Final answer:
The tax-exempt amount of employer-paid group-term life insurance for an employee is the premium for coverage up to $50,000. Any premium for coverage exceeding this amount is taxable income to the employee. The first $50,000 of coverage remains non-taxable.
Step-by-step explanation:
The amount of employer-paid group-term life insurance (GTL) that is exempt from taxes is the premium amount for coverage up to $50,000. This means that if an employer provides an employee with GTL coverage, and the coverage is $50,000 or less, the premiums paid by the employer for that coverage are not considered taxable income to the employee. However, if the GTL coverage exceeds $50,000, the premiums paid by the employer for the excess must be included in the employee's gross income and are subject to social security and Medicare taxes. It's important to note, however, that the cost of the first $50,000 of coverage remains tax-exempt.