Do I have to Pay Taxes on Disability Benefits?

April 15, the deadline to file taxes in 2019, is fast approaching.

And as usual, that means one of the most common questions I’m getting from clients is whether they’ll have to pay taxes on their disability benefits.

The good news is that no, generally, you do not have to pay taxes on Social Security Disability Insurance or Supplemental Security Income benefits.

However, there are certain circumstances where these benefits are taxable.

If you are single filer, and make less than $25,000 per year, none of your disability benefits are taxable. If you’re married and file jointly, that number rises to $32,000 per year.

If a single filer makes between $25,000 and $34,000 per year or a married couple filing jointly makes between $32,000 and $44,000, up to half of their disability benefits can be taxed at the marginal income rate.

Up to 85% of disability benefits can be taxed at the marginal tax rate for single filers making more than $34,000 per year or couples making more than $44,000.

Very few people receive enough in Social Security Disability Insurance to reach these levels. Usually these issues arise when an individual is also receiving a pension or military benefits, or some sort of passive income, like from a rental property.

Due to the income restrictions on SSI, it would be very unusual for an SSI recipient to find themselves in a situation where they would have to pay federal income taxes on their benefits.

However, several states, including Minnesota, Missouri, and Nebraska do levy their own taxes on disability benefits.