Most business owners know that offering employees benefits can be a good way to differentiate your company and keep your team intact. But many are surprised to learn just how important these benefits are! According to a survey from the Society for Human Resource Management (SHRM), a whopping 92% of employees said that benefits are important to their overall job satisfaction. Additionally, nearly a third (29%) said that a better benefits package was the top reason they would look for a new job.
With record low unemployment rates, talented employees are likely going to be weighing their options and may be thinking about jumping ship. And while most employers want to have a happy staff, the challenge is that providing an array benefits can be rather expensive.
We have some good news! There are a number of tax-free benefits that you can add to your plan to help retain your employees.
- Health benefits: According to SHRM, employer-funded (or subsidized) insurance is considered the most important benefit you can offer. From a tax perspective, employers can deduct this expense. From the employee view, they do not have to report health insurance premiums or your contributions to a health savings account as additional income. Even better, the employee portion of the premiums can be paid in pre-tax dollars.
- Employee tuition reimbursement: This is another benefit employees tend to love as it is seen as you, as the employer, investing in their career. Additionally, you can deduct up to $5250 of tuition costs paid to individual employees each year.
- Dependent care: Under a qualified plan, employers can give team members up to $5000 a year in tax-free dependent care help. The most common way to go about this is to set up a flexible spending account to which both you and the employee can contribute. Your portion is tax-free and your employees portions reduces their taxable income if the total benefit remains less than $5000.
- Credit card points: If you have a corporate credit card program, let your employees keep the points they accrue. They will appreciate it, and in most cases, the IRS views credit card points as a rebate and therefore non-taxable income.
- Group term life insurance: In most cases, you can exclude up to $50k in group term life insurance from your employee’s pay.
These are just a few of the benefits that are valued by your team and make your company a place people want to work. Everyone wants to feel appreciated, so consider adding some of these and take advantage of the tax savings too!