Is My Social Security Disability Taxable?

Social Security Disability Insurance, or SSDI, provides a source of income to individuals who are unable to work due to a disability. Whether these benefits are subject to federal income tax depends on the total amount of income you and your family receive from other sources. For many people who rely solely on SSDI, their benefits will not be taxed. However, if you have additional income, a portion of your benefits may become taxable.

Determining if Your SSDI is Taxable

To determine if your disability benefits are taxable, the Internal Revenue Service (IRS) uses a specific calculation for your “combined income.” The formula is your Adjusted Gross Income (AGI), plus any nontaxable interest you may have, plus one-half of your total Social Security benefits for the year. Your AGI includes all other income such as wages, dividends, and pensions.

The taxability of your benefits hinges on how your combined income compares to thresholds set by the federal government. For those filing as single, head of household, or a qualifying surviving spouse, the base amount is $25,000. For individuals who are married and filing a joint return, the base amount is $32,000. If your combined income is below this base for your filing status, your SSDI benefits are not taxable.

If your combined income falls within a certain range, up to 50% of your benefits may be taxable. For an individual, this range is between $25,000 and $34,000. For those married filing jointly, the range is between $32,000 and $44,000. Should your combined income exceed these upper limits, up to 85% of your SSDI benefits could be subject to income tax. It is important to distinguish SSDI from Supplemental Security Income (SSI), as SSI payments are never considered taxable income.

Calculating Your Taxable SSDI Amount

Once you determine that a portion of your benefits is taxable, you must calculate the specific amount. The taxable portion of your benefits will be the lesser of two amounts: either 50% (or 85%) of your benefits, or 50% (or 85%) of the amount by which your combined income exceeds the base threshold.

Consider a single individual who receives $16,000 in SSDI benefits and has $20,000 in other income. Their combined income would be $28,000 ($20,000 AGI + $8,000 half of SSDI). Since $28,000 is in the 50% taxable range for a single filer, the taxable amount is calculated. The lesser of 50% of the benefits ($8,000) or 50% of the income over the $25,000 base ($1,500) is the taxable portion, which is $1,500.

Lump-Sum Payments

Receiving a lump-sum payment for past-due SSDI benefits can push your income over the tax thresholds for a single year. This could create a tax liability that would not have existed if the benefits were paid on time. The IRS allows for a special calculation in this situation.

You have the option to treat the benefits as if they were received in the years they were actually due. This involves re-calculating your taxable benefits for each prior year using that year’s income, which may result in a lower overall tax. This election is made on your current year’s tax return and does not require you to file amended returns. IRS Publication 915 contains worksheets to help with these calculations.

State Taxation of SSDI Benefits

While the federal government has its own rules for taxing Social Security, most states do not impose a tax on Social Security disability benefits.

However, a minority of states do tax these benefits. These states include:

• Colorado
• Connecticut
• Minnesota
• Montana
• New Mexico
• Rhode Island
• Utah
• Vermont

West Virginia is also on this list but is in the process of phasing out the tax. For the 2025 tax year, 65% of federally taxable benefits are exempt, and they are scheduled to become fully exempt from state tax in 2026. Because state laws can change, you should consult your specific state’s tax agency for the most current information.

Reporting and Paying Taxes on SSDI

If you have determined that your SSDI benefits are taxable, you must report this information to the IRS when you file your annual tax return. Each January, the Social Security Administration (SSA) mails Form SSA-1099, the Social Security Benefit Statement. This form details the total amount of benefits you received in the previous year in Box 5, which is the amount you will use for your tax calculations.

If you need a replacement SSA-1099, you can get an instant version through your personal “my Social Security” account on the SSA’s website. When you file your taxes, you will report the total net benefits from Box 5 on line 6a of Form 1040 or Form 1040-SR. The taxable portion that you calculated is then entered on line 6b.

There are two methods for paying the taxes owed on your benefits. The first is to have federal income tax withheld directly from your monthly payments. To do this, you must complete Form W-4V, Voluntary Withholding Request, and submit it to the SSA. On this form, you can choose to have a percentage of your monthly benefit withheld for taxes:

• 7%
• 10%
• 12%
• 22%

The second option is to make quarterly estimated tax payments directly to the IRS. This is often the choice for individuals who have other income not subject to withholding, such as from self-employment. You would use Form 1040-ES to calculate and pay these taxes throughout the year. This pay-as-you-go method helps avoid a large tax bill and potential underpayment penalties, with payments due on April 15, June 15, September 15, and January 15 of the following year.