27 Mar The Smartest Tax Strategy for Businesses & Employees: Section 125 Plans
Companies using a Section 125 Plan save on taxes
Did you know? Companies using a Section 125 Plan save on payroll taxes per employee, while employees save on healthcare costs.
A Section 125 Plan allows employees to pay for health insurance, FSAs, HSAs, and dependent care with pre-tax dollars. The result? Lower taxable income for employees and reduced payroll taxes for employers. (The Smartest Tax Strategy for Businesses & Employees: Section 125 Plans)
📌 Key Advantages of the section 125 plan:
✔ Employees: Pay less for healthcare and take home more pay.
✔ Employers: Save thousands annually in payroll taxes.
✔ IRS-approved: 100% legal and tax-compliant.
🔎 Ready to optimize your benefits strategy? Contact The Policy Shop to learn more!
🔗 Discover how Section 125 Plans boost business savings
What Is a Section 125 Plan?
A Section 125 Plan—also called a Cafeteria Plan—allows employees to pay for healthcare benefits with pre-tax dollars. This lowers taxable income, reducing the amount employees and employers owe in taxes.
✅ Tax savings for both employees & businesses
✅ Lower healthcare costs through pre-tax deductions
✅ Flexible benefit options to meet diverse employee needs
🔗 Learn more about how Section 125 Plans save employees and businesses money
How Does a Section 125 Plan Work?
When an employer sets up a Section 125 Plan, employees can choose to contribute pre-tax earnings toward eligible benefits such as:
- Health insurance premiums 🏥
- Flexible Spending Accounts (FSAs) 💳
- Dependent care expenses 👶
- Health Savings Accounts (HSAs) 🏦
Since contributions are deducted before taxes, employees keep more of their paycheck while getting the coverage they need.
🔗 Discover how Section 125 Plans optimize healthcare savings
Benefits of a Section 125 Plan
For Employees:
✔ Save on healthcare costs by reducing taxable income
✔ Increase take-home pay without earning more
✔ Gain access to pre-tax benefits like FSAs and HSAs
🔗 How Section 125 Plans help employees cover unexpected medical costs
For Employers:
✔ Lower payroll taxes by reducing taxable employee earnings
✔ Boost employee satisfaction & retention with better benefits
✔ Attract top talent by offering competitive tax-advantaged perks