Is Long Term Disability Insurance Taxable?

  1. 12689 POINTS
    Ted Ratliff
    Owner, SFS Associates,
    The rule of thumb on this is that if you deducted the premiums from your taxes then the benefits would be taxable.  If you did not deduct the premiums than in most cases the benefits are not taxable.  Tax laws change so make sure you consult your tax adviser for your particular situation.
    Answered on May 29, 2013
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    David RacichPRO
    Fountain Hills, Arizona
    Compensation based on the average long term nondeductible disability insurance policy will pay around 60% of your compensation tax free, up to 80% of your compensation if you deduct the disability premium as a business expense, but your benefits are taxable. You need to do the math before selecting your course of action. 

    Answered on May 29, 2013
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