2026 Year-End Reminders: Common Fringe Benefits and Special Rules for 2% S Corp Shareholders

As 2026 draws to a close, employers should confirm that the value of common fringe benefits has been properly included in employees’ taxable wages and, where applicable, in the wages of 2% S corporation shareholders. This review is particularly important as remote and hybrid work arrangements continue to complicate fringe-benefit administration. 

A fringe benefit is a form of compensation — such as property, services, cash, or cash equivalents — provided in addition to stated pay for services. The value of those benefits must be included in an employee’s wages unless a specific statutory exclusion applies. Employers should determine the value of benefits provided during 2026 in time to withhold and deposit payroll taxes and to prepare accurate information returns. Because January 31, 2027, falls on a Sunday, Forms W-2 and applicable Forms 1099 generally must be furnished before February 1, 2027. Failure to timely report taxable benefits may result in penalties. 

Employers bear the burden of establishing that fringe benefits qualify for tax-free treatment. Contrary to a common misconception, an employer cannot make an otherwise taxable fringe benefit tax-free to an employee simply by forgoing a deduction for the related expense. Employers must withhold and report applicable income and employment taxes, regardless of how the expense is classified or whether it is deductible. An employer’s inability to deduct the expense because it is in a loss position, is a nonprofit organization, or because it voluntarily forgoes the deduction does not eliminate the wage-reporting obligations for each employee or independent contractor. When prior-year benefits were not reported correctly, an IRS voluntary compliance settlement agreement may provide an alternative to amending Forms W-2. BDO’s U.S. Employment Tax group can assist in evaluating that approach. 

This article summarizes the identification and reporting rules for several common fringe benefits, including changes enacted by the One Big Beautiful Bill Act (OBBBA) on July 4, 2025. For an overview of the OBBBA’s payroll and employee benefits provisions, including changes affecting tips, overtime, and Trump accounts for children, see OBBBA Brings New Payroll and Employee Benefits Rules. 

Trump Account Contribution Programs (TACPs)

The IRS recently issued proposed and temporary regulations addressing Trump accounts, which are tax-deferred savings accounts for children created under IRC Section 530A by the OBBBA. For prior coverage, see the tax alert published December 16, 2025, IRS Issues Initial Guidance on OBBBA’s Trump Accounts for U.S. Children. The regulations address both individual account requirements and employer-sponsored TACPs, providing preliminary guidance for employers evaluating whether and how to offer the benefit. Eligible accounts may accept contributions starting July 4, 2026. 

The rules provide the first comprehensive framework for TACPs under IRC Section 128, including employee and employer contributions, nondiscrimination testing, account verification, reporting, and investment requirements. Although the regulations resolve many threshold questions, important operational details remain open. Employers may therefore wish to proceed cautiously while service providers develop the necessary infrastructure.

Wellness/Fixed Indemnity Plans

Many wellness and fixed indemnity plans can provide tax-free health benefits. However, the IRS has repeatedly warned employers about promoters that characterize general wellness services eligible for tax-free reimbursement through health flexible spending arrangements (FSAs), health savings accounts (HSAs), health reimbursement arrangements (HRAs), or medical savings accounts (MSAs). Examples include automated health or nutrition emails, family counseling, gym memberships, and fitness classes. Programs may also bundle [PN1.1]clearly nonmedical services, such as credit and debt counseling, veterinarian services, or workplace discrimination counseling, and present the entire package as eligible for tax-free treatment.

The IRS recently updated its medical expenses FAQ to clarify that wearable devices (such as smartwatches) do not qualify as medical expenses merely because they track general health or wellness information. A device may qualify, however, when used to diagnose or treat a specific disease.

In IR-2024-65, the IRS warned that promoters of health spending plans may misrepresent general health and wellness expenses as medical care. Some arrangements automatically reduce employees’ pay — often by a fixed monthly amount — and return most of the reduction as a purportedly tax-free reimbursement after fees. The IRS release points out that expenses such as food purchased for weight loss generally do not qualify under IRC Section 213(d) absent a medical purpose and, therefore, may not be deductible or reimbursable tax-free through FSAs and other health spending accounts. 

Promoters — some of whom previously marketed employee retention credit services — often provide polished materials and a legal opinion supporting the purported tax savings generated through Section 125 salary reductions. Those opinions may not address whether the promoted expenses constitute medical care or how reimbursement of general wellness expenses affects the claimed tax treatment. 

