How much can you save by paying fringe as benefits?
Pay fringe as benefits instead of cash and labor burden only applies to the base wage — not the fringe.
$45.00
$15.00
50
Fringe paid on the check
Fringe is taxable when paid as cash wages
Base Wage$45.00
+ Fringe Benefit$15.00
Taxable Wages$60.00
+ Labor Burden ($60.00 × 25%)$15.00
Total labor cost / hr$75.00
Fringe into bona fide trust
Fringe is not taxable when paid as qualified benefits
Base Wage$45.00
+ Labor Burden ($45.00 × 25%)$11.25
Subtotal$56.25
+ Fringe paid to Bona Fide Trust$15.00
Total labor cost / hr$71.25
Savings per hour
$3.75
per employee
Per employee / year
$7,800
$3.75 × 2,080 hrs
Total annual savings
$390,000
50 employees × $7,800
Labor burden (25%) is an estimate that includes FICA (Social Security + Medicare), FUTA (federal unemployment), SUTA (state unemployment), workers' compensation, and general liability insurance. Actual rates vary by state, classification, and experience rating. Annualized savings based on 2,080 working hours per year (40 hrs × 52 weeks).