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How is the payout from disability insurance taxed?
How is the payout from disability insurance taxed?

The payout is taxed at an extremely low rate, often 0%.

Rob Schumacher avatar
Written by Rob Schumacher
Updated over a year ago

You pay:

  • Income tax

  • ...on a small part of your disability insurance income (see table below)

  • ...that is above the tax free threshold (10.908 Euros in 2023)

The rest is tax free.

How to work out your payout post tax

Example:

You plan on retiring at 65. You are 45, and suddenly unable to work. You have 2000 Euros disability insurance cover. Your payout will be the full 2000 Euros!

  • You have 64-45 = 20 years left til retirement.

  • You check the table below for 20 years and 2000 Euros

  • You see that no tax applies to you.

Years til retirement left

% of your disability income that is taxable

Sample payout of 2000 Euros post tax

Sample payout of 3000 Euros post tax

Sample payout of 5000 Euros post tax

1

0%

2000

3000

5000

2

1%

2000

3000

5000

5

5%

2000

3000

5000

10

12%

2000

3000

5000

15

16%

2000

3000

5000

20

21%

2000

3000

4900

25

26%

2000

3000

4800

30

30%

2000

3000

4750

This is a simplified table with the following notes:

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