Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income — Retirement Income; Form 1040, Lines 15-16

Taxable Pensions and Annuities

Disability Pension Income

Generally, taxpayers who retire on disability must include all of their disability payments in income. Disability payments are taxed as wages until the taxpayer reaches the minimum retirement age (set by the employer). After the taxpayer reaches the minimum retirement age, disability payments are treated as pension income.

Minimum retirement age is generally the earliest age at which taxpayers may receive a pension whether or not they are disabled.

Tip

When disability pay is treated as wages, it might affect the earned income tax credit.