I know that State Disability Insurance is not taxable. Does this then mean that it's not reported at all, and not part of your AGI?

[lyubazation]

If the income is not reported, I'm assuming it is not calculated in the AGI? I'm curious because I also made an early withdrawal from a retirement account to pay for medical expenses, and I could qualify for an exemption on the penalty fee if the cost of the medical expenses was 7.5% or more of my AGI.

[CarolC]

You are correct.  Generally, State Disability Insurance income is not taxable and therefore not reported on your federal tax return.  Therefore, it is not calculated as part of your AGI.

Depending on your disability, you may qualify for penalty exception Code 3:  Distribution made due to total or permanent disability.  

Keep in mind, state disability income may be taxable if the income is considered unemployment compensation.