Life insurance death benefits are generally not taxable at the federal level, but there are some exceptions and considerations to keep in mind. According to the IRS, if you receive a life insurance death benefit as a beneficiary, it is typically not included in your gross income and therefore not subject to federal income tax. This applies to both term and permanent life insurance policies. However, there are a few situations where life insurance proceeds may be taxable, such as when the policy was transferred for valuable consideration, or if the death benefit is paid in installments with interest. Additionally, if the policy was owned by a third party, the death benefit may be subject to estate taxes. It's important to consult with a tax professional to understand the specific tax implications of life insurance death benefits in your individual circumstances. State tax laws may also vary, so it's advisable to seek guidance from a qualified tax advisor to ensure compliance with all applicable tax regulations.