Short Term Disability Insurance
How short-term disability insurance works, how much it pays, when the benefits are taxed, and a calculator.
Short term disability insurance benefit and tax calculator
What short term disability insurance pays
Short-term disability (STD) insurance replaces part of your pay, often around 60%, when illness, injury or childbirth keeps you from working, typically after a waiting period of up to a couple of weeks and for up to several months. Long-term disability or SSDI takes over for longer absences. Most coverage comes through employers; some states run their own programs (including California, New York, New Jersey, Rhode Island and Hawaii).
Is short term disability taxable?
It depends on who paid the premiums (IRS):
- Your employer paid: benefits are taxable income.
- You paid with after-tax money: benefits are tax-free.
- Split: only the part from your employer's premiums is taxable.
- Premiums you pay pre-tax through a cafeteria plan count as employer-paid, so those benefits are taxable.
Taxable sick pay is also subject to Social Security and Medicare tax for roughly the first six months after you stop working (IRS Publication 15-A). Paying premiums after tax can make sense if you'd rely on the benefit. Check your take-home with the bring home pay calculator.
Common questions
Is short term disability taxable?
Yes if your employer paid the premiums (or you paid pre-tax); no if you paid with after-tax money.
How much does short term disability pay?
Often about 60% of pay, up to a weekly cap set by the policy.
Which states have mandatory disability insurance?
Including California, New York, New Jersey, Rhode Island and Hawaii.
Sources
More paycheck and tax calculators: Personal Property Tax · S Corp · Social Security 1099 (SSA-1099) · SS4 Form
Related
General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.