Group-Term Life Imputed Income Calculator
At 62, $300,000 of group-term life adds $1,980.00 to $95,000 of pay, and $587.07 of tax.
Last reviewed
Your imputed income
Added to your wages (box 12, code C)
$1,980.00
Social Security and Medicare
$151.47
Federal income tax
$435.60
Your $300,000 of coverage is $250,000 over the $50,000 that is tax-free, so at age 62 Table 2-2 adds $1,980.00 to your wages: $165.00 a month for 12 months.
Your employer withholds $151.47 of Social Security and Medicare tax on it, $5.82 a check if spread over checks paid every two weeks, but need not withhold income tax.
At your 22% federal rate it adds $435.60 to your income tax, due when you file unless you have $16.76 more withheld from each check on Form W-4.
At 65 the rate rises from $0.66 to $1.27 per $1,000 a month, and the same coverage would add $3,810.00 to your wages.
Your coverage and your pay
- over $50,000 = $300,000 − $50,000 = $250,000
- each month = 250.0 × $0.66 = $165.00
- Table 2-2 cost = $165.00 × 12 = $1,980.00
- added to your wages = $1,980.00 − $0.00 paid = $1,980.00
What your coverage adds to your wages at each age
Table 2-2 on your coverage, at every age
| Age on December 31 | Rate per $1,000 | Cost a year | Added to wages | Payroll tax | Federal tax |
|---|---|---|---|---|---|
| Under 25 | $0.05 | $150.00 | $150.00 | $11.48 | $33.00 |
| 25–29 | $0.06 | $180.00 | $180.00 | $13.77 | $39.60 |
| 30–34 | $0.08 | $240.00 | $240.00 | $18.36 | $52.80 |
| 35–39 | $0.09 | $270.00 | $270.00 | $20.66 | $59.40 |
| 40–44 | $0.10 | $300.00 | $300.00 | $22.95 | $66.00 |
| 45–49 | $0.15 | $450.00 | $450.00 | $34.43 | $99.00 |
| 50–54 | $0.23 | $690.00 | $690.00 | $52.79 | $151.80 |
| 55–59 | $0.43 | $1,290.00 | $1,290.00 | $98.69 | $283.80 |
| 60–64your age | $0.66 | $1,980.00 | $1,980.00 | $151.47 | $435.60 |
| 65–69 | $1.27 | $3,810.00 | $3,810.00 | $291.47 | $838.20 |
| 70+ | $2.06 | $6,180.00 | $6,180.00 | $472.77 | $1,359.60 |
The largest yearly step is at 70 and older, where the amount added to your wages rises $2,370.00, from $3,810.00 to $6,180.00.
Your pay stub: one check and the year
| Line | Each check | A year |
|---|---|---|
| Coverage added to your taxable pay | $76.15 | $1,980.00 |
| Social Security withheld on it | $4.72 | $122.76 |
| Medicare withheld on it | $1.10 | $28.71 |
| Federal income tax withheld on it | $0.00 | $0.00 |
| Take-home pay lower by | $5.82 | $151.47 |
Each check is rounded to the cent, so 26 checks at $5.82 withhold $151.32, $0.15 less than the $151.47 worked out on the year's total.
Your Form W-2 without and with the coverage
| Box | Without it | With it | Change |
|---|---|---|---|
| Box 1, wages | $95,000.00 | $96,980.00 | $1,980.00 |
| Box 3, Social Security wages | $95,000.00 | $96,980.00 | $1,980.00 |
| Box 5, Medicare wages | $95,000.00 | $96,980.00 | $1,980.00 |
| Box 12, code C | $0.00 | $1,980.00 | $1,980.00 |
Box 12 code C repeats the $1,980.00 already counted in boxes 1 and 5, so do not add it to your wages again.
