Which Fringe Benefits are Tax-Free?
By: Christina Merhar (Zane Benefits) March 2015
As small and growing businesses evaluate employees’ compensation packages, fringe benefits are inevitably part of the discussion. Fringe benefits are a way to supplement employees’ salary and can often be offered tax-free. Tax-free fringe benefits help small businesses offer a richer compensation package and employees appreciate the workplace perks such as health benefits, on-site meals, and tuition reimbursement.
Wondering which fringe benefits can be offered tax-free? Here is quick guide.
Fringe Benefits Definition
According to Investopedia, the definition of a fringe benefit is “a collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are met.”
Common fringe benefits include health insurance, life insurance, tuition reimbursement, childcare reimbursement, cafeteria plans, employee discounts, personal use of a company owned vehicle, cell phones, and meals provided at the workplace.
Which Fringe Benefits are Tax-Free?
In Publication 15-B, the IRS lists types of employee benefits that may be offered tax-free. Here is a summary of fringe benefits and their tax treatment.
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