What amount of Employer-paid Group Term Life insurance for an employee is exempt from taxes?

The correct answer indicates that the premium amount for employer-paid Group Term Life insurance coverage up to $50,000 is exempt from taxable income for the employee. This is a specific provision under the Internal Revenue Code, which states that employees can exclude the cost of up to $50,000 in group-term life insurance from their taxable income.

This exemption applies to employer-provided group term life insurance policies, meaning that as long as the coverage does not exceed the $50,000 threshold, employees do not have to report this amount as income for tax purposes. If the coverage exceeds this limit, then the premiums paid for the excess amount will be subject to taxation, which is why amounts beyond that figure are not excluded from income.

In summary, the allowance of tax exemption for Group Term Life insurance coverage up to $50,000 plays a role in total employee compensation and benefits, as it helps employees by reducing their taxable income and acknowledging the employer's contribution towards their insurance.