Member-only story
How To Save $700-$800 Per W2 Employee Annually On FICA Taxes If You Are A Business Owner
Unlocking Savings with Section 125 Plans: How Your Business Can Benefit
In the landscape of employee benefits and tax savings, Section 125 of the U.S. Internal Revenue Code stands out as a powerful tool for both employers and employees. Known as a “cafeteria plan,” Section 125 allows employees to convert taxable cash benefits, like a salary, into non-taxable benefits. Our partner company specializes in helping businesses implement these plans, potentially saving your business $700-$800 per W2 employee (Business must have at least 10 employees) annually at no additional cost to the business.
Understanding Section 125 Plans
Pre-Tax Advantages for Employees
Section 125 plans enable employees to contribute a portion of their salary to a plan pre-tax. This means these contributions are exempt from federal income tax, most state income taxes, and FICA taxes (which fund Social Security and Medicare). For employees, this translates into direct savings and a reduction in taxable income.
