Want Employees to Be Happy With Your Incentives? Know the Tax Code and Communicate

A 1986 change in the tax law has led to a lot of confusion around taxation of employee incentives. As a result, employees sometimes are left with a negative feeling when their incentive reward is taxed. But certain categories of employee achievement awards receive favorable treatment under the law. By understanding the nuances of the tax code and communicating with employees in advance regarding taxes on rewards, employers can keep the positive impact of their employee incentive program.