Tax
Aug. 14, 2023
Taxing disability pay and settlements
Many insurance companies offer disability policies, and if you buy one, it is usually out of your own pocket, which means after tax. In that case, the payments you later receive on disability are tax-free. This dividing line may sound simple, and it can be. Yet there are many tax disputes over disability pay issues.





Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
Disability insurance is often marketed to lawyers, and with good reason. Studies show that the chances of being disabled and unable to work are much higher than the chances of death. Those are sobering things to consider, and they are probably useful statistics to the insurance industry that wants to sell you disability insurance. Clearly, though, there are many circumstances where you should listen to the sales pitch.
If you die, you mos...
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