One way to save on taxes for you and your employees is to compensate them by increasing your contribution to their health insurance costs instead of giving them the same amount in terms of a salary increase.  You could give everyone a $500 a month raise but then your employees would have to pay income tax, FICA & Medicare tax on those wages.  Also, you have to pay your employer’s portion of FICA, Medicare Tax and may have to pay additional federal and state unemployment taxes as well.  If you pay $500 more for medical insurance, you eliminate the income tax, FICA, Medicare, and unemployment taxes.  This is a Win-Win for both you and your employees.

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