How the IRS prices coverage over $50,000
Under 26 U.S.C. 79(a), the cost of group-term life insurance your employer carries is part of your income, but only the part above the cost of $50,000 of coverage and above what you paid toward it. That cost is not the premium your employer pays. It comes from Table I of 26 CFR 1.79-3(d)(2), which Publication 15-B prints as Table 2-2.
For each month, 26 CFR 1.79-3(d)(1) counts the coverage over $50,000 in thousands of dollars, to the nearest tenth: the nearest $100. That count times your age band's rate is the month's cost, and the months add up to the year. Say you have $150,000 of coverage at age 40. That is 100.0 thousands at $0.10, or $10.00 a month.
Why your age on December 31 sets the whole year
Under 26 CFR 1.79-3(d)(2), "the age of the employee is the employee's attained age on the last day of the employee's taxable year." So a December birthday that starts a new band moves all twelve months into it. Turn 65 by December 31 on the default coverage, and the year's amount jumps $1,830.00, from $1,980.00 to $3,810.00. The tax on it rises $542.60.
Why your check loses Social Security but not income tax
Two parts of the tax code treat the amount differently. Under 26 U.S.C. 3121(a)(2)(C), it counts as wages for Social Security and Medicare, so your employer must withhold those two payroll taxes. Under 26 U.S.C. 3401(a)(14), it is not wages for income tax withholding. The W-2 instructions say it plainly: "For employees, you must withhold social security and Medicare taxes, but not federal income tax."
That leaves the income tax for your return. On the default inputs, $435.60 of federal tax is due when you file, while only $151.47 comes out of your checks. Asking for $16.76 more a check on Form W-4 covers the gap.
When coverage you pay for still counts
Extra coverage you buy through work can still be your employer's policy. Under 26 CFR 1.79-0, it is carried by the employer if the employer pays any part of the cost. Under the same section, it also counts if the employer charges at least one worker less than the Table I cost and at least one more, which the IRS page on group-term life insurance calls the "straddle" rule.
That page gives a case. A worker aged 47 has $40,000 of basic coverage and $100,000 of extra coverage at their own expense, which the employer still carries. Of the $140,000, $90,000 is over the tax-free amount, so Table 2-2 prices it at $162.00 for a year at $0.15, before their payments come off.
How you pay matters too. Publication 525 says you cannot reduce the amount by "Payments for coverage through a cafeteria plan, unless the payments are after-tax contributions". Enter only what you paid after tax.
Video walkthrough
A 3-minute walkthrough of how coverage over $50,000 is priced by age, and how its tax comes out of your pay and your return.
Read the transcript
What the coverage costs you
0:00 How much tax does your employer's life insurance cost you?
0:04 With $300,000 of coverage at age 62, it comes to about $590 a year in all.
0:13 Social Security and Medicare take about $150 of that out of your paychecks, and the rest is federal income tax, due when you file your return.
How the IRS prices your coverage
0:24 Where does that come from?
0:26 Under section 79 of the tax code, the first $50,000 of coverage your job gives you is tax-free, and only the rest is counted.
0:36 And the cost isn't the premium your employer pays for the policy.
0:41 It comes from Table 2-2 in Publication 15-B, which sets a monthly rate for each age band.
0:48 For your age band, the rate is 66 cents a month.
0:52 Count your coverage over the limit in thousands, and the year comes to $1,980.
Your age at the end of the year
1:00 Treasury regulation section 1.79-3 says to use your age on the last day of your tax year.
1:08 So your age at the end of the year sets the rate for every month of it.
1:13 So a birthday late in the year can push all of it into a higher band.
1:17 Turn 65 before the year ends, and the amount nearly doubles.
1:22 And it keeps on climbing after that.
What comes out of your paychecks
1:25 Now look at a pay stub from your job.
1:27 The coverage isn't cash, but payroll adds it to your taxable pay, about $76 on each check.
1:35 Social Security and Medicare on it come out of your cash pay, so each check is about $6 smaller.
