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How to Reduce Taxes for Highly Compensated Employees



When your employees are receiving a high salary, it can often lead to serious taxation that you need to mitigate. One way to make that mitigation happen is to ensure that their compensation isn’t just achieved through their salaries. When you can find nuanced ways to pay your highly compensated employees you can help to reduce taxes while also improving the longevity of employees at your company.


Incentive Stock Options

Another way to decrease the taxes with highly paid employees is to make sure that part of their income is through stock options. This is a great way to show appreciation for your employees without facing serious tax issues. Your goal with stock options should be to compensate employees, help them to be more invested in your company’s success, and decrease the tax burden. With that combination, your business will be able to operate much more successfully and your employees will be happier.


Tax-Deferred Retirement Plans

Offering retirement plans is also a great way to cut back on taxes. Additionally, it will allow you to ensure that your employees are taken care of when they eventually retire. Cash balance plans allow you to put away more than $200,000. Thinking in the long term for your employees helps you to keep them feeling good while also improving the business you have created.


Great Benefits

At least some of the compensation that your employees receive is going to be through their benefits, and when those benefits are good, it can help to lower the tax burden that you and your employees face in many ways. You want to make sure that you offer your employees great medical, dental, and vision benefits. It also is important to offer a generous time off policy that allows your employees to take time when they need it. You can offer sick and vacation time separately, or combine them into one. But it is important to make sure that they have sufficient time to relax and recover if they become ill in addition to taking breaks from work when they need it.


Your employees help your company to flourish, and they deserve to be compensated for that work. It is important that you take the time to come up with a solid compensation plan. That way you and your highly compensated employees can share a positive experience and a long-term relationship.


Check out this article on how to keep building your brand in the long-term!

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