Is My Disability Insurance Taxable? 
Disability insurance is generally taxable in one of two ways . Either you pay for premiums with your own funds that have already been taxed , in which case you will probably not need to pay taxes on the income from your policy if it is ever needed . If your employer pays for your policy , or if you pay for it with funds that have not yet been taxed , you will need to pay taxes on the insurance benefits if needed . 