Paying your employees well is important, but compensation involves more than what hits a person’s bank account a few times each month. Many employees place a high value on the benefits package they receive from their employer.
According to the Society for Human Resource Management (SHRM), 92% of employees surveyed claim that benefits are directly tied to job satisfaction. What’s more important, about one-third (29%) state that their current benefits might push them to look elsewhere for employment over the next year.
The good news is that beefing up your benefits is easier and more affordable than it seems. Here are several tax-free benefit ideas to offer better compensation to your staff.
1. Health Benefits
The SHRM reports that health insurance remains one of the most critical employee benefits in the eyes of workers. There are various options, but from a tax standpoint, you can deduct the expense. Further, employees don’t have to report health insurance premiums or contributions by employers to health savings accounts (HSAs) as income. And any employee premium contributions are made with pre-tax dollars.
2. Dependent Care Benefits
Employees that have children value any help they can get with their care. As an employer, you can provide up to $5,000 annually in tax-free dependent care assistance through a qualified plan. This can be delivered through a flexible spending account (FSA), where the employer’s contributions are tax-free.
3. Group Term Life Insurance
Employers can generally exclude from employee wages for the cost of up to $50,000 in group term life insurance.
4. Tuition Reimbursement
Many employees want to continue with self-development, and encouraging this helps improve the skill level of your talent. As an employer, you can provide up to $5,250 in tuition reimbursement to each employee annually on a tax-free basis.
5. Credit Card Points
If you have employees that travel frequently for work, it might make sense to enroll in a corporate credit program that also gives them reward points for their activity. There is value in these points, and you can count them as tax-free compensation. The IRS agrees and considers these “rebates” as opposed to taxable income.
6. Other Benefits
There are plenty of other nontaxable benefits you can provide to employees that add value to their experience with your company. Some examples include:
- Adoption assistance programs
- Retirement planning services
- Employee discounts with major brands
- Employee wellness programs
- Onsite fitness centers
You can also provide other small gifts or perks that employees will appreciate, such as occasional meals, tickets to local events, and use of the company copy machine. The IRS refers to these as “de minimis” benefits.
Just as your relationship with your staff can drive the success of your business, we take pride in establishing strong relationships with our clients. At Nolan Accounting Center, we offer a wide range of accounting, tax planning, and business consulting services to clients throughout Southeast Wisconsin. Contact us to learn more about our services.