What is the maximum amount of employer-provided group term life insurance that can be excluded from an employee's income?

The maximum amount of employer-provided group term life insurance that can be excluded from an employee's income is indeed $50,000. This is established by the Internal Revenue Service (IRS) guidelines, which state that if the total amount of group term life insurance coverage exceeds $50,000, the excess amount must be included in the employee's taxable income as imputed income.

When an employer provides group term life insurance up to the threshold of $50,000, the employee does not have to pay taxes on this benefit, making it a valuable element of employee compensation that can contribute to overall job satisfaction and retention. This tax exclusion serves as an incentive for both employers to offer life insurance benefits and for employees to take advantage of such offerings without increasing their tax burden substantially.

The other figures mentioned are either below the allowable exclusion limit or are not applicable to this specific provision. For instance, $2,000 does not reflect the current IRS regulations surrounding employer-provided insurance, and neither does $100,000 or one times their annual salary, since these amounts exceed the threshold for tax-exempt status. Thus, $50,000 is the correct amount that can be excluded from the employee's taxable income.