Employee-Provided Benefits

It is important for companies to offer generous benefit packages to attract and retain quality employees. Businesses can avoid payroll taxes on compensation shifted from salary to benefits. Employees who receive certain benefits in lieu of salary also decrease their taxable compensation. Such benefits may include retirement plans, group term life insurance (up to $50,000), medical insurance, parking, employee discounts, and noncash gifts.

Employer-provided group term life insurance coverage for more than $50,000 produces taxable income for covered employees. The amount of taxable income is determined by using a uniform premium table based on employee age.

Tax Tip

Benefits may help you retain valuable employees. Tax law changes have increased the benefit options in recent years. Now is the time to revisit your overall compensation and benefit package.