Tax Tip #174

Is disability income taxable? Yes and no. The answer to this question depends on who is paying for the insurance. 

If the employer pays for the disability insurance, then the disability benefits received by the employee is considered ordinary income included in the employee’s wages.

If the employee pays for disability insurance, then the disability benefits paid to the employee will not be considered taxable income.

If you have questions or would like assistance, please reach out to a team member.