Glossary

Imputed income

The taxable value the IRS assigns to employer-paid group-term life insurance above $50,000, added to your W-2 wages though you receive no cash.

Also called: imputed income on group life, Table I income

Imputed income is the value of a non-cash benefit that tax law treats as wages. In life insurance it almost always refers to group-term coverage: under IRC Section 79, the cost of the first $50,000 of employer-provided group-term life insurance is tax-free, but the cost of coverage above $50,000 is included in the employee's taxable income and is subject to Social Security and Medicare taxes.

The cost isn't the employer's actual premium. It comes from the IRS uniform premium table, known as Table I and reproduced in IRS Publication 15-B, which sets a monthly cost per $1,000 of coverage by age bracket, minus anything the employee pays with after-tax dollars. Say, hypothetically, a 47-year-old has $150,000 of employer-paid coverage. The excess is $100,000, or 100 units. At the Table I rate of $0.15 per $1,000 per month for ages 45 to 49, imputed income is 100 × $0.15 × 12 = $180 for the year.

The amount is usually small and shows up on your W-2 in box 12 with code C. Employer-paid coverage on a spouse or child above $2,000 can also create imputed income. Estimate yours with the imputed income calculator for group life over $50,000, and see group life over $50,000 and imputed income.

Last reviewed October 4, 2026

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Related terms

Group life insurance Coverage issued under one master contract to members of a group, usually employees, often at one or two times salary with little or no underwriting. Voluntary life insurance Group life coverage offered through an employer that employees choose to buy and pay for themselves, usually by payroll deduction. Executive bonus plan An employer benefit in which a company pays a bonus to cover premiums on a life insurance policy the executive owns, deducting it as compensation. Dependent coverage Life insurance on a spouse, domestic partner or children, added through an employer plan or a rider, that pays the employee if a covered dependent dies.

Related guides

Dependent life insurance through an employer Employer dependent life covers a spouse and children in small amounts for a low price. What it pays, how the $2,000 tax rule works, and its limits. Employer group life insurance: what it really covers Group life through work is usually one or two times salary, cheap and easy to get, but tied to your job. How the coverage, taxes and limits work. Group life over $50,000 and imputed income Employer group term life above $50,000 creates taxable imputed income. How the IRS Table I math works for 2026, a worked example, and what appears on your W-2. Is life insurance taxable? Death benefits are usually free of federal income tax, but interest, estate tax, policy sales, cash value gains and some transfers can create a tax bill. Section 162 executive bonus plans How a Section 162 executive bonus plan works: the employer pays a bonus, the executive owns the policy, and who pays the tax, plus costs and alternatives. Split-dollar life insurance How split-dollar life insurance works, the two tax regimes under Treas. Reg. 1.61-22 and 1.7872-15, and where it is used in employer and family planning.

Related tools

Is my life insurance through work enough? Compares your workplace life insurance and personal policies with what your family needs, and shows what would remain if you left your job. Imputed income calculator for group life over $50,000 Applies the IRS Table I rates to employer-paid group-term life coverage above $50,000 to estimate the taxable income added to your W-2.