What Is GTL on a Paycheck? Group-Term Life Insurance Explained
By Onoir Studio LimitedPublished Source links reviewed
GTL usually means employer-provided group-term life insurance. The line may show a premium deduction, taxable imputed income, or both, so the amount should be read together with the employer’s benefit and payroll legend.
Key takeaways
- Under IRS rules, the cost of up to $50,000 of qualifying employer-provided group-term life coverage can generally be excluded from an employee’s wages.
- The IRS-calculated cost of coverage above $50,000, reduced by applicable employee payments, is generally taxable imputed income.
- Imputed GTL income can increase taxable wages and payroll tax without increasing cash pay.
- Form W-2 generally reports the taxable cost in boxes 1, 3, and 5 and identifies it in box 12 with code C.
Why GTL can reduce net pay
An employer may pay for life insurance without handing that value to the employee in cash. When coverage exceeds the IRS exclusion, payroll calculates a taxable value using the IRS age-based table. That value is “imputed” into wages. It can create Social Security and Medicare tax, and the employer may choose to withhold federal income tax on it. The result can be a slightly smaller net check even though GTL is shown as an earning or memo item rather than a normal cash deduction.
Separately, an employee may pay part of the actual insurance premium. That premium can appear as a deduction. It is therefore possible to see both a GTL deduction and GTL taxable income on the same statement.
The IRS cost table
Publication 15-B instructs employers to price coverage over $50,000 using a monthly cost per $1,000 based on the employee’s age at the end of the tax year. The 2026 publication lists the following amounts:
| Age | Monthly cost per $1,000 |
|---|---|
| Under 25 | $0.05 |
| 25-29 | $0.06 |
| 30-34 | $0.08 |
| 35-39 | $0.09 |
| 40-44 | $0.10 |
| 45-49 | $0.15 |
| 50-54 | $0.23 |
| 55-59 | $0.43 |
| 60-64 | $0.66 |
| 65-69 | $1.27 |
| 70 and older | $2.06 |
These are tax valuation amounts, not necessarily the insurer’s premium. Special rules, including rules for key employees, former employees, dependent coverage, and plans that discriminate in favor of key employees, can change the treatment.
Worked GTL example
Assume an employee is age 47 at year-end, receives $150,000 of employer-carried group-term life coverage for all 12 months, and makes no after-tax payment toward the excess coverage.
| Step | Calculation |
|---|---|
| Coverage above exclusion | $150,000 − $50,000 = $100,000 |
| Units of $1,000 | $100,000 ÷ $1,000 = 100 |
| Monthly taxable cost | 100 × $0.15 = $15 |
| Annual imputed income | $15 × 12 = $180 |
Payroll might spread the $180 over checks or add it near year-end. If $15 is added as taxable GTL income in one month, ordinary employee Social Security and Medicare tax on that amount would be about $1.15 before rounding, assuming the wages remain subject to both taxes. This does not mean the employee received $15 cash.
How to check a GTL line
- Confirm the amount of employer-carried coverage, not just the death benefit from every policy you own.
- Check the age band payroll used and the number of months covered.
- Identify any employee after-tax contribution applied against the IRS cost.
- Distinguish a premium deduction from imputed taxable income.
- Compare the annual taxable amount with Form W-2 box 12 code C when issued.
Do not reverse-engineer coverage from one cryptic line if payroll has made a year-end adjustment. Request the employer’s calculation and benefit summary.
Where this comes from
- IRS Publication 15-B (2026), Group-Term Life Insurance (opens in a new tab)
- IRS, Group-Term Life Insurance (opens in a new tab)
- IRS General Instructions for Forms W-2 and W-3 (2026) (opens in a new tab)
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