Interest, which is credited annually on the cash value of a life insurance policy or annuity contract, is not included in the income of the policyholder or annuitant. Only when a life insurance policy is surrendered before death or when annuity payments commence does the interest become subject to tax. (Interest on dividends left on deposit is taxable.)
Origin: IRC § 101
Tax Type
Tax Expenditure
Item Number
Item Name
Description
Origin
FY2018
FY2019
FY2020
FY2021
FY2022
Personal Income Tax
Exclusions from Gross Income
1.003
Exemption of Interest on Life Insurance Policy and Annuity Cash Value
Interest, which is credited annually on the cash value of a life insurance policy or annuity contract, is not included in the income of the policyholder or annuitant. Only when a life insurance policy is surrendered before death or when annuity payments commence does the interest become subject to tax. (Interest on dividends left on deposit is taxable.)
<a href="http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000101----000-.html" target="_blank">IRC § 101</a>
221.9
246.5
250.2
255.3
261.9
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