable. If a single filer’s provisional income exceeds $34,000, or a married couple filing jointly has provisional income over $44,000, up to 85% of their Social Security benefits may be subject to federal income tax. The specific tax rate applied to the taxable portion of benefits corresponds to your overall personal income tax rate, not the 50% or 85% inclusion rate.

State Taxation of Social Security Disability Benefits

State income tax rules for Social Security Disability benefits vary across the U.S. Many states do not tax Social Security benefits, providing a full exemption.

A smaller number of states do tax Social Security benefits. For 2025, nine states tax Social Security benefits: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia. Within these states, the tax treatment is not uniform, with some offering exemptions or deductions based on income, age, or a combination.

For example, some states may fully exempt benefits for lower-income individuals or those over a certain age, while taxing benefits for higher-income recipients. West Virginia is phasing out its tax on Social Security benefits, with 65% deductible in 2025, leading to complete elimination by 2026. Recipients should consult their state’s tax agency for accurate information, as state laws can change and include specific income thresholds or age-based exemptions.

Reporting Social Security Disability Benefits

When Social Security Disability benefits are subject to taxation, they must be reported on your federal income tax return. Each January, the Social Security Administration (SSA) issues Form SSA-1099, “Social Security Benefit Statement,” to all beneficiaries. This form details total benefits received, any amounts repaid, or federal income tax withheld.

The net amount of benefits paid is found in Box 5 of the SSA-1099 form. This information is used to complete IRS Form 1040, U.S. Individual Income Tax Return. Total Social Security benefits received are reported on line 6a of Form 1040, and the taxable portion, if any, is entered on line 6b.

If you anticipate a significant portion of your Social Security benefits will be taxable, consider making estimated tax payments throughout the year to avoid underpayment penalties. Alternatively, you can request federal income tax be voluntarily withheld from your monthly Social Security payments by submitting Form W-4V, Voluntary Withholding Request, to the SSA. This approach helps manage your tax liability and prevent a large tax bill at year-end.