They might be, but it depends on the type of disability benefit you get and how much money you make overall. People with disabilities can get help from two Social Security programs: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) (SSI).
SSI is cash help for people who are disabled, blind, or older and have low incomes and few assets. The program is run by Social Security, but it is not paid for by your Social Security taxes. Instead, it is paid for by money from the U.S. Treasury. In 2023, the most a single person can get from the federal SSI program is $914 a month, and a married couple who both qualify can get $1,371. There is no income tax on these benefits.
Due SSDI could be taxed. It is subject to the same tax rules as retirement, family, and survivor benefits from Social Security.
Whether or not you have to pay taxes on your SSDI payments depends on what the IRS calls your “provisional income.” This is the total of your adjusted gross income, tax-free interest income, and half of your Social Security benefits for a given year. How it works is as follows:
You won’t have to pay taxes on your Social Security Disability Insurance if the total of these three numbers is less than $25,000 for a single taxpayer or $32,000 for a married couple filing jointly.
If your provisional income is between $25,000 and $34,000 for a single person or between $32,000 and $44,000 for a married couple filing jointly, you may have to pay taxes on up to 50% of your benefits.
If it’s more than $34,000 for a single person or $44,000 for a couple, 50–85% of your benefits will be taxed. Say you filed as a single person in 2022 and got the average Social Security Disability Insurance benefit of $1,364 per month.
You had a part-time job that paid you $15,000, and your investments and dividends gave you another $5,000. Your estimated income was $28,814, which was made up of half of your Social Security benefits and $20,000 from other sources.
You are in a group that has to pay taxes on up to half of their benefits, though in this case it would be much less: If you put these numbers into the IRS’s online tax tool, the Interactive Tax Assistant, it says that $1,592 of your benefits would be taxed at the same rate as your other income, which is 12 percent in this case.
Most disabled people don’t have to pay taxes.
In reality, many people who get Social Security Disability Insurance don’t have to worry about this because their total income is too low to reach the tax threshold.
Disability benefits are meant to help people who can’t work because of a serious illness or injury. Social Security Disability Insurance has strict rules about how much you can earn from work and still qualify for Social Security Disability Insurance . Most beneficiaries can earn up to $1,470 a month in 2023.
The Social Security Administration says that about a third of disabled people who get benefits pay taxes on them. When they do, it’s usually because of other money coming into the house, like what a spouse makes.
To find out if your Social Security Disability Insurance is taxable, enter your benefit, income, and marital status into the IRS’ Interactive Tax Assistant or fill out Worksheet 1, “Figuring Your Taxable Benefits,” in IRS Publication 915, “Social Security and Equivalent Railroad Retirement Benefits.”