Question

Disability income is

A) taxed at the long-term capital gains rate.
B) taxed as ordinary income.
C) tax-free.
D) taxed at the short-term capital gains rate.

Answer 1

Disability income is taxed as ordinary income at the individual's applicable tax bracket.

Step-by-step explanation:

Disability income is taxed as ordinary income.

When individuals receive disability income, it is considered as part of their taxable income and subject to the same tax rates as their other sources of income.

This means that disability income is taxed at the individual's applicable tax bracket and not at the long-term or short-term capital gains rates.