It depends on how the insurance premiums are paid. If your employer covered the premiums, or you paid them with pretax dollars through an employee plan, then your short-term disability benefits are likely taxable. However, if you paid the premiums yourself with after-tax income, your short-term disability benefits are likely to be tax free.

Some employee plans are set up so that premiums are split between the employer and the employee. If this is how your short-term disability plan is set up, then a portion of your benefits may be taxable.

Have questions or concerns about taxes on short-term disability benefits? Your local Jackson Hewitt Tax Pro is open all year and ready to help. Find tax services near you, then walk in or book now.

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Sharon Brucker, CPA Senior Tax Research Analyst Published on: July 29, 2026
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*This content is for general informational purposes only. It is not intended to be comprehensive and should not be construed as professional tax or financial advice for any specific individual tax situation. Taxpayers should always consult a qualified professional for individual guidance. This information constitutes a solicitation under the Treasury Department's Circular 230. Most offices are independently owned and operated.