What Is GTL on My Paystub? Group Term Life Explained (2026)

What GTL Actually Means

GTL stands for Group Term Life insurance. When your employer gives you life insurance as a benefit, the first $50,000 of coverage is tax-free under IRC Section 79. Coverage above $50,000 is considered a taxable fringe benefit, and the IRS-calculated cost of that excess coverage gets added to your paystub as imputed income.

You did not receive that money in cash — it is just the dollar value of the benefit, added to your wages so it can be taxed.

Why It Shows Up Twice (Income AND Deduction)

This trips people up. GTL usually appears in two places on a stub:

1. Earnings side: "GTL" or "Imputed GTL" added to your gross pay.
2. Deductions side: the same amount subtracted back out, since you never actually got the cash.

The net effect on your take-home pay is zero dollars. The non-zero impact is on the taxes withheld, because that imputed amount is subject to Social Security, Medicare, and (sometimes) federal income tax.

The IRS Cost Table

The taxable value of the excess coverage is not what the policy actually costs your employer. The IRS publishes a fixed monthly rate per $1,000 of coverage in Publication 15-B, Table 2-2:

Real Example

Say you are 42 years old and your employer provides $150,000 in group term life:

• Excess coverage: $150,000 − $50,000 = $100,000 (or 100 units of $1,000)
• IRS monthly cost at age 42: $0.10 per $1,000
• Monthly imputed income: 100 × $0.10 = $10.00
• Annual imputed income: $120.00

That $120 gets sprinkled across your stubs throughout the year (about $4.62 per biweekly check) and FICA tax of 7.65% applies — so it costs you about $9.18 in extra FICA for the year, in exchange for $100,000 in life insurance coverage. A genuinely good deal.

When GTL Is Not Taxable

A few situations remove GTL from your taxable income entirely:

• Coverage stays under $50,000 for the year (no imputed income at all).
• Employer is the policy beneficiary (key person insurance) — not a benefit to you.
• A charity is the irrevocable beneficiary.
• You pay the entire premium with after-tax dollars for the excess coverage.

GTL on Your W-2

At year end, the imputed GTL amount flows into:

• Box 1 (federal taxable wages) — yes
• Box 3 (Social Security wages) — yes, up to the $176,100 cap
• Box 5 (Medicare wages) — yes
• Box 12, Code C — the exact GTL amount, itemized

If your W-2 Box 12-C number does not match what added up on your paystubs across the year, ask payroll for a reconciliation. This is a common audit trigger.

What to Do If You See GTL and Did Not Expect It

• Confirm coverage amount with HR. You may have been enrolled in a higher tier than you remember.
• Check your beneficiary designation. A surprising number of people pay GTL tax on coverage with an outdated beneficiary.
• Ask whether the employer offers an opt-out above $50,000 if you have private term life that covers your needs.

How to Show GTL on a Self-Generated Paystub

If you are a small-business owner using a paystub generator for your own payroll, and you pay for an employee's GTL above $50,000, the stub should:

1. Add imputed GTL to gross wages under earnings.
2. Apply FICA (7.65%) to the imputed amount.
3. Subtract the imputed amount as a non-cash deduction so net pay is unchanged.
4. Track YTD imputed GTL separately for W-2 Box 12-C.

PayStub LLC's generator handles this automatically when you check the "Group Term Life over $50K" box during the earnings step.

Bottom Line

GTL is a paper transaction. It does not affect your take-home pay directly, but it does add a small amount of taxable income that increases your FICA and federal tax bill in exchange for life insurance coverage your employer is funding. For most employees, the trade is worth it — pennies on the dollar of actual coverage value.