The BDO article, IRS Cautions Employers Again on Wellness Plans Purporting to Avoid Payroll Taxes Absent Medical Expenses, summarizes the IRS warnings and identifies practical diligence steps for employers evaluating promoted wellness arrangements. Employers should exercise particular care because the IRS has begun examining some arrangements.

Remote Workforce Fringe Benefits

Transportation and Travel to the Office

Many employers now give employees significant flexibility in choosing their work location. A common work arrangement permits employees to work regularly from home and report to an employer office as needed. Whether travel to the office may be reimbursed tax-free depends on whether the trip is business travel or a personal commute; the distance between the employee’s residence and the office is not determinative.

Whether the reimbursement is tax-free turns on the character of the trip. An employer’s request that an employee report to the office does not, by itself, convert commuting into business travel. Employer-paid commuting expenses generally are taxable to the employee and nondeductible to the employer, subject to specific exceptions (for additional analysis, see the BDO Tax Strategist article: 

Home Office Expenses

Employers frequently reimburse employees for reasonable home-office expenses. To qualify as a tax-free working-condition fringe benefit under IRC Section 132, employees generally must substantiate business expenses, such as a desk, chair, equipment, internet service, or utilities. 

Some employers prefer to pay a periodic flat dollar “allowance” but such allowances are treated as taxable wage income (subject to both income and employment tax withholding and the employer’s share of employment taxes) if employees do not substantiate how the funds were used. IRS rules require that the employer maintain an “accountable plan” for such reimbursements to be tax-free (see below “Employee Business Expense Reimbursements and Allowances”). 

Only business expenses — not personal expenses — may be reimbursed tax-free. To constitute a business expense, the employee’s home workspace generally must be used exclusively for business and for the convenience of the employer (not the employee). Furniture and equipment purchased or reimbursed by the employer remain employer property and may create state or local tax “nexus” where located. If an employee retains the property after termination of employment, the property’s fair market value generally must be included in taxable wages unless the employee reimburses the employer.

Meals for Remote Employees

Employers may provide tax-free meals to employees during meetings or when they are working on pressing projects, as well as snacks and beverages in an office break room. Extending similar treatment to meals or snacks provided to employees working from home is difficult to support under current IRS rules and depends on the facts and circumstances. In addition, meals provided when a remote employee travels to the office may not qualify as tax-free business-travel meals if the underlying trip is a commute rather than actual business travel. 

Employer-Paid Group Term Life Insurance Coverage

Employer-paid group term life insurance coverage of up to $50,000 is generally excluded from income. Any amount in excess of $50,000 must be included in an employee’s taxable income and is subject to Social Security and Medicare taxes (FICA). Federal and state income tax withholding generally is not required, although employers may withhold voluntarily. The amount of coverage must be reported as wages in Boxes 1, 3, and 5 of the employee's Form W-2 and in Box 12 using code “C.”

Group Long- and Short-Term Disability

The tax treatment of disability benefits generally depends on how the premiums were paid. Benefits are generally taxable when long- or short-term disability premiums were paid with pre-tax dollars and tax-free when premiums were paid with after-tax dollars. Employer and employee funding may also be combined. Because the tax rules are complex and vary with the funding arrangement, employers should review the plan’s specific terms. 

Employee Business Expense Reimbursements and Allowances

An allowance or reimbursement of business expenses for which the employee does not provide an adequate accounting (i.e., substantiation with receipts or other records), or for which the employee does not return any excess allowance or reimbursement to the employer, are considered to have been provided under a non-accountable plan and treated as taxable wages. Such amounts generally are subject to federal and applicable state and local income tax withholding, employer and employee FICA taxes, and federal and state unemployment taxes (FUTA and SUTA).

By contrast, reimbursements are generally excluded from taxable income and wages when employees adequately account for their expenses or are deemed to have substantiated them under an applicable per diem arrangement.

Expenses incurred by employees who voluntarily work from home require particular scrutiny. Employers should confirm that the expenses have a sufficient business connection before reimbursing them tax-free under an accountable plan.  

If an IRS examination determines that purported reimbursements were taxable, the employer may be liable for income taxes it failed to withhold, in addition to applicable employment taxes, interest, and penalties.

Employer-Paid Educational Assistance

For Active Employees

Employers may provide tax-free, job-related education to current employees as a working-condition fringe benefit under IRC Section 132. Although no specific dollar limit applies, the education must maintain or improve skills required in the employee’s current position and meet other applicable IRS requirements. 

