is federal included in disability income
Self-Paid vs Employer Paid Disability Policy. If you pay for your own disability insurance policy, you do not need to claim disability income on your federal tax return. However, if your employer pays for your disability policy, you must include any disability payments as income when you file your taxes. Each state has its own way of determining state taxable income. Contact your state's revenue department to determine how disability income is to be reported for state income taxes.