Effective Federal Income Tax Rate
Definition - What does Effective Federal Income Tax Rate mean?
The effective federal income tax rate is the rate at which individuals and businesses have their incomes taxed by the federal government. Similarly, disability income benefits are sometimes subject to being taxed and sometimes not. Whether they are taxed can depend on whether the premiums for the policy are paid by its beneficiary or not.
Insuranceopedia explains Effective Federal Income Tax Rate
Most of the time, death benefits from life insurance policies are not taxable. However, if a person receives a death benefit over a period of time as opposed to receiving it in a lump sum, and if the benefits generate interest over that time, then the interest can be subject to the effective federal income tax rate.
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