Feb 25, 2022 - Health

Job-based health care is still the biggest break in the tax code

Percentage of households benefitting from tax break for employer health coverage
Data: Congressional Budget Office; Chart: Thomas Oide/Axios

Employer coverage is the country's largest tax break, and the idea of taxing that benefit to help expand coverage is usually met with widespread outrage from both corporations and organized labor.

By the numbers: Employer-paid health insurance premiums, which are exempt from income and payroll taxes, cost the federal government $329 billion in lost tax revenue in 2021, according to the Treasury Department.

  • The benefits disproportionately accrue to higher-income households, according to the Congressional Budget Office.
  • For most other workers, companies have been funneling untaxed dollars toward health care premiums instead of toward wages and salaries.
  • And the longstanding division over the tax treatment of workplace health coverage usually results in the status quo staying put, experts say.
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