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Pennsylvania Group Term Life Taxability

I was hoping some of you could give me feedback on Pennsylvania. Do you configure your payroll system to NOT tax imputed company paid Group Term Life insurance in Pennsylvania? Also, I just found out about this recently and was surprised it hadn't come up in my 35 years with Payroll. Were you Gurus on the board aware of PA doesn't tax imputed Life Insurance?

Thank you for any feedback.


  • It's all over the PA website - search for "income items that are never taxable as PA compensation". Sometimes it pays to read the instructions - e.g. page 2 of the Instructions for PA-40 Schedule W-2S top of the second column regarding adjusting PA income in box 16. If you withheld on it, it should not be a major issue as it will be excluded from employee PA wages on the employee's tax return and the employee will recover the excess withholding. However, it should be fairly easy to code the benefit as not subject to withholding for PA tax.