Is your long-term disability benefit taxable?

Long-term disability runs for years rather than months, which makes the premium question worth far more here than on a short-term policy. The rule is the same: employer-paid premiums produce a taxable benefit, premiums you paid from taxed income produce a tax-free one.

Over a long claim the difference compounds into a serious sum. A policy paying 60% of a salary sounds adequate until tax takes a share of it; the same 60% paid tax-free is worth substantially more, which is why paying the premium yourself is often the better arrangement even though it costs more up front.

If you are also receiving SSDI, most long-term policies reduce their payment by the SSDI amount. And the two are taxed under completely different rules. Use the combined calculator for that.

Calculator

Where this comes from

The rules on this page that are specific rather than general are cited below. Follow a link to read the provision itself rather than taking our word for it:

• A disability benefit is excluded from income where the recipient paid the premium with money already taxedIRC 104(a)(3); IRC 105(a)

Related

• All benefit calculators
• How much of your SSDI is taxable
• Is your short-term disability benefit taxable?
• SSDI and long-term disability together
• Is workers’ compensation taxable?
• Tax on Social Security and a 401(k)
• Household calculator

General information about how these benefits are taxed, not tax advice. Disability and benefit taxation turns on facts about your policy and your household that this page does not have, check with a tax professional before relying on a figure here.