1:42 But your employer doesn't have to withhold any income tax on it, because under section 3401(a)(14) of the tax code, it isn't wages for that.
1:53 The instructions for Form W-2 say the same thing, in plain words.
Your W-2 and your tax return
1:58 At the end of the year, your W-2 shows the amount in box 12 with code C, and it's already counted in box 1, your wages, so don't add it again.
2:09 So the income tax waits for your return.
2:12 To pay it through the year instead, ask for about $17 more on each check, using Form W-4 at work.
If your coverage changed this year
2:21 What if your coverage changed during the year, say after a raise?
2:25 Choose yes in the form, then type the old amount, and after it the new one.
2:31 The page works it out at once, and with the raise in July, about $1,540 is added to your wages for the year.
2:40 Each stretch is priced on its own: the first months at the old amount, the last 6 months at the new one, and then the stretches are added together.
2:49 So only coverage over the limit is taxed, your age sets the rate, and the income tax waits for your return.
2:57 Try your own coverage and pay at fastcalc.us.
Imputed income formulas
coverage over $50,000 = coverage − $50,000, to the nearest $100 thousands = that ÷ $1,000 each month = thousands × Table 2-2 rate for your age on December 31, to the cent added to wages = each month × months, summed over each amount − what you paid after tax (at least $0) Social Security = 6.2% up to the $184,500 wage base Medicare = 1.45%, + 0.9% over $200,000 of pay federal = the 2026 rate schedule on taxable income with it − without it taxable income = pay + other income − standard deduction standard deduction (2026): $16,100 single, $32,200 married filing jointly, $24,150 head of household
Worked examples
Publication 15-B's own case. Tom is 45, has $200,000 of coverage and pays $100 a year toward it. Taking off $50,000 leaves 150.0 thousands at $0.15, so the year costs $270.00, and $170.00 goes in box 12 with code C. On $95,000 of pay, that brings $13.01 of Social Security and Medicare and $37.40 of federal tax.
A raise in July. Say your coverage is two times your pay and goes from $190,000 to $300,000 halfway through the year, at age 62. The first six months cost $92.40 each and the last six $165.00 each, so $1,544.40 is added to your wages for the year.
Coverage that is not a round number. On $135,550, the excess of $85,550 is counted as $85,600, or 85.6 thousands. At $0.66 a month that is exactly $56.496, which rounds to $56.50, so 12 months come to $678.00.
Check your pay stub and Form W-2
A pay stub line called GTL or imputed income is this amount. It counts as pay for Social Security and Medicare, but it is not cash, so it adds nothing to your take-home pay. Spread over checks paid every two weeks, the default case adds $76.15 to each check's taxable pay, and $5.82 more Social Security and Medicare comes out.
The W-2 instructions tell your employer to show the amount in box 12 with code C and also in "boxes 1, 3 (up to the social security wage base), and 5." On $95,000 of pay, box 1 reads $96,980.00. You file box 1 as printed: code C is already in it, so adding it again would tax it twice.
Your employer may also add the amount once a quarter or once a year instead of each check. Publication 15-B lets it treat the benefit as paid on "a pay period, quarter, semiannual, annual, or other basis". The year's total is the same either way. Personal use of a company car is another benefit treated this way, and the company car personal use calculator values it.
When your case is different
If two employers each give you coverage
The $50,000 is yours once, not once per job. Publication 525 says the exclusion "can’t exceed the cost of $50,000 of coverage, whether the insurance is provided by a single employer or multiple employers." Its Example 3 has a worker aged 51 with $35,000 at one job and $45,000 at another, paying $4.15 a month. Neither W-2 shows code C, yet $33.00 belongs on the return: $82.80 of cost less $49.80 paid.
If you have left the job or retired
Coverage after you leave is still taxed, unless you left permanently and totally disabled or another case below applies. Your former employer does not take your share of Social Security and Medicare out. The W-2 instructions have it show the Social Security you owe in box 12 with code M. The Medicare goes in code N, without any Additional Medicare Tax. Publication 525 says to include them on Schedule 2 (Form 1040), line 13. A retiree aged 67 with $150,000 of coverage gets $1,524.00 in code C, $94.49 in code M and $22.10 in code N.
