What are fringe benefits?

Fringe benefits are supplementary forms of payment that employers provide team members in addition to a salary.

While many team members must receive government-mandated core benefits, fringe benefits provide additional support in people’s day-to-day lives.

Employers can deliver fringe benefits in various forms, such as:

• • Gift cards

• • Savings bonds

• • Company cars

• • Student loan refinancing programs

• • Critical illness insurance

• • Pet insurance

• • Property

Fringe benefits are cash equivalent and can qualify as taxable, partially taxable, non-taxable, or tax-deferred. Depending on the number of hours worked, companies also sometimes offer fringe benefits as an incentive to high-performing freelance workers.

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Key insights

• • Fringe benefits offer additional compensation beyond salaries, enhancing people’s overall wellbeing and work-life balance

• • Many benefits have cash value and can be taxable, non-taxable, or tax-deferred, impacting both team members and employers

• • Implementing a successful fringe benefits program involves setting clear objectives, understanding legal requirements, and offering a range of options

• • Regular assessment and communication ensure that the benefits align with organizational goals and promote team member satisfaction

Why should HR leaders care about fringe benefits?

Organizations use fringe benefits to provide holistic support to their team. Rather than just providing a salary, employers offer fringe benefits to address each team member as a whole person with a broad array of interplaying needs, including physical, emotional, financial, and social.

That matters because non-work pressures don’t stay neatly outside office hours. “Whatever you can do to stabilize productivity [through benefits] is key for [your people’s] long-term sustainability,” says Bobbi Kloss, vice president of human capital management services at Benefit Advisors Network.

A system of personalized benefits can aid in:

• • Staying compliant: Clear policies keep taxable and non-taxable benefits aligned with local rules and payroll reporting

• • Attracting top talent: Nearly half of people say benefits are a deciding factor in choosing where they work

• • Driving engagement: When employee benefits remove everyday friction, people have more energy for meaningful work

• • Boosting retention: Comprehensive benefits packages can reduce turnover by meeting diverse needs

• • Reducing financial stress: Financial wellbeing is a top team member priority, and targeted support can bring peace of mind

• • Enhancing employee satisfaction: Benefits that fit people’s lives make them feel valued and cared for

• • Pursuing tax advantages: Depending on jurisdiction, employers can structure many fringe benefits so team members receive tax-favored treatment while the company deducts the cost

Types of fringe benefits

Fringe benefits come in many shapes and sizes, but most programs usually cover a few core areas of life. The goal is to offer a balanced mix so your people can get meaningful support that fits their lifestyle, location, and stage of life. Common types of fringe benefits include:

• • Health and wellness: Support physical and mental health with offerings like medical, dental, and vision coverage, mental health resources, wellness stipends, fitness memberships, and preventive care programs

• • Financial: Improve short- and long-term financial security through retirement contributions, equity or stock options, bonuses, student loan support, savings programs, and financial coaching

• • Paid time off (PTO) and leave: Give team members more time to rest and manage life outside work with enhanced PTO, paid caregiver or parental leave, volunteer days, sabbaticals, and time in lieu for overtime

• • Work-life balance and flexibility: Help your people manage responsibilities without burning out via hybrid or remote work, flexible schedules, compressed workweeks, childcare or eldercare assistance, and commuter benefits

• • Lifestyle and convenience: Make everyday life easier with meal stipends, company cars or parking allowances, pet insurance, housing or relocation support, and team member discounts

• • Career growth and development: Invest in skill-building and progression through learning budgets, tuition reimbursement, certifications, mentorship programs, and conference or training access

• • Recognition and community: Strengthen belonging and appreciation with milestone awards, spot bonuses, team events, and recognition programs

What can HR leaders do to implement a successful fringe benefit program?

HR leaders can formulate and facilitate a solid fringe benefits framework through these practices:

• • Outline objectives: Define what you want fringe benefits to achieve, such as better retention, stronger wellbeing, or improved hiring. Align those objectives with your broader HR strategies so the program supports your company’s ultimate goals.

• • Play by the rules: Build the program around local tax and employment requirements, and partner with legal or compliance specialists when needed to make sure you offer and report every benefit correctly.

• • Offer choices: Provide a range of options so team members with different lifestyles or life stages can select the fringe benefits that fit their needs, which increases relevance and uptake across your team.

• • Explain: Communicate the program clearly and often, including what’s available, how each benefit works, and how to use it, so your people understand the value and can take full advantage.

• • Assess: Review usage and feedback regularly through surveys, enrollment trends, and cost-impact checks. You can use this to refine your benefits program and keep it aligned with your people’s changing needs.

How do fringe benefits work?

Fringe benefits work like an extension of compensation. Companies define them in their policies, deliver them through benefits or payroll software, and treat them differently depending on how local law classifies them. In practice, here’s what that typically looks like:

Taxable income

Some fringe benefits count as taxable income. Because many perks come with a real cash value (like stipends and bonuses), many jurisdictions treat certain benefits just like earnings.

That means you may need to add the value of a fringe benefit to payroll, withhold the right taxes, and report them. Not all fringe benefits are taxed the same way, though. Some are fully taxable (especially cash equivalents like gift cards), some are only taxable above certain thresholds, and others may be non-taxable if they meet specific legal conditions.

Customizable policies 

Companies usually deliver fringe benefits through a policy that outlines what they offer, who is eligible, and how people access them. Some organizations give everyone the same set of company perks, while others optimize employee benefits by offering a customizable, menu-style program where team members choose what works best for them.

