With Tax Day just around the corner, many businesses are looking for ways to maximize employee tax savings and benefits. While it may be too late to enjoy these tax savings for 2023, there are still valuable opportunities to explore for future tax years. Here are 10 group benefits options that receive tax credits that your business should consider:
1. Health Insurance
Offering health insurance coverage to your employees promotes health and well-being while providing tax advantages for your business. Small businesses may be eligible for the Small Business Health Care Tax Credit, which can cover up to 50% of the premiums paid for employee health coverage.
2. Retirement Plans
Employer-sponsored retirement plans, such as 401(k) or SIMPLE IRA plans, can provide tax benefits for both employers and employees. Contributions to these plans are typically tax-deductible for the business, and employees can enjoy tax-deferred growth on their retirement savings.
3. Dependent Care Assistance
Dependent care assistance programs (DCAPs) allow employees to set aside pre-tax dollars to cover qualified child or dependent care expenses. Employers can claim a tax credit for a portion of the contributions made to DCAPs, providing savings for both the business and employees.
4. Flexible Spending Accounts (FSAs)
Healthcare FSAs and dependent care FSAs allow employees to contribute pre-tax dollars to cover eligible medical or dependent care expenses. Employers may also benefit from reduced payroll taxes by offering these accounts to their employees.
5. Health Savings Accounts (HSAs)
HSAs offer triple tax advantages: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free. Employers can contribute to employees’ HSAs and may be eligible for tax deductions.
6. Commuter Benefits
Commuter benefits, such as transit and parking reimbursement accounts, allow employees to use pre-tax dollars to cover commuting expenses. Employers can save on payroll taxes by offering these benefits, and employees can enjoy tax savings on their commuting costs.
7. Group Life Insurance
Group life insurance premiums are generally tax-deductible for businesses, and the first $50,000 of coverage provided to employees is typically tax-free. Offering group life insurance can provide valuable financial protection for employees and their families.
8. Disability Insurance
Employer-paid disability insurance premiums are tax-deductible, and benefits received by employees are typically subject to income tax. Offering disability insurance can help protect employees’ income in the event of a disability or illness.
9. Employee Assistance Programs (EAPs)
EAPs provide employees access to counseling, support services, and resources to address personal and work-related issues. Employers can deduct the cost of providing EAPs as a business expense, and employees can benefit from improved well-being and productivity.
10. Wellness Programs
Employer-sponsored wellness programs, such as gym memberships, health screenings, and nutrition counseling, can qualify for tax deductions as a business expense. Investing in employee wellness can lead to lower healthcare costs and increased productivity.
Our agents can help you explore these group benefits options and maximize tax savings for your business. Contact your local agent today to learn more about how we can assist you in implementing tax-advantaged benefits for your employees. Let us help you create a comprehensive benefits package that promotes employee well-being and financial security.
