GTL on a pay stub means group-term life insurance. It shows the taxable value of life insurance your employer pays for when the coverage is more than $50,000. It is not cash paid to you or taken from you: it is added to taxable wages so Social Security and Medicare are charged on it.
In brief: the cost of the first $50,000 of employer-paid group life cover is tax-free. Above that, the IRS sets the taxable value by age, not from the actual premium. Payroll adds it to your wages each paycheck, and it appears on your W-2 in box 12 with code C.
What does GTL mean on a pay stub?
GTL stands for group-term life insurance, the life cover many employers give staff as a benefit, often one or two times salary. When the coverage is worth more than $50,000, the IRS treats the cost of the extra cover as part of your pay (IRS Publication 15-B).
That taxable amount is often called imputed income. You never receive it as money, so payroll adds it to your earnings for tax purposes only and takes it back out before your net pay is worked out. Depending on the payroll system, the line may read GTL, GTLI, Group Term Life or Imputed Income.
Why GTL is on your paycheck
Under Publication 15-B, your employer can leave out the cost of up to $50,000 of group-term life cover from your wages. Anything over that has to be added to your wages for income tax and for Social Security and Medicare, reduced by anything you paid toward the cover yourself.
So GTL shows up only when your cover is over $50,000. If your employer gives you, say, a flat $50,000 policy, you will not see a GTL line at all. A salary-based policy can cross the line after a raise, so GTL can appear with no change to your benefits.
How GTL is calculated
Payroll does not use the premium the employer pays. The IRS sets a fixed cost per $1,000 of cover per month, by your age on December 31, in Table 2-2 of Publication 15-B:
| Age | Per $1,000 a month | Per $10,000 over $50,000, a year |
|---|---|---|
| Under 25 | $0.05 | $6.00 |
| 25 to 29 | $0.06 | $7.20 |
| 30 to 34 | $0.08 | $9.60 |
| 35 to 39 | $0.09 | $10.80 |
| 40 to 44 | $0.10 | $12.00 |
| 45 to 49 | $0.15 | $18.00 |
| 50 to 54 | $0.23 | $27.60 |
| 55 to 59 | $0.43 | $51.60 |
| 60 to 64 | $0.66 | $79.20 |
| 65 to 69 | $1.27 | $152.40 |
| 70 and older | $2.06 | $247.20 |
The steps are the same for everyone. Take your coverage, subtract $50,000, and count the thousands left (coverage is figured to the nearest $100). Multiply by the rate for your age and by the months of coverage. Subtract anything you paid for the cover with after-tax money. The result is your GTL for the year.
A worked GTL example
Here is an employee aged 52 at year end whose employer gives life cover of twice their salary, with nothing paid by the employee. Payroll spreads the year’s GTL evenly over 26 biweekly paychecks:
| Employer-paid coverage | $130,000 (2 x a $65,000 salary) |
|---|---|
| Excluded coverage | $50,000 |
| Coverage over the exclusion | $80,000 |
| Table 2-2 rate at age 52 | $0.23 per $1,000 a month |
| GTL for the year | 80 (thousands over) x $0.23 x 12 months = $220.80 |
| GTL on each biweekly stub | $220.80 / 26 = $8.49 |
| Extra Social Security per stub | 6.2% of $8.49 = $0.53 |
| Extra Medicare per stub | 1.45% of $8.49 = $0.12 |
On each stub, the GTL line raises taxable wages by that amount, and the Social Security and Medicare lines rise by a few cents. Net pay drops only by those cents, because the GTL amount itself is added and then removed. Our guide to OASDI on a paycheck explains the Social Security line.
Is GTL taxable?
Yes, the part over $50,000 is. It is subject to Social Security and Medicare, and it counts as income on your tax return. Your employer does not have to withhold federal income tax on it, but may choose to (Pub 15-B). It is not subject to federal unemployment tax.
Because income tax is often not withheld on GTL, a large policy at an older age can leave a small amount of extra tax due when you file. The amount is usually modest, as the example shows, but it grows quickly with age because the table rates rise steeply.
GTL on your W-2
At year end the GTL amount is included in box 1 (wages), box 3 (Social Security wages) and box 5 (Medicare wages) of your W-2, and shown again in box 12 with code C (Pub 15-B). It is already in your wages; do not add it again. See our guide to W-2 box 12 codes.
Former employees and retirees can still have GTL coverage. Their employer reports the uncollected Social Security and Medicare on it with codes M and N, and the former employee pays that tax with their own return.
GTL for a spouse or children
Employer-paid life cover for a spouse or dependents is a separate benefit. It can be left out of income as a de minimis benefit when the face amount is not more than $2,000 (Pub 15-B). Above that, the cost may be taxable to you, so it can appear as its own imputed income line.
Other imputed income on a pay stub
GTL is one of several non-cash benefits that payroll adds to wages and then removes. Others include personal use of a company car. Each raises taxable wages and the taxes on them without changing your cash pay. For every common pay stub line, see what is on a pay stub.
