Fringe Benefits

What Are Fringe Benefits?

Fringe benefits are benefits that supplement an employee’s normal salary. While the name might suggest that fringe benefits are uncommon or unique, they are what most of us would call regular employee benefits.

What Are Fringe Benefits Examples

Some of the most common examples of fringe benefits are health insurance, workers’ compensation, retirement plans, and family and medical leave. Less common fringe benefits might include paid vacation, meal subsidization, commuter benefits, and more. Many companies offer a combination of both common and uncommon benefits to help attract new hires and keep current employees satisfied.

Fringe Benefits and Employee Satisfaction

Some fringe benefits can reduce employee dissatisfaction while others may increase satisfaction. For example, since most employees view health insurance as a necessity, providing it as a benefit won’t necessarily increase employee satisfaction—it will simply prevent the dissatisfaction your employees would feel if your organization did not provide health insurance. On the other hand, paid vacation is not a requirement in many employees’ eyes, so offering it to can boost their feelings of satisfaction.

Fringe Benefits Tax

Are fringe benefits taxable? Sometimes. In the US, the IRS provides a detailed list of tax-free benefits in IRS Publication 15-B. All other benefits are subject to tax.

Here are some examples of tax-free benefits:

  • Accident and health benefits
  • Achievement awards
  • Adoption assistance
  • Athletic facilities
  • De minimis benefits (small perks like free coffee)
  • Dependent care assistance
  • Educational assistance
  • Employee discounts
  • Employee stock options
  • Employer-provided cell phones
  • Group-term life insurance coverage
  • Health savings accounts
  • Lodging on business premises
  • Meals
  • No-additional-cost services
  • Retirement planning services
  • Transportation (commuting benefits)
  • Tuition reduction
  • Working condition benefits
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