What Is GTL on Your Paystub? Group Term Life and Imputed Income
GTL is the taxable value of employer-paid life insurance above $50,000. Why it increases your taxable wages without reducing your deposit, and where it shows up on your W-2.
GTL is one of the stranger lines on a pay stub. It appears in the earnings or deductions area, it changes your tax, and yet no money moves. Understanding it means understanding imputed income.
The $50,000 Exclusion
Employer-provided group-term life insurance is a tax-favoured benefit, but only up to a point. Coverage up to $50,000 is excluded from an employee's income entirely. Above that threshold, the value of the excess coverage is treated as taxable compensation, calculated using an IRS table based on the employee's age.
So an employee with $50,000 of coverage sees nothing. An employee with $200,000 of employer-paid coverage has the value of $150,000 of it added to taxable wages.
Why Your Net Pay Changes Without a Deduction
Imputed income is added to taxable wages so the correct tax can be withheld, then removed again so it is not paid out in cash. The visible effect is that your taxable wages rise, Social Security and Medicare tax are withheld on the extra amount, and your net pay is slightly lower than it would otherwise be. Nothing was deducted for the insurance itself; the dip is purely the tax on a benefit you received in kind.
Where It Appears at Year End
The taxable cost of group-term life insurance over $50,000 is reported in Box 12 of your W-2 with code C, and it is already included in the wages shown in Boxes 1, 3 and 5. You do not add it again when filing; the figure in Box 12 is informational.
I work through the age-based valuation table and the cases where employee-paid coverage changes the calculation in my explainer on GTL and imputed income for Online Paystub.
Worth Checking at Open Enrolment
If your employer offers coverage at a multiple of salary, a raise can quietly push you past the threshold and introduce a GTL line that was not there before. That is not an error, but it is a reason to read the benefit summary rather than accepting the default multiple without looking at the tax consequence.