How to Reduce Payroll Taxes Without Cutting Employee Pay or Benefits
You want to reduce payroll costs—but cutting wages or benefits? That’s a fast track to unhappy employees and higher turnover.
What if there was a way to cut thousands from your payroll tax bill—without touching employee paychecks and while actually improving their benefits?
The answer lies in a strategic, IRS-compliant approach using preventive healthcare benefits. Here's how leading companies are doing it.
Why Payroll Taxes Are a Missed Opportunity
Most business owners are aware of their FICA obligation: 7.65% of every dollar paid to W-2 employees goes directly to the IRS.
For a company with 50 employees earning $50,000 each, that’s $191,250 a year—gone.
Because the payment is automated through payroll, it’s rarely questioned. But that doesn’t mean it’s untouchable.
Enter Section 125 and Preventive Care
The IRS allows employers to reduce their taxable payroll base through pre-tax benefit deductions under Section 125 of the tax code.
When you offer a preventive care plan like the one from HGB (HealthGuard Benefit), eligible employees opt into a wellness-focused benefit program. A portion of their earnings is redirected—pre-tax—into the benefit.
This structure:
Lowers the company’s FICA tax liability
Preserves full take-home pay
Adds valuable healthcare access for employees
How the Numbers Work
Let’s break it down for a company with 50 W2 employees.
That’s over $1,000 in savings per employee—every year.
And those savings scale with your business.
What Employees Get (at No Extra Cost)
This isn’t a cost shift—it’s a value boost.
Employees enrolled in the HGB plan gain access to:
12 annual virtual urgent care visits
Virtual primary care with same provider
24/7 mental health support
Over 1,000 free prescription medications
Personal health dashboards and wellness coaching
All with no copays, no deductibles, and no out-of-pocket expenses.
Compliance Without Complexity
This model is:
Fully compliant with ACA and IRS Section 125
Designed to complement, not replace, your existing insurance
Turnkey—with setup and onboarding handled by EHP
Fully operational in 30 days or less
There’s no change to your payroll provider. No disruption to HR. Just cost savings and happier employees.
Real Impact for Real Businesses
Whether you're running a 15-person agency or a 500-person manufacturing operation, this strategy works. We've seen businesses save:
$25,000 with 30 employees
$64,000 with 60 employees
Over $100,000 with 100+ staff
And that doesn’t account for secondary savings like improved retention, reduced absenteeism, or lowered workers’ comp costs.
Final Thought
If you’re looking for a smart, compliant way to reduce payroll taxes without harming employee morale, HGB’s preventive care program is a no-brainer.
It’s not about cutting—it’s about optimizing.
📞 Want to see how much your business could save?
Book your 15-minute strategy call with HGB today
