Even in slow economic times, it's important for companies to offer generous benefit packages to attract and retain quality employees.
Businesses can avoid payroll taxes on compensation shifted from salary to benefits. Employees who receive certain benefits in lieu of salary decrease their taxable compensation. Such benefits may include group-term life insurance (up to $50,000), medical insurance, parking, employee discounts, and noncash holiday gifts.
Employer-provided group-term life insurance coverage in excess of $50,000 produces taxable income for covered employees. The amount of taxable income is determined by using a uniform premium table based on the employee's age.