What is a common threshold that triggers taxation on group life insurance coverage provided by an employer?

In the context of group life insurance coverage provided by an employer, the threshold that typically triggers taxation is $50,000. Under the Internal Revenue Code, the first $50,000 of group term life insurance coverage provided to an employee by their employer is generally tax-free to the employee. However, if the coverage exceeds this amount, the excess is considered taxable income and is subject to income tax based on the employee's marginal tax rate. This means that any coverage above the $50,000 limit incurs imputed income that will be reported on the employee's W-2 form. Understanding this threshold is essential for both employers in structuring their benefits and for employees to comprehend their potential tax liabilities.