RogerD1
Employee Tax Expert

State tax filing

Yes, you are correct.  Any amount of the insurance premiums that an employer pays or amounts that an employee pays with "pre-tax" dollars will result in taxable income for any disability payouts.

 

In your case, the portion of the payout related to the premium % that your employer paid will be taxable.  Your portion paid with "after-tax" money will not be taxable.

 

Sometimes employers will give their employees additional taxable income and use that as payment toward the disability premiums.  The advantage to the employee is that any disability payouts will be non-taxable to the employee.

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