An employee has been offered a choice of an increase in salary of $100,000 or a combination of salary and other benefits with a cost to the employer of $100,000. Assuming that the employee would buy the listed benefits with his own funds if they were not provided in the benefits package, which of the following packages would be the most advantageous from a tax perspective?

Question

Quizplus · Accepted Answer

A dental plan and a leased automobile used only for personal travel, when provided as part of a benefits package, are typically considered non-taxable benefits. This means the employee receives the full value of these benefits without having to pay income tax on them, making this option more advantageous from a tax perspective compared to receiving an equivalent amount in salary, which would be subject to income tax.

An Employee Has Been Offered a Choice of an Increase