GTL on your paystub stands for group term life insurance, and it represents the taxable value of employer-provided life insurance coverage above $50,000. It isn’t money being paid to you. It’s a figure the IRS requires your employer to add to your wages so Social Security and Medicare taxes come out of the right amount.
What the GTL Line Actually Is
When your employer provides life insurance through a group policy, the IRS treats it as a fringe benefit.1Internal Revenue Service. Publication 15-B – Employer’s Tax Guide to Fringe Benefits The GTL entry on your pay statement is the calculated cost of the portion of that coverage the government considers taxable. Payroll systems display it as income so the correct payroll taxes are withheld from the cash part of your check.
Nothing is being deposited to your account for that line. Your take-home pay is slightly lower than it would be otherwise, because taxes are being pulled on a number that includes the imputed value of the insurance.
Why $50,000 Is the Threshold
Under 26 U.S.C. § 79, the first $50,000 of group term life insurance an employer provides is excluded from your gross income. Any coverage above that amount has a calculable value that federal law requires to be included in your taxable wages.2Office of the Law Revision Counsel. 26 U.S. Code 79 – Group-Term Life Insurance Purchased for Employees That calculated value is called imputed income: income you didn’t receive in cash, but that the IRS treats as compensation because the coverage has real financial worth.
If your employer-provided coverage is $50,000 or less, GTL won’t appear on your paystub at all. The full cost is tax-free. The line shows up only when coverage crosses the threshold.
One thing worth knowing: the taxable amount isn’t based on what your employer actually pays the insurance company. It comes from a standardized IRS rate table, so the number on your paystub may look nothing like a real-world premium.
How the Amount Is Calculated
The IRS publishes a Uniform Premium Table (Table 2-2 in Publication 15-B) that assigns a fixed monthly cost per $1,000 of coverage based on your age.3Internal Revenue Service. Group-Term Life Insurance These are the 2026 rates:
- Under 25: $0.05 per month
- 25 through 29: $0.06
- 30 through 34: $0.08
- 35 through 39: $0.09
- 40 through 44: $0.10
- 45 through 49: $0.15
- 50 through 54: $0.23
- 55 through 59: $0.43
- 60 through 64: $0.66
- 65 through 69: $1.27
- 70 and older: $2.06
The age used is your age on the last day of the tax year, December 31 for most people.4Internal Revenue Service. Publication 15-B – Employer’s Tax Guide to Fringe Benefits The rate climbs sharply after age 50, which is why older employees with generous coverage see a much bigger GTL figure than younger colleagues with the same policy.
Running the Math
Take the total face value of your policy, subtract $50,000, divide by 1,000, and multiply by the monthly rate for your age. Multiply by 12 for the full year, or by the number of months you were covered.
An example. Tom is 45 with $200,000 in employer-provided coverage. He contributes $100 a year toward the premium out of his own pocket. Subtracting $50,000 leaves $150,000 of taxable coverage. That’s 150 units of $1,000. At the age 45–49 rate of $0.15 a month, monthly imputed cost is $22.50, or $270 for the year. Subtract Tom’s $100 contribution and $170 is the imputed income his employer will report.4Internal Revenue Service. Publication 15-B – Employer’s Tax Guide to Fringe Benefits Spread across biweekly paychecks, that’s about $6.54 per pay period.
If you pay toward the premium with after-tax dollars, your contributions reduce the imputed income dollar for dollar. Section 79 subtracts both the cost attributable to the first $50,000 of coverage and any amount you pay toward the insurance before arriving at the taxable figure.2Office of the Law Revision Counsel. 26 U.S. Code 79 – Group-Term Life Insurance Purchased for Employees Most people miss this when checking the math on their own paystub.
What GTL Costs You in Withholding
GTL imputed income is subject to Social Security tax at 6.2% and Medicare tax at 1.45%.5Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates Those amounts are withheld from the cash portion of your paycheck, which is what makes a larger GTL number translate into slightly smaller take-home pay. On $170 of annual imputed income, combined FICA comes to roughly $13 for the year.
Social Security tax only applies to earnings up to the annual wage base, which is $184,500 in 2026.6Social Security Administration. Contribution and Benefit Base If your regular salary already tops that cap, your GTL imputed income won’t add any Social Security tax. Medicare has no cap, so the 1.45% always applies.
Federal income tax works differently. Employers are not required to withhold federal income tax from GTL amounts on each pay period, though some do.1Internal Revenue Service. Publication 15-B – Employer’s Tax Guide to Fringe Benefits Either way, the imputed income lands in your total taxable wages for the year, so income tax applies when you file.
How It Shows Up on Your W-2
At year-end, GTL imputed income appears in three wage boxes: Box 1 (wages, tips, other compensation), Box 3 (Social Security wages, up to the wage base), and Box 5 (Medicare wages). It also appears separately in Box 12 with Code C, which identifies the taxable cost of group term life insurance over $50,000.7Internal Revenue Service. 2026 General Instructions for Forms W-2 and W-3
Box 12 Code C gives you a way to check your paystubs. Add up every GTL entry across the year and it should match Code C. If it doesn’t, ask payroll about it before you file.
Situations That Change the Picture
Two Jobs
You only get one $50,000 exclusion in total, not one per employer. If two employers each provide group term life insurance, all of that coverage is combined, and anything above $50,000 is taxable. Each employer usually calculates imputed income based on their own policy only, so you can end up under-taxed if neither knows about the other. Reporting the correct total on your return is your responsibility.
Retirees and Former Employees
Section 79 defines “employee” to include former employees, so retirees who keep employer-provided group term coverage above $50,000 still owe tax on the imputed income.2Office of the Law Revision Counsel. 26 U.S. Code 79 – Group-Term Life Insurance Purchased for Employees There’s one carve-out: if a former employee is disabled as defined under IRC § 72(m)(7), the imputed income rules don’t apply to post-termination coverage. Expect a W-2 from your former employer even without a regular paycheck.
Key Employees in a Discriminatory Plan
Most workers get the $50,000 exclusion without conditions. But if a plan favors highly paid workers, the IRS can strip the exclusion for “key employees.” Under IRC § 79(d), the plan has to pass non-discrimination tests on eligibility and benefits. If it fails, key employees are taxed on the full value of their coverage using either the Table 2-2 rate or the actual premium, whichever is greater.3Internal Revenue Service. Group-Term Life Insurance A key employee for this purpose is generally an officer earning more than $235,000 a year, a more-than-5% owner, or a more-than-1% owner earning above $150,000. Rank-and-file employees keep their $50,000 exclusion either way.