Updated October 28, 2026. Quick answer: Worksheet 5-1 in Publication 17 figures the taxable cost of employer-paid group-term life insurance when the coverage is more than $50,000. It takes the coverage above $50,000, prices each $1,000 by your age on the last day of the year, subtracts anything you paid, and the result is income as wages.
IRS worksheet walk-throughs: Pub 571 Worksheet A, cost of incidental life insurance.
What this worksheet is for
An employer can provide group-term life insurance with the first $50,000 of coverage not counted as your income. The publication addresses coverage over that amount: “Use Worksheet 5-1 to figure the amount to include in your income.” When one employer’s coverage is over the limit, the amount is reported to you; with two or more employers it is not, and the publication explains “Your exclusion for employer-provided group-term life insurance coverage can’t exceed the cost of $50,000 of coverage, whether the insurance is provided by a single employer or multiple employers.”.
The 12 lines
| Line | What the worksheet says |
|---|---|
| 1 | “Enter the total amount of your insurance coverage from your employer(s)” |
| 2 | “Limit on exclusion for employer-provided group-term life insurance coverage”: the worksheet prints $50,000 |
| 3 | “Subtract line 2 from line 1” |
| 4 | “Divide line 3 by $1,000. Figure to the nearest tenth” |
| 5 | “Go to Table 5-1. Using your age on the last day of the tax year, find your age group in the left column, and enter the cost from the column on the right for your age group” |
| 6 | “Multiply line 4 by line 5” |
| 7 | “Enter the number of full months of coverage at this cost” |
| 8 | “Multiply line 6 by line 7” |
| 9 | “Enter the premiums you paid per month” |
| 10 | “Enter the number of months you paid the premiums” |
| 11 | “Multiply line 9 by line 10” |
| 12 | “Subtract line 11 from line 8. Include this amount in your income as wages” |
Table 5-1: cost of $1,000 of coverage for one month
Line 5 reads from this table, headed Cost of $1,000 of Group-Term Life Insurance for 1 Month. Use your age on the last day of the tax year.
| Age on the last day of the year | Cost in dollars |
|---|---|
| Under 25 | 0.05 |
| 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 above | 2.06 |
The publication’s example, line by line
The publication’s example is a 51-year-old with coverage of $35,000 from one employer and $45,000 from another, with $4.15 a month in premiums paid under one of the plans.
| Item | Amount |
|---|---|
| Line 1: coverage from Green Company ($35,000) plus Maple Company ($45,000) | $80,000 (computed) |
| Line 2: limit on the exclusion | $50,000 |
| Line 3, computed: line 1 minus line 2 | $30,000 (computed) |
| Line 4, computed: line 3 divided by $1,000 | 30.0 |
| Line 5: Table 5-1 cost for age 51 (the 50 through 54 row) | 0.23 |
| Line 6, computed: line 4 x line 5 | $6.90 (computed) |
| Line 7: full months of coverage | 12 |
| Line 8, computed: line 6 x line 7 | $82.80 (computed) |
| Line 9: premiums paid per month | $4.15 |
| Line 10: months premiums were paid | 12 |
| Line 11, computed: line 9 x line 10 | $49.80 (computed) |
| Line 12, computed: line 8 minus line 11, included in income as wages | $33.00 (computed) |
The $33.00 result is small because the coverage above $50,000 is only $30,000. The same method gives a larger number at an older age, because the Table 5-1 cost rises with age.
When the whole cost is excluded or taxed
The publication lists circumstances where “You aren’t taxed on the cost of group-term life insurance if any of the following circumstances apply.” They include a permanently and totally disabled person who has ended employment, an employer as sole beneficiary and a charity as sole beneficiary. In the other direction, “You’re taxed on the entire cost of group-term life insurance if either of the following circumstances apply.” Those are insurance provided through a qualified employees’ trust, and a key employee under a plan that discriminates in favor of key employees.
Where the result shows up
Publication 525 prints the same worksheet as its Worksheet 1: “Figuring the taxable cost. Use the following worksheet to figure the amount to include in your income.” Publication 17 says “Reduce the amount you figure by any amount reported in box 12 of Form W-2, with code C, add the result to the wages reported in box 1, and report the total on your return.” Box 12 code C is explained at W-2 box 12 code C, and the uncollected social security and Medicare tax on the excess coverage is reported on Schedule 2 line 13.
Edition
This page reads Publication 17 (2025), the file irs.gov served on 2026-10-28 (sha256 in the kit data). It covers the 2025 return, filed in 2026. Check the tax year printed on the worksheet in your own copy and use that year’s line numbers and dollar amounts, because a different year’s worksheet can word its lines differently.
Common mistakes
- Using the age at the start of the year. Line 5 uses your age on the last day of the tax year.
- Skipping the worksheet because the W-2 already shows an amount. With two or more employers the W-2 wages will not be correct.
- Dividing by $100 or $10,000 on line 4. The worksheet divides the excess coverage by $1,000.
- Forgetting to subtract the premiums you paid on line 11.
Related: W-2 box 12 code C, W-2 box 12 codes, W-2 box 1, and Schedule 2 lines 13 to 16.
Find the right next step for your situation
About how much do you have invested? Pick the range that fits; your next step appears immediately below.
Compare vetted advisors for tax planning
For U.S. investors with $250,000 or more in investable assets. WiserAdvisor is an independent service matching you with 2 to 3 vetted advisers. Its form asks for your ZIP code and answers to a few questions; a match is not guaranteed.
Free to request, with no obligation to hire. By submitting, you consent to calls, texts and emails from WiserAdvisor and up to three advisers. Advisers pay for introductions.
Clear Money Guide may earn a referral payment for a qualifying completed form. An introduction is not a Clear Money Guide recommendation.
Opens on WiserAdvisor’s site in a new tab.
Explore optional adviser matching today
Price the destination before you decide. The matching service below introduces you to advisers who pay to meet you.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide may earn a referral payment for a qualifying submitted form, whether or not you ever hire anyone. This is free to you and there is no obligation to hire anyone.
The Kapitalwise form opens here; you stay on this page.
What happens when you press the button
It asks about nine questions: age, investable assets, location; then your name, email and phone number, and verifies the phone by text. Nothing loads and nothing reaches Kapitalwise until you press the button.
Prefer flat-fee or hourly pricing instead? Compare ranges here.
Answer againSources
- Publication 17 (2025), Your Federal Income Tax: https://www.irs.gov/pub/irs-pdf/p17.pdf
- Publication 525 (2025), Taxable and Nontaxable Income: https://www.irs.gov/pub/irs-pdf/p525.pdf
Read from the IRS documents linked above on October 28, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.