10 Employee Benefit Examples
Beyond traditional employee benefits, there are other incentives, known as “fringe benefits,” you can offer employees, ranging from wellness to childcare benefits. We’ve covered a few of these employee benefits below.
Wellness benefits
- Gym memberships
- Mental health counseling
- Dietician/nutrition services
Childcare benefits
- Stipends related to daycare or afterschool care
- Dependent Care Assistance Program
Education and Professional Development
- Professional development conferences
- Tuition reimbursement after a certain number of years with the company
- Educational assistance programs
Commuter benefits
- Mileage reimbursement
- Transit passes
- Parking expenses (tax-free to employees, but not deductible by employers during 2018 through 2025)
How are fringe benefits taxed?
The IRS sees most—but not all—fringe benefits as taxable ordinary income, just like regular wages. Based on the value of the benefit, you’ll pay your share of employer taxes while your employee will pay income tax.
However, there are some fringe benefits that are exempt from income tax.
Commuter Benefits
Qualified commuter benefits, like transit passes and parking, can be excluded from an employee’s wages up to $325 per month. Learn more about the commuter benefit exclusion here.
Dependent Care Assistance Program
The Dependent Care Assistance Program (DCAP) is a type of flexible spending account that helps employees cover the cost of care for qualifying dependents. Employees can set aside up to $5,000 per year ($2,500 if married filing separately) in pre-tax dollars—often with an optional employer contribution—to be reimbursed for eligible dependent care expenses.
The IRS provides this example:
“Oak Co. provides a dependent care assistance FSA to its employees through a cafeteria plan. In addition, it provides occasional on-site dependent care to its employees at no cost. Emily, an employee of Oak Co., had $4,500 deducted from her pay for the dependent care FSA. In addition, Emily used the on-site dependent care several times. The FMV of the on-site care was $700. Emily’s Form W-2 should report $5,200 of dependent care assistance in box 10 ($4,500 FSA plus $700 on-site dependent care). Boxes 1, 3, and 5 should include $200 (the amount in excess of the nontaxable assistance), and applicable taxes should be withheld on that amount.”
Educational Assistance
Tuition reimbursement is a fringe benefit that can help you both attract quality talent and empower your current employees to further their education. You can exclude up to $5,250 of educational assistance from your employee’s wages per year.
Other Fringe Benefits
The fringe benefits listed in this article don’t cover all potential fringe benefits you can offer employees. The IRS offers this table covering other tax exemptions or reductions for certain types of fringe benefits.
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