Are Social Security Disability Benefits Taxable?

Most people don't pay taxes on their disability benefits, unless they have a lot of other income.

By , Attorney · UC Law San Francisco
Updated 1/13/2022

The majority of people don't pay taxes on the Social Security disability benefits they receive. This usually is true for people who have income in addition to disability benefits as well as those who don't.

Breaking this down a bit, about one-third of recipients of Social Security disability insurance (SSDI) benefits have to pay taxes.

Is Social Security Disability Taxable?

Yes, some people have to pay taxes on their SSDI benefits.

People who do have to pay federal taxes on their SSDI benefits generally owe taxes on part of their benefits because they have another source of substantial income, or their spouse does. If you're required to file a tax return, you claim a portion of your Social Security disability benefits on your 1040 form. Below, we'll go into detail on how this works.

Is SSI Taxable?

No, recipients of Supplemental Security Income (SSI) don't have to pay federal taxes on their benefits, because SSI is not taxable.

How Much of Your Social Security Benefits Are Taxed?

The portion of SSDI benefits that you'll have to pay taxes on depends on how much other income you have. If you file your taxes as an individual, and your income is more than $25,000 per year but less than $34,000, you would have to pay taxes on up to half the value of your Social Security benefits.

If you're married and you file your taxes jointly, you can have a combined income of up to $32,000 before having to pay taxes on up to half of your benefits.

If your income is higher, you'll have to pay taxes on a bigger portion of your benefits. If you're single and you make more than $34,000 (or married and make more than $44,000), up to 85% of your benefits could be taxed.

The fact that a portion of your SSDI benefits may be taxable doesn't mean you'll pay 50% or 85% of your benefits in taxes. It just means that 50% of your benefits, or 85% of your benefits if you're in the higher income bracket, is subject to taxation at your personal income tax rates.

At What Rate Are Your Disability Benefits Taxed?

If part of your disability benefits is subject to taxation (because your income is higher than the limits listed above), your disability benefits will be taxed at your personal income tax rate. For example, if your income is fairly low, you would probably pay taxes of about 10% (on 50% of your benefits), assuming your tax rate is 10-12%. People with higher income might pay taxes of 22-24% (on 85% of their benefits).

Estimating the federal tax on Social Security disability benefits is pretty complicated. The IRS has a tax estimator you can try here.

Will I Have to Pay State Taxes on My Disability Benefits?

Most states don't tax disability benefits at all, but a few states tax them in the same way as the federal government, and still other states have their own way of applying state taxes to disability benefits. For information on whether your state taxes Social Security, see our article on which states tax disability benefits.

Is SSI or SSDI Backpay Taxed?

SSI backpay is not federally taxable. SSDI is a different story.

If you receive a lump-sum payment for retroactive benefits and/or back payments of SSDI, you could have to pay taxes on this amount all in one year, and your tax rate might be higher than usual because of receiving the large lump sum. This could amount to a big tax bill.

Luckily, if part of your backpay was for monthly benefits from an earlier tax year, you should be able to apply the income to an earlier year, if it would lower your tax bill. For the details, read our article on how Social Security disability backpay is taxed.

If you find yourself in this situation, you should contact a CPA or an attorney who is familiar with tax law and Social Security disability, as it's fairly complicated.

How Can You Pay Taxes on Your Disability Benefits?

If you do owe taxes on your benefits, the easiest way to pay the taxes is when you receive your benefits. You can ask the Social Security Administration (SSA) to withhold federal taxes from each of your monthly payments. To request that the SSA withhold some of your SSDI benefits to pay your taxes throughout the year, you can submit IRS Form W-4V to your local office by mail or fax. Or, if you or your spouse has self-employment income, you may want to make quarterly estimated tax payments.

How Do You Report Your Disability Benefits for Tax Purposes?

On IRS Form 1040, you report the full amount of your Social Security benefits on line 6a. You report the taxable amount of your benefits on line 6b. To calculate the taxable amount of your benefits, use the IRS's interactive tax assistant.

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