When are SDI State Disability & Long Term Disability benefits included as
taxable compensation for MAGI Income – Covered CA Subsidies
Your DI benefits are taxable only if you receive DI benefits in place of UI Unemployment Insurance benefits. In this case, your DI benefits are considered a substitution for your UI benefits, which are taxable. Federal Tax Regulation Section 1.85-1
Thus, if you can’t work because of a disability and receive disability benefits, those benefits are not taxable.
Learn More ⇒ edd.ca.gov/