Taxes on Disability Benefits and Pensions
There's no easy rule on whether disability benefits are taxed; taxation varies depending on the benefit you're receiving, your other income, and even your state.
Social Security disability benefits (SSDI) can be subject to tax, but most people don't pay taxes on them because they don't have much other income.
Money you get from workers’ comp usually isn’t taxed, but there is an exception.
Not always, but many disability-related payments are taxable income.
The answer depends on your state, the type of benefit, and whether you're talking about federal taxation or state taxation.
Half of my lump-sum payment was for the tax year before last year. Will I be taxed on it?
If you're disabled, you are entitled to an array of disability tax deductions and credits.
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