An employer does not need to include in its employee’s gross income a price reduction given on certain property or services that is offered to customers in the ordinary course of the business in which the employee performs services.

Specific Details

The business reduced its taxable income by $5,000 by using qualified employee discounts as an employee benefit. Since the business income was taxed at the 30% tax bracket, the income reduction may decrease its income taxes by $1,500 ($5,000 x 30%).

Potential Savings

If you are in a combined (federal, self-employment, and state) tax bracket of 30%, you could reduce your taxes up to $300 for every $1,000 of income reduction by using qualified employee discounts as an employee benefit.