Is Social Security Disability Taxable?

If you’re concerned about losing part of your Social Security Disability (SSD) or SSDI benefits to taxes, you’re not alone. Many people facing serious health issues and an inability to work also worry about how taxes could affect their limited income. Social Security Disability benefits can be a crucial lifeline, but tax rules can be confusing.

The encouraging news: Most people receiving SSDI benefits will not have to pay federal income tax on them. According to the Social Security Administration (SSA), about two-thirds of SSDI recipients fall below the income thresholds that trigger taxation.

Here’s some insight from Second Chance Lawyer, Merryl Jones.

What Is Social Security Disability Insurance?

Social Security Disability Insurance (SSDI) is a federal insurance program funded by payroll taxes. It’s designed to provide financial support to individuals who have worked, paid into Social Security, and later become unable to work due to a qualifying disability expected to last a year or more. The SSA uses strict medical and work history criteria to determine eligibility.

Your SSDI benefit amount is based on your average indexed monthly earnings (AIME) from your top earning years, which the SSA uses to calculate your primary insurance amount (PIA).

Generally, the more you earn over your working life, the higher your benefit, up to a set maximum. SSDI benefits may also extend to certain dependents, such as children.

Other income sources can affect your SSDI payments. While private disability insurance does not reduce your SSDI, benefits from other government programs—such as workers’ compensation—may reduce your total monthly amount. The SSA limits the combined total from SSDI and certain other government disability benefits to no more than 80% of your average pre-disability income.

Is Social Security Disability Income Taxable?

SSDI benefits may be taxable if your total income exceeds specific thresholds. For tax purposes, the IRS considers your income to be one-half of your SSDI benefits plus all other sources of income, including wages, interest, dividends, or a working spouse’s income.

The current IRS thresholds are:

• Single, Head of Household, Qualifying Surviving Spouse, or Married Filing Separately (did not live with spouse): $25,000
• Married Filing Jointly: $32,000
• Married Filing Separately (lived with spouse at any time): $0

If your combined income is:

• Between $25,000–$34,000 (single) or $32,000–$44,000 (married filing jointly), up to 50% of your SSDI benefits may be taxable.
• Above $34,000 (single) or $44,000 (married filing jointly), up to 85% of your SSDI benefits may be taxable.

Even then, these percentages do not mean you lose that portion of your benefits; instead, that percentage is added to your taxable income and taxed at your normal rate.

State Taxes on SSDI Benefits

Most states do not tax SSDI benefits, and Texas, where Merryl Jones – Second Chance Lawyer is based, has no state income tax. This means Texas residents receiving SSDI benefits do not pay any state income tax, regardless of their income level.

Why Consult Social Security Disability Lawyers?

Tax laws change annually, and understanding whether your SSDI benefits are taxable requires careful review of your income sources and filing status. Attorney Merryl Jones, an experienced Social Security disability lawyer recommends consulting a qualified tax professional for accurate advice tailored to your situation.

If you still need to apply for SSDI benefits or have received a denial, our legal team can evaluate your case at no cost. We guide clients through every step, from filing applications to navigating appeals, while helping protect the benefits you’ve earned.

Contact us today to speak with Merryl Jones – Second Chance Lawyer, a skilled Social Security disability lawyer who can help you secure and protect your SSDI benefits.