Question

Khalid's father recently passed away, leaving him with $100,000 in life insurance benefits. If Khalid is in the 37% marginal tax bracket, how much of that $100,000 will he have after tax?

a. $100,000
b. $63,000
c. $75,000
d. $37,000

Answer 1

Life insurance benefits are not taxable, so Khalid would keep the full $100,000 regardless of his 37% marginal tax bracket.

Step-by-step explanation:

Khalid does not need to pay any taxes on the $100,000 in life insurance benefits he receives, as life insurance payouts are generally not considered taxable income. Therefore, if Khalid is in the 37% marginal tax bracket, it does not affect the life insurance benefit. The entirety of the $100,000 benefit would be left for Khalid after-tax.