IRS Table I: Group-Term Life Insurance Rates and Imputed Income

The IRS Table I group-term life insurance rates assign a monthly cost per $1,000 of employer-provided coverage, ranging from $0.05 for employees under 25 to $2.06 for those 70 and older. Your employer uses these uniform rates, not the real premium it pays the insurer, to value any coverage above $50,000 as taxable income to you.¹

Under Internal Revenue Code Section 79, the cost of the first $50,000 of group-term life insurance your employer provides is excluded from your gross income. If your coverage is $50,000 or less, Table I never comes into play. Once coverage crosses that line, only the excess is valued for tax purposes, and any after-tax contributions you make toward the premium reduce the taxable amount dollar for dollar.²³

The Full Table I Rate Schedule

Table I (labeled Table 2-2 in IRS Publication 15-B) uses your age on the last day of the tax year. The rates do not vary by the employee’s health, the actual premium the employer pays, or geography.¹

Under 25: $0.05 per $1,000 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 rate roughly doubles at the older brackets. An employee with $200,000 of coverage moving from the 60-to-64 bracket into 65-to-69 sees the annual taxable amount rise from roughly $1,188 to $2,286 on the same policy.

How To Calculate Your Imputed Income

You need three numbers: your total employer-provided coverage, your age on December 31, and any after-tax premium contributions you made during the year.

Take a 47-year-old employee with $150,000 of coverage who pays nothing toward the premium. Subtract the $50,000 exclusion, leaving $100,000 of taxable excess. Divide by 1,000 to get 100 units. The 45-to-49 rate is $0.15, so 100 × $0.15 = $15.00 per month, or $180.00 for the year. If that employee had contributed $50.00 on an after-tax basis, the final imputed income would be $130.00.¹

Round coverage to the nearest $100 before dividing into $1,000 units. The age you use is your age on December 31 of the tax year, even for earlier months when you were technically younger.

Mid-Year Changes and Partial Months

When coverage starts, stops, or changes partway through a month, the employer prorates the cost for that partial month rather than charging a full monthly rate. If your coverage amount increases mid-year, say from $100,000 to $200,000 in July, the calculation runs separately for each period at the corresponding coverage amount, then the pieces are added together for the annual total.¹

How the Amount Shows Up on Your W-2

Imputed income from group-term life insurance is added to Box 1 (wages), Box 3 (Social Security wages), 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 $50,000.⁴

One point catches people off guard. This imputed income is subject to Social Security and Medicare taxes but is not subject to federal income tax withholding. Your employer collects FICA on the amount; the federal income tax piece is settled when you file your return. For small policies the effect is minor, but employees with large coverage should factor it into their planning.

If an employee has separated from the company but still has coverage, the employer may have no paycheck to withhold from. The employer remains liable for collecting FICA on the imputed income, and any uncollected employee share of Social Security and Medicare tax must be added to the employee’s wages. Withheld federal income tax cannot be used to cover the FICA obligation.¹

What Counts as Group-Term Life Insurance

Not every employer-purchased policy runs through Table I. To fall under Section 79, the policy must provide a general death benefit (not just accidental death), cover a group of employees rather than a single individual, be carried directly or indirectly by the employer, and use a formula that prevents individual selection of amounts (like a flat sum or a multiple of salary).²

Whole life, permanent life, and policies that build cash value are outside Section 79. If a policy bundles a permanent benefit with term coverage, only the term piece runs through Table I; the permanent portion is taxed under separate rules.

When the $50,000 Exclusion Doesn’t Apply

Key Employees Under a Discriminatory Plan

Section 79 has nondiscrimination rules meant to prevent plans that favor top executives. If a plan is discriminatory in eligibility or benefits, key employees lose the $50,000 exclusion entirely and must include the full Table I cost of all their employer-provided group-term coverage in income.⁵

A key employee for this purpose is generally an officer earning more than $235,000 in 2026, a more-than-5-percent owner, or a more-than-1-percent owner earning over $150,000.²

More-Than-2% S Corporation Shareholders

If you own more than 2 percent of an S corporation, the $50,000 exclusion does not apply to you. The IRS treats you more like a self-employed person than a traditional employee for fringe benefit purposes. The full Table I cost of your employer-provided group-term life coverage is included in wages on your W-2, with no tax-free threshold.

Retired and Disabled Former Employees

The exclusion runs the other direction for former employees who have both left the company and reached retirement age or become permanently disabled. Their group-term life insurance cost is fully excluded from gross income, regardless of coverage amount.⁶

Retirement age is defined by the employer’s pension or retirement plan as the earliest age at which an active employee can retire with immediate benefits without disability and without employer consent. If the employer has no formal plan, the standard practice for age-based terminations controls. If neither applies, the IRS uses a default retirement age of 65.⁶

Coverage Naming a Charity as Beneficiary

If a qualifying charity is the sole beneficiary of a portion of your group-term coverage for the entire tax year, with no contingent non-charitable beneficiary, the cost of that portion is excluded from your income. You can name a charity for part of your coverage and keep an individual as beneficiary for the rest; only the charitable portion qualifies. No Section 170 charitable deduction is allowed for the designation.⁷

Spouse and Dependent Coverage

Some employers extend group-term coverage to a spouse or dependents. If the face amount is $2,000 or less, the IRS treats the employer-paid premium as a de minimis fringe benefit and it is tax-free to the employee. Coverage above the de minimis threshold is valued using the same Table I rates, but the spouse or dependent’s own age determines the bracket, not the employee’s.³

1
Internal Revenue Service. Publication 15-B (2026), Employer’s Tax Guide to Fringe Benefits
2
Office of the Law Revision Counsel. 26 USC 79 – Group-Term Life Insurance Purchased for Employees
3
Internal Revenue Service. Group-Term Life Insurance
4
Internal Revenue Service. 2026 General Instructions for Forms W-2 and W-3
5
eCFR. 26 CFR 1.79-4T – Questions and Answers Relating to the Nondiscrimination Requirements for Group-Term Life Insurance (Temporary)
6
eCFR. 26 CFR 1.79-2 – Exceptions to the Rule of Inclusion
7
eCFR. 26 CFR 1.79-2 – Exceptions to the Rule of Inclusion