Education expenses that do not qualify as a working-condition fringe benefit may be paid or reimbursed tax-free — up to $5,250 per employee per year — through a qualifying IRC Section 127 educational assistance plan program that meets the following requirements: 

• The tuition plan must be in writing and communicated to the employees with reasonable notice;
• Payments cannot discriminate in favor of highly compensated employees, and no more than 5% of the amounts paid can go to shareholders or owners (i.e., those who own more than 5% of the company’s stock or capital interests on any day of the year); and 
• Employers cannot give employees a choice between educational assistance and other compensation.

The IRS has issued a sample education assistance plan designed to meet the IRC Section 127 written plan document requirements. Having a model plan document may encourage more employers to offer tax-free educational assistance benefits to their employees.

The OBBBA permanently extended the treatment of qualifying student loan debt repayments as Section 127 educational assistance. The student loan debt must be related to the employee’s own education; payments of a spouse’s or child’s student loan do not qualify. Beginning in 2027, the $5,250 annual limit will be indexed for inflation.

For Future Employees

Employers increasingly offer education funding to recruit prospective employees. For example, some businesses pay for nursing, engineering, business, or other schooling, provided the individual agrees to accept employment for a specified period after graduation. Many companies are surprised that even though the individual is not an employee when the payment is made, and even if the tuition is paid directly to the school, such payments are treated as taxable wages, reportable on Form W-2 (not on Form 1099) when made in connection with anticipated employment. Because the individual receives no cash, the employer may need to gross up the benefit to cover the required income and employment tax withholding. 

A bona fide loan may avoid current wage inclusion. If the loan is later forgiven because the individual accepts employment, however, the forgiven amount generally becomes taxable wages reportable on Form W-2 and subject to income and employment tax withholding. 

PTO Leave Donation

Remote and flexible work arrangements may reduce employees’ use of paid time off (PTO), increasing the risk that accrued leave will be forfeited. For example, routine doctor visits require less time off due to the widespread availability of virtual, online medical services and essential employees might not have PTO approved because there is no one to perform their duties while they are away. For these and other reasons, employees are taking fewer PTO days and therefore are at risk of forfeiting some of their accrued PTO. 

Some employers are adopting alternative policies to avoid employees having to forfeit excess PTO accruals, such as mandatory or voluntary cash-outs. No single approach will suit every workforce. For example, mandatory cash-outs may be unpopular, while voluntary cash-out elections can create constructive-receipt concerns for employees who choose to retain their leave. Employers should evaluate program design before offering employees a choice between cash and future PTO use.

Another option is to establish a program that allows employees to donate unused PTO to eligible coworkers or, in appropriate circumstances, to charitable organizations. Employers may wish to review their PTO policies and consider whether leave-sharing or charitable donation programs would better address unused balances.

Leave-Sharing Plans

Under a qualifying leave-sharing program, the donor generally avoids wage inclusion, and the recipient recognizes taxable Form W-2 compensation when the donated leave is used. Improperly structured PTO donations may create taxable income for both the donor and the recipient.

Employers may establish leave-sharing programs for medical emergencies (including extended time off due to the death of a spouse, child, or parent), federally declared disasters, or both (although slightly different rules apply to disaster relief plans). 

A robust program should limit annual donations, require recipients to submit a written request for leave, and prohibit donors from designating a specific recipient. Recipients generally should exhaust their own available PTO before using donated leave and must be paid for the donated leave at their regular rate of compensation. The employer should monitor use of the leave and, for disaster programs, return unused donated leave pro rata to the eligible donors when the disaster period ends.

Personal Use of Company Car

The value of an employee’s personal use of a company vehicle generally must be treated as wages unless the employee reimburses the employer for such personal use. Employers may report the value as frequently as each pay period or as infrequently as annually, subject to the applicable timing rules.

For employees whose annual supplemental wages do not exceed $1 million (including taxable fringe benefits), the federal income tax withholding on taxable fringe benefits may generally be calculated by combining the amount with regular wages or by applying the 22% supplemental wage rate.

Alternatively, employers can choose not to withhold if the employee is properly notified by January 31 of the year in which imputed income for personal use of a company car will arise, or 30 days after a vehicle is provided and the value is properly reported on a timely filed Form W-2. However, employers must withhold FICA taxes on such benefits.

