Which States Tax SSDI Disability Benefits?

Most states do not tax Social Security Disability Insurance (SSDI) benefits at all, but eight states still tax a portion of disability payments in 2026 if your income exceeds specific state thresholds. The states that tax SSDI under certain conditions in 2026 are Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont, while all other states exempt SSDI completely or have no state income tax.

Understanding how your home state treats disability income is critical because state tax rules differ from federal rules. While the federal government taxes up to 85 percent of your SSDI benefits once your combined income crosses statutory base amounts, most states shield disability recipients from additional tax burdens. Where state taxes apply, generous deductions and credits ensure that low-income and middle-income households rarely pay state taxes on their disability benefits.

How Federal Rules Determine State Taxation

To understand state taxation, you must first understand how the federal government calculates taxable disability benefits. Under Internal Revenue Code Section 86 (26 U.S.C. 86), the Internal Revenue Service calculates tax liability using provisional income, also called combined income. Provisional income equals your adjusted gross income, plus tax-exempt interest, plus exactly 50 percent of your total Social Security benefits for the calendar year.

Congress established statutory base thresholds for provisional income that apply to tax years including 2024, 2025, and 2026. For an individual filing as single, head of household, or qualifying surviving spouse, provisional income between $25,000 and $34,000 makes up to 50 percent of SSDI benefits taxable at ordinary federal rates. If provisional income exceeds $34,000, up to 85 percent of benefits become taxable. For married couples filing jointly, provisional income between $32,000 and $44,000 makes up to 50 percent of benefits taxable, and provisional income above $44,000 makes up to 85 percent taxable.

States that tax disability payments generally use your federal adjusted gross income or federal taxable benefits as the starting point on your state return. If a portion of your SSDI is not taxable on federal Form 1040, no state can tax that portion. The eight taxing states then apply state-specific subtractions, exemptions, or credits to reduce or eliminate the taxable amount.

States With No Personal Income Tax in 2026

If you live in a state without a personal income tax, your SSDI benefits are completely safe from state taxation regardless of how much income you receive. In 2026, nine states impose no state income tax on Social Security disability payments: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Residents of these nine states never need to calculate state deductions or file state income tax forms for their disability benefits. Washington imposes an excise tax on certain high-value capital gains, but it does not tax personal wages or disability benefits. New Hampshire phased out its dividend and interest tax entirely for tax years beginning after 2025.

States That Completely Exempt SSDI From State Income Tax

Beyond the nine states with no income tax, 33 states and the District of Columbia impose a personal income tax but specifically exempt 100 percent of Social Security disability benefits from state taxation. In these jurisdictions, you subtract the entire federally taxable amount of your SSDI benefits on your state return.

Several states recently passed legislation to eliminate their Social Security taxes entirely. In Missouri, Senate Bill 190 eliminated all state income taxes on Social Security benefits beginning in tax year 2024. In Nebraska, Legislative Bill 754 accelerated the phase-out of state taxes on Social Security benefits, reaching a 100 percent exemption for tax year 2024 and subsequent years. In Kansas, lawmakers passed Senate Bill 1 in 2024 to eliminate state taxation on Social Security benefits starting in tax year 2024. In West Virginia, House Bill 4880 enacted a multi-year phase-out that fully exempts all Social Security benefits from state income taxation by tax year 2026.

Because of these legislative reforms, the vast majority of American disability recipients live in states where state income tax on SSDI does not exist. If you reside in any of these 33 exempt states, your monthly disability check is exempt from state tax.

The Eight States That Tax SSDI in 2026

Only eight states continue to tax Social Security disability benefits under certain circumstances in 2026. Each provides specific exemptions or credits to protect lower-income households.

Colorado

Colorado taxes Social Security benefits under Colorado Revised Statutes Section 39-22-104(4)(f). Taxpayers who are 65 or older can deduct 100 percent of their federally taxable benefits. For recipients under age 65, Colorado allows a full subtraction in 2026 if federal adjusted gross income is $75,000 or less for single filers, or $95,000 or less for married couples filing jointly. Above those levels, filers can claim a pension and annuity subtraction of up to $20,000 in 2026.

