Tax Tip of the Week – Employee Discounts

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Employee discountDiscounts on your business’s goods or services may be given to employees and their families tax free. You can provide anything your business makes or sells at a reduced price, but never below cost.

Services may be provided at a discount of up to 20 percent.

Discounts must be given across the board to employees and families (or even retired employees), not just to higher-paid employees.

There are a few items specifically prohibited from being discounted without being taxed to employees – primarily real estate and investment property.

Like any good CPA, I need to add a disclaimer: Unfortunately, it is impossible to offer comprehensive tax info over the internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.