If your pay is near the Social Security wage base
Social Security stops at the $184,500 wage base, so on pay at or over it the coverage adds only Medicare. On $190,000 of pay, the default coverage brings $28.71 of Medicare and no Social Security. Once your pay for the year tops $200,000, your employer also takes the 0.9% Additional Medicare Tax. On $199,000 of pay that adds $8.82. The Additional Medicare Tax calculator works out what you owe on your return.
If the coverage is on your spouse or child
Coverage on a spouse or child is not part of the $50,000 of 26 U.S.C. 79(a). Publication 15-B says it "may be excludable from income as a de minimis fringe benefit if the face amount isn’t more than $2,000." Above $2,000, Publication 15-B adds, it can still be excluded when the cost beyond what you paid after tax is too small to account for. When part of it is taxable, the IRS page on group-term life insurance says "the same Premium Table is used as for the employee."
If you get no tax-free $50,000
Some people are taxed on all of it. Under 26 U.S.C. 79(d), a key employee in a plan that favors key employees loses the $50,000 and is taxed on the greater of the premiums and the Table I cost. Under Publication 15-B, a 2% shareholder of an S corporation also gets no $50,000, so the cost of all their coverage goes into wages. On the default coverage, the whole $300,000 costs $2,376.00 a year by Table 2-2.
When none of it is taxed
Publication 525 lists four cases where you are not taxed on any of the cost. In each of them, enter $0 of coverage, and the page shows $0.00.
- You are permanently and totally disabled and have ended your work for the employer.
- Your employer is the beneficiary for the whole time the insurance is in force that year.
- A charity you could deduct gifts to is the only beneficiary for that whole time.
- The plan existed on January 1, 1984, and either you retired before January 2, 1984, covered by the plan, or you reached age 55 before January 2, 1984, and worked for the employer or its predecessor in 1983.
If you were covered for part of a month
This page counts whole months. Publication 15-B says you "must prorate the cost from the table if less than a full month of coverage is involved." Half of a $165.00 month is $82.50.
Assumptions and limits
- The rates are Table 2-2 of Publication 15-B (2026), the Table I of 26 CFR 1.79-3(d)(2) in use since July 1, 1999. Your age band is your age on December 31.
- This page rounds each month's cost to the cent, since 26 CFR 1.79-3 and Publication 15-B do not say where to round. Rounding only the year's total instead can change it by at most 6 cents. An excess ending in exactly $50 is rounded up to the next $100.
- Your payments come off the year's cost only when made after tax for this year's coverage, as Publication 525 sets out. They never make the amount less than $0.00.
- Social Security and Medicare here are what your employer withholds, the Additional Medicare Tax at the threshold for withholding whatever your filing status. On your return the Additional Medicare Tax starts at $250,000 on a joint return and $125,000 if married filing separately.
- Federal tax uses the 2026 brackets and standard deduction of Rev. Proc. 2025-32, with no credits or itemized deductions. Your pay is taken to be your box 1 wages, so a traditional 401(k) would lower it.
- A separate return uses the Single brackets here. They are the same as the separate-return brackets until taxable income reaches $384,350.
- The paycheck table spreads the year's amount evenly over your checks and shows the first check of the year. The defaults are an example, not typical figures, and coverage runs up to $10,000,000.
These figures are estimates for learning and planning, not financial, tax, legal or investment advice. Terms of use.
What to do with the amount
Check your W-2 when it comes. Box 12 with code C should match the amount here, $1,980.00 on the defaults, and it should already be inside box 1. If it is not, ask your payroll office, then check your return with the federal income tax calculator.
