Abstract Background Low socioeconomic status and underlying health increase the risk of fatal outcomes from COVID-19, resulting in more years of life lost (YLL) among the poor. However, using standard life expectancy overestimates YLL to COVID-19. We aimed to quantify YLL associated with COVID-19 deaths by sex and income quartile, while accounting for the impact of individual-level pre-existing health on remaining life expectancy for all Dutch adults aged 50+. Methods Extensive administrative data were used to model probability of dying within the year for the entire 50+ population in 2019, considering age, sex, disposable income and health care use (n = 6 885 958). The model is used to predict mortality probabilities for those who died of COVID-19 (had they not died) in 2020. Combining these probabilities in life tables, we estimated YLL by sex and income quartile. The estimates are compared with YLL based on standard life expectancy and income-stratified life expectancy. Results Using standard life expectancy results in 167 315 YLL (8.4 YLL per death) which is comparable to estimates using income-stratified life tables (167 916 YLL with 8.2 YLL per death). Considering pre-existing health and income, YLL decreased to 100 743, with 40% of years lost in the poorest income quartile (5.0 YLL per death). Despite individuals in the poorest quartile dying at younger ages, there were minimal differences in average YLL per COVID-19 death compared with the richest quartile. Conclusions Accounting for prior health significantly affects estimates of YLL due to COVID-19. However, inequality in YLL at the population level is primarily driven by higher COVID-19 deaths among the poor. To reduce income inequality in the health burden of future pandemics, policies should focus on limiting structural differences in underlying health and exposure of lower income groups.