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Fringe Benefits Rates Table 2021

Published · Updated

Special Rules for Various Types of Fringe Benefits (Source: IRS)

On the Fringes: The Ins and Outs of Fringe Benefits

Treatment Under Employment Taxes
Type of Fringe Benefit Income Tax Withholding Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000)1 Federal Unemployment (FUTA)
Accident and health benefits Exempt,2 except for long-term care benefits provided through a flexible spending or similar arrangement. Exempt, except for certain payments to S corporation employees who are 2% shareholders. Exempt
Achievement awards Exempt2 up to $1,600 for qualified plan awards ($400 for nonqualified awards).
Adoption assistance Exempt2,3 Taxable Taxable
Athletic facilities Exempt if substantially all use during the calendar year is by employees, their spouses, and their dependent children, and the facility is operated by the employer on premises owned or leased by the employer.
De minimis (minimal) benefits Exempt Exempt Exempt
Dependent care assistance Exempt3 up to certain limits, $5,000 ($2,500 for married employee filing separate return).
Educational assistance Exempt up to $5,250 of benefits each year. (See Educational Assistance , later in this section.)
Employee discounts Exempt3 up to certain limits. (See Employee Discounts , later in this section.)
Employee stock options See Employee Stock Options , later in this section.
Employer-provided cell phones Exempt if provided primarily for noncompensatory business purposes.
Group-term life insurance coverage Exempt Exempt2,4,6 up to cost of $50,000 of coverage. (Special rules apply to former employees.) Exempt
Health savings accounts (HSAs) Exempt for qualified individuals up to the HSA contribution limits. (See Health Savings Accounts , later in this section.)
Lodging on your business premises Exempt2 if furnished on your business premises, for your convenience, and as a condition of employment.
Meals Exempt2 if furnished on your business premises for your convenience.
Exempt if de minimis.
No-additional-cost services Exempt3 Exempt3 Exempt3
Retirement planning services Exempt5 Exempt5 Exempt5
Transportation (commuting) benefits Exempt2 up to certain limits if for rides in a commuter highway vehicle and/or transit passes ($270) or qualified parking ($270). (See Transportation (Commuting) Benefits , later in this section.)
Exempt if de minimis.
Tuition reduction Exempt3 if for undergraduate education (or graduate education if the employee performs teaching or research activities).
Working condition benefits Exempt Exempt Exempt
1 Or other railroad retirement taxes, if applicable.
2 Exemption doesn’t apply to S corporation employees who are 2% shareholders.
3 Exemption doesn’t apply to certain highly compensated employees under a program that favors those employees.
4 Exemption doesn’t apply to certain key employees under a plan that favors those employees.
5 Exemption doesn’t apply to services for tax preparation, accounting, legal, or brokerage services.
6 You must include in your employee’s wages the cost of group-term life insurance beyond $50,000 worth of coverage, reduced by the amount the employee paid toward the insurance. Report it as wages in boxes 1, 3, and 5 of the employee’s Form W-2. Also, show it in box 12 with code “C.” The amount is subject to social security and Medicare taxes, and you may, at your option, withhold federal income tax.

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