For administrative convenience, an employer may value personal use of a company vehicle using a 12-month period ending in November or December, such as November 1 through October 31 if employees receive timely notice. Once elected for a particular employee and vehicle, the same valuation period generally must be used in subsequent years.

Many employers provide cash allowances instead of company vehicles. In this case, a vehicle allowance paid without substantiation of business use is fully taxable and generally subject to FICA, FUTA, federal income tax withholding, and applicable state income tax withholding.

Caution: If the employer reimburses an employee for business use of their personal vehicle (using the IRS’s “cents-per-mile” or other rule), the employee should not also be reimbursed for fuel costs. For example, if an employee is reimbursed for business use of their personal car using the cents-per-mile rule, the employee should not use the company credit card to fill the gas tank of their personal car for that business trip, since the cents-per-mile reimbursement includes fuel, wear and tear on the vehicle, etc. Employers often do not realize this is “double dipping” and not allowed under IRS fringe benefit rules. In some cases, employers lease vehicles for employees, and reimburse them using the cents-per-mile rule and allow the employee to use the company credit card for fuel and other costs. This is impermissible “triple dipping.”

The IRS cents-per-mile rate for 2026 is split into two periods, due to a rare mid-year rate increase due to the increased cost of fuel primarily due to the Iran war. For expenses incurred from January 1 to June 30, 2026, the business expense cents-per-mile rate was 72.5 cents per mile and from July 1, 2026, through December 31, 2026, the rate is 76 cents per mile. Read this BDO article about the tax treatment of employees’ personal use of company cars:

Personal Use of Company Aircraft

Personal use of company aircraft generally is subject to FICA, FUTA, federal income tax withholding, and state income tax withholding unless the employee reimburses the employer to the extent permitted under FAA rules or a security exception applies. The taxable value is calculated using the Standard Industry Fare Level formula provided by the IRS. For officers, directors, and 10%-or-more owners, entertainment-flight expenses exceeding the amount treated as compensation may be nondeductible for the company.

Benefits That Exceed De Minimis Exclusion

A de minimis fringe benefit may be excluded only when its value and frequency make accounting for unreasonable or administratively impracticable. It is a common misconception that if a fringe benefit amounts to less than $100, it is automatically considered a de minimis benefit. No general rule allows employers to exclude benefits merely because they cost less than $100.

If a benefit does not qualify as de minimis, its full value generally is subject to income and employment taxes. Season tickets, the use of an employer’s residence or vacation property, and country club or athletic facility memberships are not de minimis benefits. 

Cash, gift cards, and cash equivalents are also taxable regardless of amount. A narrowly restricted certificate redeemable only for a specific low-value item may qualify, but a card usable for a broad range of merchandise is generally a taxable cash equivalent.

Business Meals, Employee Meals/Snacks

Many employer-provided meals are excluded from employees’ taxable income under either the IRC Section 132(e) de minimis exception, the accountable plan rules for Section §132(d) working-condition fringe benefits, or the Section 119 convenience-of-the-employer rules. Deductibility for the employer depends on the facts. Business meals with customers and clients generally are 50% deductible when no entertainment is involved; entertainment expenses generally are nondeductible. Food and beverage expenses for employee recreational events, such as holiday parties or annual picnics, generally remain fully deductible when provided primarily for rank-and-file employees. 

Effective January 1, 2026, the OBBBA generally eliminated the employer 50% deduction for meals provided on the employer’s business premises for the employer’s convenience, unless employees pay “full and adequate consideration” for the employer-provided meal. An exception applies for certain Alaska businesses. 

The 2026 meal-deduction changes may require employers to create new accounting categories. In particular, employers should separately identify the costs of employer-operated eating facilities and meals furnished for the employer’s convenience, as well as nondeductible on-premises meal costs without overlooking expenses that remain deductible.

Caution: On examination, the IRS may contend that regularly provided on-site food and beverages are taxable compensation when the benefits are too frequent or substantial to qualify as working-condition or de minimis fringe benefits.

Employee Achievement Awards, Gifts, and Prizes

Employee achievement awards, gifts, and prizes are generally subject to FICA, FUTA, federal income tax withholding, and state income tax withholding unless a specific exclusion applies. The employer’s deduction for a business gift is generally limited to $25 per recipient per year; that deduction limit is not an employee income exclusion. In general, employee achievement awards, gifts, and prizes that do not specifically qualify for exclusion are deductible by the employer only up to $25 per person per year, unless the excess is included as taxable compensation to the recipient. Gifts to employees in excess of $25 per person per year in the form of tangible or intangible property are taxable wages, subject to two exceptions: 

• Achievement awards for length of service or safety; and 
• Certain non-cash achievement awards, such as a gold watch at retirement or nominal birthday gifts, which fall within the exclusion for de minimis benefits.

