Is employer life insurance for my spouse taxable?
The $50,000 exclusion and Table 2-2 do not apply to coverage on your spouse or children. Those rules price your own coverage. Spousal coverage is tested differently, and the test is short. For your own coverage, use the imputed income calculator.
Employer-paid group-term life coverage for a spouse or dependent is not part of your section 79 coverage. IRS Publication 15-B treats it as a de minimis fringe benefit when the face amount is $2,000 or less, so nothing goes on your Form W-2. Above $2,000, the cost can still be excluded only if accounting for it is administratively impracticable.
Updated 2026-10-28
Two different rules, two different sets of coverage
Section 79 and Publication 15-B give an employee a $50,000 exclusion on group-term life insurance on the employee's own life, and price anything above that with Table 2-2. Publication 15-B then lists the coverage the exclusion does not reach, and "Life insurance on the life of your employee's spouse or dependent" is on that list.
Publication 15-B sends that coverage to a different rule instead: "However, you may be able to exclude the cost of this insurance from the employee's wages as a de minimis benefit."
The practical result: Table 2-2 never enters the calculation for spousal coverage. An employee with a $250,000 policy on their own life and a $25,000 policy on a spouse has one imputed income figure for the first policy and none from Table 2-2 for the second.
The $2,000 face-amount test
Publication 15-B, under "Coverage for dependents", says: "Group-term life insurance coverage paid by the employer for the spouse or dependents of an employee may be excludable from income as a de minimis fringe benefit if the face amount isn't more than $2,000."
The number being tested is the face amount of the policy, not its premium and not the employee's salary. A $2,000 policy passes. A $2,001 policy does not pass this test and moves to the next paragraph of the publication.
| Face amount $2,000 or less | Excludable as a de minimis fringe benefit |
| Face amount over $2,000 | Excludable only if the excess cost over what the employee paid is so small that accounting for it is unreasonable or administratively impracticable |
| Value that is not excludable | Included in the employee's income as wages |
Above $2,000: the second sentence
Publication 15-B continues: "If the face amount is greater than $2,000, the dependent coverage may be excludable from income as a de minimis fringe benefit if the excess (if any) of the cost of insurance over the amount the employee paid for it on an after-tax basis is so small that accounting for it is unreasonable or administratively impracticable."
Three things decide that sentence. The cost of the insurance, what the employee paid for it with after-tax dollars, and whether the leftover amount is small enough to be administratively impracticable. The publication gives no dollar threshold for "so small". That judgment belongs to the employer's payroll function, not to a calculator.
What happens when the value is not excludable
The general de minimis rule in Publication 15-B is blunt: "If a benefit provided to an employee doesn't qualify as de minimis ... then generally the entire benefit must be included in income." For a spousal policy that fails both tests, the includible amount is the cost of the coverage, reduced by what the employee paid on an after-tax basis.
This page does not compute that amount. It depends on the insurer's rate for the spouse's age, the months of coverage, and the employee's after-tax contributions, which are not on a public table like Table 2-2.
Common questions
Does my own $50,000 exclusion count the spouse's coverage too?
No. The $50,000 exclusion applies to coverage on the employee's own life. Spousal and dependent coverage is tested under the de minimis rule, separately, and the two amounts are not added together.
Is a $2,000 policy on a child treated the same way?
The publication's sentence covers "the spouse or dependents of an employee", so a child's coverage is tested by the same face-amount rule rather than by Table 2-2.
Does imputed income appear on my W-2 for spousal coverage?
Not when the coverage is excluded as de minimis: an excluded benefit is not wages. If the value is not excludable, Publication 15-B says it is included in income, and the employer reports wages it includes.
Can I use Table 2-2 to estimate the spousal cost anyway?
You can use it as a rough cost estimate, but it is not the rule that decides taxability here. Table 2-2 is the section 79 table for the employee's own coverage, and Publication 15-B does not apply it to spouse or dependent life insurance.
Sources
IRS Publication 15-B (2026), Employer's Tax Guide to Fringe Benefits, section Group-Term Life Insurance Coverage, including "Coverage for dependents", and section De Minimis (Minimal) Benefits.
Sources read on October 28, 2026. This page describes a published rule. It is not tax advice.