Monday, October 19, 2009

The $6,000 per year gift to wage earners making $150,000

How much are federal tax subsidies for employer-provided health insurance worth to wage earners? Answer: a nice chunk of change. The Kaiser Foundation looked at the tax benefits to families earning $40,000, $80,000, $120,000 and $150,000 as of 2006 using the following assumptions:

  • the family has four members, two of which are working spouses and two are dependent children;
  • the family has only wage income;
  • wages are equally divided between the spouses;
  • one spouse receives a family health insurance policy valued at $11,500 through his or her employer;
  • the employer contributes $10,000 toward the cost of the policy and the family contribution of $1,500 is paid through a Section 125 plan;
  • the family does not itemize deductions;
  • the family lives in California and pays California state tax.

Here is how much each family saves in federal and state taxes:

$40,000 = $3,695

$80,000 = $4,925

$120,000 = $5,705

$150,000 = $6,049

It’s a nice tax gift if you can get it.

Read the study at:

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