Will I have to pay taxes on long term disability?

Any form of compensation you receive annually, including long term disability, will be taxed. The state and federal governments take taxes out of government provided and privately provided disability benefits. However, the tax rate you pay may be reduced when compared to your normal income tax if the amount you are receiving for disability benefits is lower than your income. You can have these taxes automatically pulled out of your paycheck in order to streamline the process. You will have to continue making payments toward your medical benefits and other costs as well while you are on disability if you would like to continue coverage.

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