Employees want to be paid a fair wage, and this something that every company should make a priority. But one of the most impactful ways that a company can set itself apart and let employees know they are valued is by investing time and resources into a robust benefits package.
According to a survey released by the Society of Human Resource Management (SHRM), 92% of employees state that benefits are tied to overall job satisfaction. More importantly, nearly a third of employees (29%) state that benefits at their current employer are a top reason for looking at other opportunities within the next year.
If you want to retain your top talent, here are seven tax-free benefit ideas you can implement.
1. Health Benefits
It shouldn’t come as a shock, but the SHRM reports that health insurance remains one of the most valued employee benefits. There are a variety of plans available, so you’ll need to evaluate what works best for your business.
When it comes to taxes, the expense of this benefit is entirely deductible, and employees don’t report any premiums paid or contributions their employers make to health savings accounts (HSAs) as income. Even employee contributions are made with pre-tax dollars.
2. Employee Tuition Reimbursement
Another quality benefit is tuition reimbursement, which also helps you enrich the skillset in your talent pool. You can make tax-free contributions to an employee’s education of up to $5,250 per year.
3. Dependent Care Benefits
As an employer, you can also provide your staff with up to $5,000 each year in tax-free dependent care benefits through a qualified plan. One of the most popular ways to provide this benefit is by setting up a flexible spending account (FSA). Your employer contributions are tax-free, and any employee portion up to $5,000 reduces their taxable income.
4. Group Term Life Insurance
In general, you can exclude the employer-paid premiums for up to $50,000 in group term life insurance from your employee’s wages.
5. Credit Card Points
If you have a corporate credit card program and your employees travel frequently for work, consider passing the earned credit card points along to those employees as a benefit. In general, the IRS doesn’t consider credit card points as taxable income, but instead as rebates.
6. Various Fringe Benefits
Some examples of other tax-free fringe benefits that you can provide to employees include onsite fitness centers, employee wellness programs, retirement planning services, adoption assistance, and employee discounts through business partnerships with major brands.
7. Small Gifts
The IRS refers to these as “de minimis” benefits. They are small benefits that aren’t included in your employee’s wages, but still have some value. Examples include tickets to concerts and sporting events, occasional meals, and personal use of the company copy machine.
Orcutt & Co. helps serve the needs of small businesses in the Cincinnati area. We provide monthly accounting, bookkeeping, tax planning, and payroll services. Contact our office to learn more about how our services can benefit your business and its staff.
