Taxability of Social Security Disability Insurance (SSDI)

SSDI benefits may be taxable, but only if your total income exceeds certain thresholds:

• If you file as an individual:
• If your total income (including half of your SSDI) is between $25,000 and $34,000, you may pay taxes on up to 50% of your benefits.
• If it’s over $34,000, up to 85% of your SSDI benefits may be taxable.
• If you file jointly with a spouse:
• If your combined income is between $32,000 and $44,000, you may owe taxes on up to 50% of your benefits.
• If it’s over $44,000, up to 85% could be taxable.

Note: You will never be taxed on more than 85% of your SSDI benefits.

Taxability of Supplemental Security Income (SSI)

SSI benefits are not taxable. This program is based on financial need, and the IRS does not count SSI as taxable income under any circumstances.

Veterans Disability Benefits (VA)

VA disability compensation is not taxable. These benefits are tax-free, including:

• Monthly disability compensation
• VA grants for homes or vehicles
• Disability pensions

Private or Employer-Sponsored Disability Insurance

• If you paid the premiums with after-tax dollars, your benefits are not taxable.
• If your employer paid the premiums (or you paid with pre-tax dollars), then your benefits are taxable as ordinary income.