Is Disability Insurance Tax Free? 
If you pay your disability insurance premium with money that you paid income taxes on , your disability benefit should be tax free . It is a big advantage to receive disability benefits tax free , because becoming disabled brings with it extra expenses and challenges . While disability benefits are not 100 % of what prior income was , not having to take out taxes could make them equivalent -LRB- or even higher -RRB- than your take home pay previously was . 