Life insurance money generally does not count as income for tax purposes. Life insurance proceeds that are paid out as a death benefit to the beneficiary are typically not taxable. This means that if you receive a life insurance payout due to the death of the insured person, you do not need to report it as income on your tax return. The money you receive from the life insurance policy is generally not subject to federal income tax. However, there are some exceptions to this general rule. For example, if you choose to receive the life insurance payout in installments rather than as a lump sum, the interest earned on the installments may be taxable. Additionally, if you sell your life insurance policy for a cash surrender value, any amount received that exceeds the premiums paid may be subject to taxation. It's always a good idea to consult with a tax professional or financial advisor to understand the specific tax implications of your life insurance payout, as individual circumstances may vary.