Cover the income tax before April. Your employer need not withhold it, so ask for extra withholding on Form W-4: $16.76 a check paid every two weeks covers the $435.60 of the default case. The paycheck withholding calculator shows the new check.
Weigh the coverage against its tax as you age. On $250,000 over the tax-free amount, the yearly cost is $3,810.00 from 65 and $6,180.00 from 70. If you need less coverage than work gives you, the life insurance needs calculator helps you size it before open enrollment.
Count every job's coverage. If two employers each give you coverage, add them up as Publication 525's worksheet does, and add any amount not on a W-2 to your wages. Then see what your check looks like with the take-home pay calculator.
Group-term life imputed income questions
What is box 12 code C on my W-2?
It is the taxable cost of group-term life insurance over $50,000. On $300,000 at age 62 it is $1,980.00. The same amount is already in boxes 1 and 5, so it is not extra income on top of them.
How is imputed income on group-term life insurance calculated?
Take $50,000 off your coverage, count the rest in thousands to the nearest $100, and multiply by the Table 2-2 rate for your age. Times the months, less what you paid after tax, that is the amount. At age 50 on $250,000, 200.0 thousands at $0.23 is $46.00 a month.
Is group-term life insurance over $50,000 taxable?
The cost of the part over $50,000 is, unless one of the exceptions applies. You pay Social Security and Medicare on it through your checks and income tax on your return. At age 30, $100,000 of coverage adds $48.00 for the year.
Why does my pay stub show GTL as income and then take it away?
The coverage counts as pay for Social Security and Medicare, but it is not cash, so it adds nothing to what you take home. Only the tax comes out of your money. On the default case that is $5.82 a check paid every two weeks.
Does imputed income go up when I turn 65?
Yes, for the whole year you turn 65, since the rate goes from $0.66 to $1.27 per $1,000 a month. On $250,000 over the tax-free amount, that is $317.50 a month instead of $165.00.
Do my premium payments lower my imputed income?
Only payments made after tax do, dollar for dollar. If you pay $300.00 a year after tax on the default coverage, the amount falls to $1,680.00. Payments taken before tax through a cafeteria plan do not lower it.
Is voluntary or supplemental life insurance taxable as imputed income?
It is when your employer carries the policy, which includes charging some workers less than Table 2-2 and others more. Then the extra coverage is added to your basic coverage before the $50,000 comes off. If the employer does not carry it, none of it is imputed income.
Is federal income tax withheld on group-term life imputed income?
Your employer need not withhold it. On the default case that leaves $435.60 of federal tax to pay when you file. Adding $16.76 a check on Form W-4 covers it.
Sources
- IRS, Publication 15-B (2026), Employer's Tax Guide to Fringe Benefits (page reviewed Apr 30, 2026)
- 26 CFR 1.79-3, determination of the cost of group-term life insurance (eCFR) (current version)
- 26 CFR 1.79-0, definitions for group-term life insurance (eCFR) (current version)
- 26 U.S.C. 79, group-term life insurance purchased for employees (Cornell LII text) (current version)
- 26 U.S.C. 3121, definitions for Social Security and Medicare taxes (Cornell LII text) (current version)
- 26 U.S.C. 3401, definitions for income tax withholding (Cornell LII text) (current version)
- IRS, Publication 525 (2025), Taxable and Nontaxable Income (page reviewed Apr 30, 2026)
- IRS, Group-term life insurance (page reviewed Oct 9, 2026)
- IRS, General Instructions for Forms W-2 and W-3 (2026) (page reviewed Apr 30, 2026)
- IRS, Publication 15 (2026), Employer's Tax Guide (page reviewed Apr 30, 2026)
- IRS, Topic no. 560, Additional Medicare Tax (page reviewed Oct 9, 2026)
- IRS, Rev. Proc. 2025-32, 2026 inflation adjustments (page modified Oct 17, 2025)
- IRS, Form W-4 (2026), Employee's Withholding Certificate (page modified Dec 11, 2025)
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