Disability insurance benefits may or may not be taxable. It depends on who paid for the disability insurance policy.  As a general rule, if the premiums are paid for after-tax the benefits are not taxable. This is a nice perk because it can give you an income similar to what you made before receiving disability insurance benefits.  On the other hand, if premiums were paid before taxes, the benefits themselves are taxable.  Here is a chart to help make it easier to understand: