Do I Have to Pay Taxes on SSI or SSDI?

What to know before tax season hits

Introduction: Will You Owe the IRS on Your Disability Benefits?

If you receive Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI), you might be asking:

🧾 “Do I have to pay taxes on these benefits?”

💰 “Will my benefits count as taxable income?”

⚖️ “How can I avoid unexpected tax bills?”

The short answer:

✅ SSI is never taxable, but SSDI can be taxable in certain situations.

This post explains:

✅ Whether SSI or SSDI benefits are taxed

✅ Income thresholds and tax rules

✅ What to watch for if you have other income

✅ How Purple helps you track and prepare

1. Do You Pay Taxes on SSI?

✅ No—SSI is never taxable.

SSI is a needs-based benefit designed to help people with limited income and resources. It is excluded from federal taxation and usually from state taxes too.

2. Do You Pay Taxes on SSDI?

⚠️ Maybe—SSDI can be taxable, depending on your total income.

💡 When SSDI Is Taxable

SSDI alone is not taxed unless your total income (including SSDI and any other income) goes above certain thresholds.

📌 2025 Tax Year Thresholds

• Single filers: If total income is more than $25,000

• Married filing jointly: If combined income is more than $32,000

If you exceed these limits, up to 50% or 85% of your SSDI benefits may be taxable.

🧮 What Counts Toward “Total Income”?

• Half of your SSDI benefits

• Wages or self-employment income

• Interest, dividends, or other taxable income

3. State Taxes on SSDI

Most states do not tax SSDI, but a few do. Always check your state’s rules or consult a tax professional.

4. What If You Receive Back Pay?

SSA sometimes issues a lump-sum SSDI payment (back pay).

• You may have the option to spread the tax liability over prior years when the benefits were originally due.

• Talk to a tax advisor to minimize your tax burden on back pay.

5. Reporting SSDI on Your Tax Return

If your SSDI is taxable:

• SSA will send you Form SSA-1099 each January.

• You must report the amount on your federal tax return.

6. How Purple Helps You Prepare

💜 Deposit Tagging

Identify which deposits are benefits, work income, or other taxable sources.

💜 Smart Alerts

Get notified if your additional income might push you into a taxable range.

💜 Document Storage

Upload and organize your SSA-1099 forms and tax documents in one place.

💜 Companion AI Support

Our Companion AI helps explain what to report and how your income could affect taxes.

FAQs About Taxes on SSI and SSDI

⚠️ Is SSI ever taxable?

No—SSI is always tax-free.

⚠️ Can SSDI push me into a higher tax bracket?

Possibly—if you have other income in addition to SSDI.

⚠️ Do I have to file a tax return if I only get SSI?

Usually no—unless you have other taxable income.

⚠️ Does Purple handle tax filing?

No—but we help you track and organize everything so you’re prepared.

Conclusion: Taxes Don’t Have to Be a Surprise

✅ SSI is tax-free.

✅ SSDI might be taxable if you have additional income.

✅ Stay organized and monitor your income to avoid unexpected bills.

✅ Purple helps you track benefits, plan for taxes, and stay stress-free.

💜 Open your Purple account today and confidently prepare for tax season without surprises.