Before we dive right into fringe benefits examples, it's important to understand exactly what a fringe benefit is. By definition, fringe benefits are extra, non-wage compensations given to employees as a supplement to their regular salaries. Some examples of fringe benefits are health insurance, a company car, paid time off, and retirement plans, but these only scratch the surface. The list of potential fringe benefits is long, and while some are taxable, there are also nontaxable fringe benefits.
Common Types of Fringe Benefits
Fringe benefits can span many different categories from company to company. Here are a few of the most common types along with some fringe benefits examples.
Transportation & Mobility Benefits
If your job requires a lot of business travel, your company may provide transportation and mobility fringe benefits. Whether you're using public transport or driving a personal car, your company may offer things like reimbursement for ride-sharing services and/or public transport, parking passes, and more. Your company may even provide you with a company car.
Another example of transportation fringe benefits is membership with a corporate car rental program, like the one available through SIXT. SIXT offers flexible business car rental solutions for every scenario, whether you need a commuter car or you're headed on a business trip. With SIXT, you can get up to 15% off business car rentals, and you'll choose from a large fleet. Whether you just need it for a couple of days or you need a long-term business car rental, SIXT has got you covered. A long-term rental solution can be a great alternative to leasing or owning a car for business purposes, as you only pay for exactly what you need.
A flexible vehicle program also comes with tax benefits. In fact, reimbursement for business travel rental vehicles is non-taxable, as it's not added to your gross income.
Other transportation and mobility fringe benefits may include the following:
- Mileage reimbursement
- Providing parking permits
- Carpool subsidies
Educational Benefits
In the age of student loans, this category is a super popular fringe benefit to offer. Educational fringe benefits include the following:
- Educational assistance of up to a certain monetary value per year
- Tuition reimbursement
- Student loan repayment assistance
- Professional development courses
Health & Wellness Benefits
Another category is health and wellness, and most companies offer these fringe benefits to some degree. Here are some common examples of health benefits directly related to employee finances:
- Health and dental insurance
- Health Reimbursement Arrangements (HRAs)
- Health and wellness stipends
- Subsidized gym memberships
Aside from these financial health benefits, companies may also offer free services to employees:
- Mental health support
- Stress management classes
- Employee health screenings
- Vaccination clinics
- Nutritional education
- On-site fitness classes
Family Care Benefits
Many employees have dependents, ranging from young children to elderly family members. As a result, many employers have made it a priority to support the family unit to make life easier for their employees who have dependents. Examples include:
- On-site childcare facilities
- Reimbursements for daycare or care for the elderly
- Family support stipends to be used for babysitting services, prenatal classes, and the like
Work-life Balance Benefits
Employees are placing more and more value on work-life balance, and employers recognize this by offering fringe benefits that provide flexibility and support this priority. Some types of work-life balance benefits might include:
- Paid time off (PTO)
- Remote work allowance
- Home internet
- Sabbatical leave
- Flexible work schedules
In-office Perks
Fringe benefits can also extend to the office itself. Your company may provide certain things for free or have facilities in the office for you to use at your leisure. Some in-office perks may include:
- Free coffee/tea
- A game room and other recreational areas
- An on-site gym
- A cafeteria providing subsidized or complimentary meals
- Meditation or yoga classes
Other Financial Fringe Benefits
And, of course, some fringe benefits focus solely on the money. Here are some examples:
- Employee discounts on the company's products or services
- Bonuses (performance-based, end-of-year, signing, employee referral, etc.)
Non-taxable vs. Taxable Fringe Benefits
Now that you know about the common fringe benefits categories offered, let's look at how these impact your taxes. If you're wondering are fringe benefits taxable, the answer is yes: most fringe benefits are considered taxable. There are a few, however, that are non-taxable. The IRS provides a list of non-taxable fringe benefits examples, and if a benefit isn't on that list, then it is indeed taxable.
Some non-taxable fringe benefits examples include the following:
- Employee discounts
- Family care assistance
- Life insurance and health insurance
- Retirement planning services
- Meals
- Educational assistance and tuition reduction
- Transportation benefits (commuter vehicle, transport passes, parking)
- Employee stocks
- Athletic facilities
- Achievement awards
- Company-provided cell phones
These non-taxable fringe benefits are excluded from the employee's income and are not reported on W-2 tax forms.
That being said, here are some taxable fringe benefits examples, which are added to an employee's income and reported on tax forms:
- Health and wellness stipends
- Gift cards
- Personal use of a company car
- Cash bonuses
- Reimbursement for moving expenses
- Educational assistance over a certain amount determined by the IRS
| Benefit | Taxable | Non-taxable |
|---|---|---|
Employee discounts | No | Yes |
Bonuses | Yes | No |
Access to on-site facilities (athletic, on-site classes, etc.) | No | Yes |
Relocation assistance | Yes | No |
Educational assistance and tuition reduction | Taxable over a certain amount | Non-taxable up to a certain amount |
Insurance and retirement planning | No | Yes |
Family care assistance | No | Yes |
Transportation benefits (use of a company car for business use, transport pass, etc.) | No (but personal use of a business car is taxable) | Yes (unless the employee is using the business car for personal reasons) |
Gift cards | Yes | No |
Company-provided equipment (cell phones, etc.) | No | Yes |
Health and wellness stipends (such as gym memberships) | Yes | No |
When doing your taxes, we always recommend speaking to a tax professional to ensure you're reporting your fringe benefits correctly.
The Advantages of Fringe Benefits
Obviously, all of these fringe benefits mentioned are attractive to employees—people are always happy to receive perks that make them feel cared for and appreciated by their employer. And of course, non-taxable benefits are more attractive to employees than taxable ones.
It's not just nice to offer fringe benefits to employees; it's essential for employee retention and satisfaction. According to a survey conducted by Business Insider in 2023, 79% of employees said they'd rather stay in a job where they feel valued. And now that more and more companies are offering fringe benefits, it's not difficult for unsatisfied employees to find another job that offers better ones. That means that in order to retain talent, it's important to make sure your benefit package is up to par.
Fringe benefits don't just benefit employees, either. If your employees report high job satisfaction and therefore are loyal to your company, the overall company culture is affected. Fostering a supportive environment where people feel valued also fosters productivity, and this in turn can result in an increase in revenue.
And the more creative companies get with their fringe benefits packages, the happier employees tend to be. For example, innovative mobility solutions such as the business car rentals available via SIXT give your employees one less thing to worry about. A reliable commute goes a long way.
Consider SIXT for Flexible Corporate Mobility Benefits
Among all the types of benefits offered, transport and mobility are some of the most important. After all, it's difficult to get work done if you don't have transportation to the office, meetings, or other events.
Corporate car rental programs like the one offered by SIXT solve this problem in a flexible, cost-effective way. With savings of up to 15% on rental cars, personal support for each rental, and short-term and long-term options, this benefit is what every employee needs to support their business travel.
FAQs
A corporate car rental program is a great fringe benefit as it reduces employee commuting stress and allows for flexibility. It also comes with tax advantages for the employer, as rental costs can be written off as business expenses. For the employee, it reduces the cost of having to use a personal vehicle.
Some transportation benefits are taxable; others are not. For example, a commuter highway vehicle, parking passes, and transport passes are not taxable. However, personal use of a provided company car is taxable.
There aren't many disadvantages of fringe benefits. For employers, the main disadvantage may be that offering fringe benefits packages requires a lot of organization and administration work. There aren't any disadvantages of fringe benefits for employees.
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