What are fringe benefits?
Fringe benefits, sometimes called supplemental, non-wage or “perquisite” compensation, are any forms of value that an employer provides in addition to straight salary or hourly pay. Commonly cited in HR policies as “total rewards,” these perks range from health insurance to childcare subsidies. In U.S. payroll law (click here if you are interested in hiring Colombian professionals), the Internal Revenue Service (IRS) defines fringe benefits as property, services or cash-equivalent items provided to an employee that would otherwise have to be purchased with after-tax dollars.
Put simply, what are fringe benefits? They are the extras that elevate the employee value proposition, helping organizations attract, retain and motivate talent. This broader sense is what professionals usually mean when they ask for the fringe benefits meaning or fringe benefits definition.
Benefits of reviewing examples of fringe benefits
- Seeing real-world examples helps compensation teams benchmark against competitors.
- Employees gain clarity on the total value of their package beyond base pay.
- Tax and compliance teams can spot which perks may trigger payroll reporting or Form W-2 adjustments.
- Decision-makers can identify low-cost, high-impact additions (such as de minimis snacks) that boost morale without inflating payroll tax liability.
FAQ for fringe benefits (what are fringe benefits for employees)
What qualifies as a fringe benefit?
A benefit qualifies if (1) it is provided “because of” the employment relationship and (2) it has measurable fair-market value. Typical examples include employer-paid insurance, subsidised transport and personal use of a company car.
Which fringe benefits are tax-exempt?
Publication 15-B lists numerous statutory exclusions, including: health-plan premiums, up to $5,250 of educational assistance per year, on-site athletic facilities, qualified transportation benefits (up to monthly limits) and de minimis gifts such as holiday turkeys.
Why do companies offer fringe benefits?
- Talent attraction and retention in competitive labour markets
- Productivity gains—healthy, less-stressed employees miss fewer days
- Culture and engagement—perks communicate organisational values (e.g., family support through childcare reimbursement)
- Tax efficiency—certain benefits are deductible to the employer while remaining non-taxable to the employee, creating mutual savings
15 examples of fringe benefits
1. Life, dental or vision insurance
Supplemental coverage that extends beyond core medical plans and signals a holistic approach to wellbeing.
2. Retirement plan contributions
Employer matches to 401(k) or similar schemes typically escape current income tax for the employee.
3. Employee stock options
Gives staff the right to buy company shares at a set price, aligning employee interests with shareholder value.
4. Unlimited paid time off (PTO)
A policy granting employees autonomy to take leave as needed within performance expectations.
5. Tuition reduction or assistance
Covers undergraduate or graduate coursework; annual IRS exclusion of up to $5,250 per employee applies.
6. Transportation assistance
Pre-tax commuter passes, parking subsidies or ride-share credits fall under qualified transportation fringe benefits.
7. Free or discounted meals
From on-site cafeterias to lunch stipends, meals can be tax-free if provided for the employer’s convenience and on the premises.
8. Free gym membership
Wellness allowances or employer contracts with local fitness centres support physical health and can lower healthcare costs.
9. Childcare reimbursement
Direct subsidies, on-site crèches or backup-care stipends help working parents remain productive.
10. Company cell phone
If primarily for business use, the fair-market value of incidental personal calls is considered de minimis.
11. Employee discounts
Percentage reductions on company products or services; tax-free if they meet the qualified-discount thresholds.
12. Discounted amusement park tickets
Often organised through third-party platforms or HR portals, these fall under recreational or “fringe club” benefits.
13. Company-owned vehicle
Personal use must be imputed as income unless valued under cents-per-mile or commuting valuation rules in Pub 15-B.
14. Moving expenses
Reimbursement for relocation costs can be excluded from income for certain military moves; otherwise generally taxable post-2017.
15. Free or discounted lodging
On-site housing (e.g., remote mining sites) may be tax-free if furnished for the employer’s convenience and as a condition of employment.
Are fringe benefits taxable?
For readers outside the United States, note that the guidance below describes U.S. federal tax rules; each country sets its own criteria for taxing employee perks.
U.S. overview. The Internal Revenue Service (IRS) begins Publication 15-B by stating that every fringe benefit is taxable to the employee unless a specific law says otherwise.
Common statutory exclusions. Among the benefits the U.S. code does exclude are employer-paid health insurance, up to USD 5,250 per year of educational assistance, qualified commuter subsidies (within monthly limits), and certain de minimis gifts or services of low value. Investopedia
Valuation and reporting. When an exclusion does not cover a benefit, the employer must determine its fair-market value, add that amount to the employee’s wages, and withhold federal income tax, Social Security and Medicare contributions just as it would for cash pay. The taxable value is reported on Form W-2 at year-end.Outside the U.S. Many countries apply the same “taxable unless exempt” principle, but the list of exemptions, valuation methods and reporting forms can differ greatly. Always check your national revenue authority’s guidance—or consult a qualified payroll adviser—for the rules that apply in your jurisdiction.