Connecticut

Under Connecticut General Statutes Section 12-701, Connecticut exempts 100 percent of Social Security benefits for single filers with federal adjusted gross income under $75,000 in 2026. For married couples filing jointly, the full exemption threshold is $100,000 in 2026. Filers above these caps can deduct 75 percent of their federally taxable benefits, leaving only 25 percent subject to Connecticut income tax rates.

Minnesota

Minnesota incorporates federal taxable Social Security benefits into its tax base under Minnesota Statutes Section 290.0132, subdivision 26. Under statutory updates effective in 2024 and continuing through 2026, married couples filing jointly with adjusted gross income up to $100,000 can subtract 100 percent of their taxable benefits. For single filers, the full subtraction applies to adjusted gross income up to $78,000 in 2026, phasing out gradually above those limits.

Montana

Montana restructured its individual income tax system through Senate Bill 399, effective for tax years beginning in 2024. Under Montana Code Annotated Title 15, the state uses federal taxable income as its starting point. The portion of SSDI benefits taxable under federal Internal Revenue Code Section 86 flows onto the Montana state return, where state standard deductions and personal exemptions apply.

New Mexico

New Mexico reformed its taxation of Social Security benefits through House Bill 163, codified at New Mexico Statutes Annotated Section 7-2-5.13. For tax years 2024 through 2026, New Mexico exempts all Social Security benefits for single filers with adjusted gross income up to $100,000. For married couples filing jointly, the exemption covers income up to $150,000 in 2026, while the limit is $75,000 for married individuals filing separately.

Rhode Island

Under Rhode Island General Laws Section 44-30-12, Rhode Island exempts Social Security benefits for taxpayers who have reached full retirement age and whose federal adjusted gross income falls below statutory caps. For tax year 2025 and tax year 2026, those indexed limits exceed $101,000 for single filers and $126,250 for joint filers. Because this exemption requires reaching full retirement age, SSDI recipients under that age face state taxation on the federally taxable portion of their benefits.

Utah

Utah taxes Social Security benefits under Utah Code Section 59-10-1042, but provides a nonrefundable tax credit to offset liability. In 2026, single filers with income up to $45,000 and married couples filing jointly with income up to $75,000 receive the full credit, which eliminates state tax on their benefits. The credit phases out by 25 cents per dollar of income above those levels.

Vermont

Vermont taxes Social Security benefits but provides an income-based exemption under 32 Vermont Statutes Annotated Section 5813. For the 2026 tax year, single filers with adjusted gross income up to $50,000 can deduct 100 percent of their federally taxable benefits, phasing out between $50,000 and $60,000. For married couples filing jointly, the full exemption covers income up to $65,000 in 2026, phasing out between $65,000 and $75,000.

Supplemental Security Income Is Never Taxed

Claimants often confuse Social Security Disability Insurance (SSDI) with Supplemental Security Income (SSI). SSDI is paid under Title II of the Social Security Act and is funded by payroll taxes, making it subject to federal and state tax rules under Internal Revenue Code Section 86.

Supplemental Security Income is paid under Title XVI of the Social Security Act and is a means-tested program funded by general federal revenues. Under IRS Publication 915 and 20 CFR 416.1100, SSI benefits are never considered gross income for tax purposes. No state and no federal agency can tax SSI payments. If you receive only SSI, you do not report your benefits on any tax return.

Managing State Tax Withholding

If you live in one of the eight states that tax SSDI and your household income exceeds state exemption thresholds, you may owe state income tax. The Social Security Administration does not withhold state income taxes directly from monthly benefit checks.

Under Section 3402(p) of the Internal Revenue Code (26 U.S.C. 3402(p)), you can request voluntary federal income tax withholding from your SSDI payments by submitting IRS Form W-4V to your local SSA office. You can select a flat federal withholding rate of 7 percent, 10 percent, 12 percent, or 22 percent. However, Form W-4V applies exclusively to federal taxes. Claimants in taxing states should submit quarterly estimated tax payments directly to their state revenue department, or adjust withholding on a working spouse's Form W-4.

This article is general information about Social Security rules, not legal advice. Rules and tax formulas change over time. For advice about your own situation, consult a qualified representative or contact SSA directly.