To qualify for the employee achievement award exclusion, a length of service or safety award must be presented as part of a meaningful ceremony and satisfy the applicable frequency and eligibility rules. The exclusion applies only to tangible personal property, not cash, gift cards, event tickets, travel, or similar items. The annual exclusion is generally limited to $400 for awards under nonqualified plans (unwritten and discriminatory plans) and $1,600 for awards under qualified written, nondiscriminatory plans.

Points-based recognition programs commonly allow employees to redeem points for merchandise, event tickets, travel, experiences, gift cards, or charitable contributions. The fair market value of the redeemed benefit generally must be included in taxable wages unless a specific exclusion, such as de minimis fringe benefit exception, applies. 

Award Trips

Employers should carefully evaluate “award” trips. When an employee receives an all-expenses-paid trip primarily as an incentive and little or no business is conducted, the trip’s fair market value generally is taxable wages. The incremental cost of a companion’s travel — including airfare and meals — is also generally taxable. Employers may gross up these benefits so that the employer bears the economic cost of the taxes owed on the award trip, but they should not characterize an incentive trip as tax-free business travel merely because it is company sponsored.

Job-Related Moving Expenses Paid by Employer

Employer-paid moving expenses incurred in 2026 generally must be included in taxable wages unless the employee is an eligible active-duty member of the U.S. Armed Forces or intelligence community moving pursuant to a qualifying permanent change of station. Note that this exception generally does not apply under federal tax law (but may apply under certain state tax laws) if the employer is paying for moving expenses of the spouse of someone who is eligible for the exception. The OBBBA made this treatment permanent after 2025. Employers may deduct qualifying compensation expense, but the payment remains taxable to the employee.

Qualified Transportation Fringe Benefits

Employers generally may not deduct the cost of qualified transportation fringe benefits even when the benefits remain excludable from employees’ income. The final regulations on how to calculate the disallowed deduction for employee qualified transportation costs provide methods for calculating the disallowed deduction, including simplified approaches for employee parking. For example, parking in some remote areas may be treated as having no value, in which case a deduction is not disallowed. 

The payroll tax treatment of employee parking, van pool, and mass transit benefits remains unchanged. Qualified commuting and parking amounts provided to the employee by the employer in excess of the monthly statutory limits are subject to FICA, FUTA, federal income tax withholding, and state income tax withholding. For 2026, the monthly exclusion is $340 for qualified parking and a separate $340 for transit passes and van pool benefits. An employee may receive both benefits — up to $680 per month tax-free — with any excess included in Form W-2 wages. Amounts above the statutory limits cannot be excluded as de minimis fringe benefits. The monthly limit is projected to increase to $350 for each category in 2027, for a combined monthly tax-free benefit of $700.

Caution: Reimbursing an employee for commuting mileage does not qualify as a tax-free transportation fringe benefit. Travel from home to a regular work location generally is personal commuting. Mileage reimbursement is excludable only when the travel qualifies as business use under the working-condition fringe-benefit rules.

For 2025 and later years, qualified bicycle commuting benefits are taxable wages subject to FIT, FITW, FICA, and FUTA taxes. Because the benefit is taxable compensation, the employer generally may deduct the expense. 

A truly de minimis transportation benefit may remain excludable. For example, an occasional taxi ride home for an employee working overtime or leaving an employer-sponsored business event (such as a holiday party) may qualify for tax-free treatment.

Some jurisdictions require employers to offer mass transit benefits. Employers should confirm compliance with the local requirements applicable to each employee’s work location.

Noncompensatory Cell Phones and Other Devices

Business use of an employer-provided cell phone or other communications device is excludable from an employee's income as a working-condition fringe benefit when the device is provided to the employee primarily for noncompensatory business reasons. By contrast, a device provided as a recruiting incentive, welcome gift, or substitute for compensation generally is taxable at fair market value.

Reasonable personal use of a device provided primarily for noncompensatory business reasons generally is excludable from the employee's income as a de minimis fringe benefit. Substantial business reasons may include the need to contact the employee during emergencies, communicate with clients while the employee is away from the office, or conduct business across time zones outside normal working hours.

