Updated September 29, 2026. Quick answer: code C in Box 12 is the taxable cost of group-term life insurance your employer provided above $50,000 of coverage. That amount is also included in your wages in Boxes 1, 3 and 5.
What the IRS tells the employer
The instructions define code C as “Taxable cost of group-term life insurance over $50,000.” and say: “Show the taxable cost of group-term life insurance coverage over $50,000 provided to your employee (including a former employee).”
Where else it appears
“Also include this amount in boxes 1, 3 (up to the social security wage base), and 5.” The group-term life section adds the rule for what is counted: “the cost of group-term life insurance that is more than the cost of $50,000 of coverage, reduced by the amount the employee paid toward the insurance.”
What is withheld
“For employees, you must withhold social security and Medicare taxes, but not federal income tax.”
Former employees and codes M and N
For coverage provided to former employees the instructions say the former employee pays the employee share of social security and Medicare tax on the Form 1040 and the employer is not required to collect it. “However, you must report the uncollected social security tax (or railroad retirement taxes, if applicable) with code M and the uncollected Medicare tax (or RRTA Medicare tax, if applicable) with code N in box 12 of Form W-2.”
Common mistakes
- Treating the whole value of the coverage as income. Only the cost above $50,000 of coverage, less what you paid, is counted.
- Expecting income tax to have been withheld on it. The instruction says employers withhold social security and Medicare tax, not federal income tax.
Related: code DD, codes A and B, and code P.
Every code in one place: the Box 12 codes table. If a withdrawal from one of these accounts is your question, see the Form 1099-R Box 7 codes.
Figures verified against the IRS 2026 General Instructions for Forms W-2 and W-3 on September 30, 2026.
Sources
- IRS, 2026 General Instructions for Forms W-2 and W-3: https://www.irs.gov/pub/irs-pdf/iw2w3.pdf
- IRS, About Form W-2, Wage and Tax Statement: https://www.irs.gov/forms-pubs/about-form-w-2
Code meanings are read from the IRS 2026 General Instructions for Forms W-2 and W-3 (Box 12) at irs.gov on September 29, 2026. General information, not tax advice. Your own facts decide the outcome, and a payroll professional, a preparer or the IRS is the right place to confirm anything consequential.