Social Security Disability Insurance (SSDI) benefits in Chicago and the rest of Illinois are not subject to state tax, but you may have to pay federal income tax on them if your combined income is above certain thresholds. The rules governing the taxation of SSDI benefits can be confusing. Below, you’ll learn more about tax thresholds and regulations to help you identify whether your benefits are taxable and plan adequately to avoid unforeseen tax liabilities and paying more taxes than necessary.