Employers may reimburse employees tax-free for substantiated business use of personal devices under an accountable plan. The employee should submit the expense and business purpose within a “reasonable” period; expenses substantiated within 60 days are deemed timely. A fixed monthly allowance paid without substantiation generally is taxable wages subject to applicable income and employment taxes.

Special Rules for Taxing Certain Employee Fringe Benefits to 2% S Corporation Shareholders

Certain fringe benefits that are excludable for rank-and-file employees must be included in the wages of a 2% shareholder of an S corporation or an LLC taxed as an S corporation. A 2% shareholder is an individual who owns, directly or indirectly, more than 2% of the corporation’s outstanding stock or voting power on any day during the year. These benefits generally are taxed in the same manner as benefits provided to partners. If required amounts are omitted from the shareholder’s Form W-2, the S corporation may lose the corresponding deduction and create inequitable tax consequences among shareholders.

Taxable Fringe Benefits

The following S corporation-paid benefits generally must be included in a 2% shareholder’s taxable income.

Health, Dental, Vision, Hospital, and Accidental Death and Dismemberment Insurance Premiums, and Qualified Long-Term Care (LTC) Insurance Premiums Paid Under a Corporate Plan

Employer-paid or reimbursed health, dental, vision, hospital, accidental death and dismemberment, and qualifying long-term care premiums generally are subject to federal and state income tax withholding but not FICA or FUTA. Any after-tax reimbursement by the shareholder reduces the amount included in wages; pre-tax payroll deductions may not be used. The shareholder may be eligible for the self-employed health insurance deduction on Form 1040.

Cafeteria Plans

A 2% S corporation shareholder — and the shareholder’s spouse, child, grandchild, or parent — is not eligible to participate in an IRC Section 125 cafeteria plan. Allowing an ineligible individual, such as a 2% shareholder (or other ineligible participant, such as a partner or nonemployee director) to participate in a cafeteria plan may disqualify the plan and cause benefits to become taxable to all participants.

Employer Contributions to HSAs and Other Tax-Favored Health Plans

Employer contributions to a 2% S corporation shareholder’s HSA or other tax-favored health plan generally are subject to federal and state income tax withholding but not FICA or FUTA. After-tax reimbursements by the shareholder reduce wage inclusion; pretax payroll deductions may not be used. The shareholder may be eligible for a corresponding deduction on Form 1040.

Short-Term and Long-Term Disability Premiums

Employer-paid short- and long-term disability premiums for a 2% S corporation shareholder generally are subject to federal and state income tax withholding, but not to FICA or FUTA. Because the premiums are treated as paid with after-tax dollars, disability insurance proceeds generally are tax-free.

Group Term Life Insurance Coverage

The full cost of group term life insurance provided to a 2% S corporation shareholder — not merely coverage above $50,000 — must be included in Boxes 1, 3, and 5 of Form W-2. The taxable cost is generally the cost (premium) paid by the S-corporation for the shareholder’s coverage and generally is subject to FICA, but not FUTA or federal or state income tax withholding. No wage inclusion arises for key-person coverage when the corporation is both owner and beneficiary.

Other Taxable Fringe Benefits

Employee achievement awards, qualified transportation fringe benefits, qualified adoption assistance, qualified moving expense reimbursements, personal use of employer property or services, and meals or lodging furnished for the employer’s convenience generally must be included in a 2% S corporation’s compensation. These benefits generally are subject to FICA, FUTA, federal income tax withholding and state income tax withholding.

Nontaxable Fringe Benefits

The following benefits generally remain excludable from a 2% S corporation shareholder’s compensation, subject to the applicable statutory and nondiscrimination requirements:

• Qualified retirement plan contributions 
• Qualified educational assistance up to $5,250 (indexed starting in 2027) (but tax-free benefits are not available if more than 5% of the educational assistance benefits are provided to 2% S corporation shareholders, their spouses, or dependents) 
• Qualified dependent care assistance up to $5,000 (increased to $7,500 under the OBBBA beginning in 2026) (but tax-free benefits are not available if more than 25% of benefits paid during the year are provided to individuals who own more than 5%) 
• Qualified retirement planning services 
• No-additional-cost services 
• Qualified employee discounts
• Working condition fringe benefits 
• De minimis fringe benefits 
• On-premises athletic facilities