Group-term life insurance over $50,000 provided by an employer is subject to FICA taxes but not income or unemployment taxes. The taxable value is reported on the employee's W-2 and employer tax forms. The taxable amount is calculated using IRS age-banded tables rather than the actual cost. In an example, Jane's employer-provided life insurance of $130,000 resulted in $80,000 of taxable excess, taxed at $18.40 per month based on Jane's age and the IRS table rates.

1. Calculating
Group-term Life

2. Group-term Life
Group-term life (GTL) – Value up to $50,000 is
excluded from employee income. Over $50,000 is
subject to FICA but not FIT or FUTA.

3. Group-term Life
• Taxable value must be reported on the employee’s
W-2 and the 940 and 941
• Calculation of GTL is determined by age banded
IRS tables, not the actual cost to the employer

4. Example Calculation
Jane is 52 and her annual salary is $70,000. Her
employer group term life provides coverage at 2x
her annual salary with a $130,000 cap. Premiums
are 100% employer paid.

5. Example Calculation
First calculate her coverage:
$70,000 x 2= $140,000.
$140,000 > $130,000
Jane’s coverage is $130,000

6. Example Calculation
Next calculate the taxable excess:
$130,000 - $50,000 = $80,000
Then determine the number of $1,000 increments:
$80,000 / $1,000 = 80

7. Example Calculation
Apply the rate from the IRS table for age 50-54:
$.23 * 80 = $18.40 per month taxable income