2026 tax year

Benefits and retirement

Benefit income is taxed by rules that look nothing like the rules for wages.

Two rules govern almost everything here, and they have nothing in common. Social Security and SSDI are taxed on a combined-income formula half the benefit plus your other income, tested against a threshold, and never more than 85% of the benefit taxable however high your income goes. Disability policies are taxed on a premium question who paid for the policy, and whether the money that paid for it had already been taxed.

Neither rule has anything to do with how large the benefit is. Both are usually got wrong in the same direction, which is why people are surprised in April rather than pleased.

Calculators

How much of your SSDI is taxable
SSDI on its own is usually tax-free. What makes it taxable is everything else.
Is your short-term disability benefit taxable?
The answer depends on who paid the premium, not on how much you receive.
Is your long-term disability benefit taxable?
The same benefit is worth thousands more a year if you paid the premium yourself.
SSDI and long-term disability together
Two benefits, two completely different tax rules, one tax bill.
Is workers’ compensation taxable?
Workers’ comp for a job injury is tax-free. The one catch is when it reduces your SSDI.
Tax on Social Security and a 401(k)
Drawing from a 401(k) can make your Social Security taxable. The order you take money matters.
The interaction that catches people

A benefit can become taxable without the benefit changing. The Social Security formula counts your whole household's income, so a spouse taking on freelance work. Or an employer-paid disability policy starting, can make an SSDI benefit taxable that was tax-free the year before. The household calculator models everyone at once for exactly that reason.

The 12 states that tax Social Security

Everywhere else leaves it alone entirely, whatever your income:

Related

General information about how these benefits are taxed, not tax advice. Check with a tax professional before relying on any figure here.