Is Short-Term Disability Taxable?

The answer varies. This usually depends on who pays the premiums and when they are paid.

• If you pay for the premiums with your after-tax dollars, your short-term disability benefits are not taxed.
• If your employer pays for all of the premiums, your short-term disability benefits are taxed.
• If you split premium payments with your employer and your share is deducted from your paycheck, your short-term disability benefits are taxed.
• If you split premium payments with your employer and your share is paid with after-tax dollars, half of your short-term disability benefits are taxed.