When you’re initially approved for Social Security Disability (SSD) benefits, you will likely feel a sense of relief – the application process is over, and you’re finally receiving the financial assistance you need. However, questions will eventually arise. For instance, are Social Security benefits taxed? This is a commonly asked question, and the answer varies based on your income, the benefits you receive, and the state you live in. Here’s what this means for people with disabilities in Oregon.
IRS Provisional Income and SSD Taxation
Generally, if a beneficiary has a low income due to an inability to work, it is unlikely that their benefits will be taxed. However, when the income of those collecting exceeds a certain threshold, it may be subject to income tax. The IRS calls this a “provisional income,” which is the sum of your adjusted gross income, tax-exempt interest income, and half of your Social Security Disability benefits for a given year. This will determine if your benefits are subject to tax and, if so, how much.
For example, if those three figures add up to less than $25,000 for an individual taxpayer or $32,000 for a married couple filing jointly, you won’t pay taxes on your SSD benefits. However, if your provisional income is $25,000 to $34,000 for an individual or $32,000 to $44,000 for a married couple, 50 percent of your benefits are subject to taxation. If it’s more than $34,000 for an individual or $44,000 for a couple, you are taxed on 50 to 85 percent of your benefits. The specific amount taxed ultimately depends on your state of residence. You should contact a qualified tax advisor in your area with any questions.
Are Social Security Disability Benefits in Oregon Tax-Exempt?
Yes, SSD in Oregon is tax-exempt. Luckily, in Oregon, Social Security disability payments are tax-exempt. Although the state imposes taxes, it exempts 100% of Social Security Disability benefits from tax liability. So, if you collect disability benefits in Oregon, you will not have to worry about taxes from your payments. If you have additional questions about Social Security Disability benefits in Oregon, the SSD attorneys at Kerr Robichaux & Carroll are here and happy to help.
Understanding State Income Tax Rates for SSD
While SSD benefits are tax-exempt in Oregon and a handful of other states in the U.S., some states tax SSD benefits of beneficiaries with an adjusted gross income (AGI) that meets a threshold specific to the states. Other states use the federal method, the same method as the federal government. In addition, several states in the U.S. do not impose any state income tax at all.
States that tax SSDI benefits based on AGI are:
States that tax SSDI benefits using the Federal Tax Method include:
States where SSDI benefits are tax-exempt:
- Alabama
- Arizona
- Arkansas
- California
- Delaware
- Washington, D.C.
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Mississippi
- New Hampshire
- New Jersey
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- South Carolina
- Virginia
- Wisconsin
Finally, here are the states with no income tax:
Each state taxes SSDI income differently, with some using different methods and some not taxing SSDI benefits or imposing any income tax altogether. If you plan on moving to any of the states that tax SSDI benefits, you may qualify for other income deductions or credits. Speak with a tax professional to review your options.
Pacific Northwest SSD Attorneys Who Are Here for You
The SSD application and appeals processes can be difficulty for those unfamiliar with the process. For those who have recently become disabled, it could be that much harder to navigate. This is why the SSD attorneys at Kerr Robichaux & Carroll are here to help. We are dedicated to helping disabled persons thrive by securing the benefits they need.
Have you been recently disabled and are beginning to navigate the Social Security Disability application process? We’re here to help. Contact the experienced SSD attorneys at Kerr Robichaux & Carroll by submitting a contact form on our website or calling our office at 503-255-9092 for a free consultation today.