In customizable setups, companies group benefits into clear options in a portal or list, and team members pick what they want during onboarding or enrollment windows. HR teams log those selections in benefits or payroll systems so the chosen perks kick in automatically and remain consistent.

Legal compliance

Given the overlap between tax law, employment law, and sometimes insurance regulation when offering fringe benefits, HR teams prioritize managing them with a compliance-first lens from day one. They map each benefit to local requirements, document the rationale for its tax treatment, and apply eligibility rules consistently across team member groups.

Because rules vary by jurisdiction, worker type, and even industry, HR teams usually review benefit policies on a regular schedule and coordinate with payroll and legal partners to keep classifications current. That way, companies stay aligned with local law while still delivering a fair, well-understood benefits experience across regions, even when the exact perks differ.

What fringe benefits look like in different industries

Every industry comes with its own pressures, schedules, and talent challenges, so the perks that matter most can look different from one workplace to the next. Here’s how fringe benefits commonly show up across sectors:

Healthcare

Healthcare teams work long shifts in high-stress, in-person roles. Fringe benefits in this space tend to focus on recovery, stability, and practical support, including:

• • Shift recovery and mental health support: Extra rest days after night rotations, counseling access, or dedicated mental health days to help keep burnout in check

• • Education and debt help: Student loan assistance, licensing and certification stipends, or paid learning days for continuing education

• • On-site life-savers: Parking or transit coverage, meal subsidies during extended shifts, and wellness resources geared toward physical work

Technology

Tech companies usually face strong competition for specialized talent, with fringe benefits often reflecting a total lifestyle approach. You’ll frequently see perks like:

• • Work-from-anywhere support: Home-office setups, coworking credits, or reliable internet or phone stipends

• • Wellbeing budgets with choice: Flexible monthly allowances for fitness, therapy, mindfulness apps, or other health needs

• • Shared upside: Equity, profit-sharing, or performance bonuses that connect people to company growth

Creative

Creative teams (like marketing and design) often operate in project cycles with sharp deadlines, high collaboration, and periods of intense output. Some fringe benefits to consider are:

• • Tooling and craft support: Hardware upgrades, software subscriptions, or creative-tool stipends

• • Flexibility-first perks: Remote or hybrid work, flexible hours, or project-based time off

• • Inspiration and development: Budgets for workshops, classes, or portfolio-building programs

Automotive

Automotive and manufacturing roles are hands-on, safety-sensitive, and shift-based. Fringe benefits in these industries usually revolve around:

• • Mobility and vehicle perks: Car allowances, vehicle discounts, subsidized leases, and fuel or commuting support

• • Safety and onsite essentials: Uniform and tool allowances, safety gear programs, and disability and injury coverage

• • Retention and shift incentives: Attendance bonuses, shift premiums, and retirement contributions tied to tenure

Financial

Financial services teams face high performance expectations and intense cycles and therefore value fringe benefits that strengthen security, family support, and wellbeing. For example, they may include:

• • Family and caregiver support: Enhanced parental leave, adoption or fertility assistance, and dependent-care subsidies

• • Financial wellbeing perks: Strong retirement matching, financial planning access, or savings programs

• • Burnout buffers: Therapy coverage, wellness stipends, or additional PTO during peak periods

Retail

Retail teams are frontline and customer-facing, with variable schedules and physically demanding workdays. Fringe benefits in this sector might include:

• • Schedule support: Shift-swapping tools, predictable scheduling, and flexible availability policies

• • Immediate-value perks: Team member discounts, meal assistance, and transportation subsidies

• • Short-term financial help: Earned-wage access, emergency assistance, or small savings programs to ease financial stress between payroll cycles

How can fringe benefits improve company culture?

Fringe benefits can alleviate stress in your people’s everyday lives, so they can demonstrate higher-performance work, feel enthusiastic about their jobs, and engage positively with coworkers. Ultimately, investing in team members through a supportive fringe benefits program can nurture, enliven, and strengthen your company culture.

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Fringe benefits FAQs

Are fringe benefits required by law?

Fringe benefits typically aren’t required by law. They’re considered optional extras that employers choose to offer on top of statutory, government-mandated benefits. Once a company does offer them, though, they’re treated as part of compensation, which means you’re required to follow local tax and reporting rules for how you value and administer them.

How do you calculate fringe benefits?

Calculate fringe benefits by figuring out their fair market value (what it would cost a team member if they paid for it themselves), then applying any special valuation rules your country requires for certain benefits (like company cars or housing). If the benefit is taxable in your location, you see that value on payroll as part of compensation; if it’s exempt, you still track it but don’t add it to taxable wages.

Which fringe benefits aren’t taxable?

Fringe benefits that aren’t taxable are the ones your local tax authority explicitly exempts from income. In the U.S., that commonly includes employer-paid health insurance, qualified retirement contributions, certain job-related perks (like required training or a business-use phone), small “de minimis” items (such as occasional snacks), and some education or commuter benefits within set limits. The safest approach is to verify each fringe benefit against local guidance.

What is a cafeteria plan?

A cafeteria plan is a flexible benefits program that lets team members pick from a menu of employer-offered options instead of receiving one fixed package. This flexibility helps your people tailor their benefits to fit their needs.

What benefits aren’t considered fringe benefits?

Fringe benefits are the optional extras on top of pay, so anything that’s part of basic compensation or required by law doesn’t fall into this category. That means regular salary or hourly wages, government-mandated benefits (like required leave or social insurance contributions), and simple reimbursements for work expenses (such as business travel) aren’t considered fringe benefits.