Discretionary Benefits: What They Are and Main Trends in 2025

In an increasingly competitive job market, companies are investing in discretionary benefits to attract and retain top talent. These voluntary perks, once viewed as a nice-to-have, are now a strategic way to enhance satisfaction and stand out as an employer of choice.

Discretionary benefits, which are not legally mandated, can include offerings like health insurance, paid time off, retirement plans, and wellness programs. As these benefits gain momentum, let’s learn what they are and explore the key trends shaping their evolution in 2025.

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Discretionary benefits are additional perks or services provided to employees beyond legally mandated offerings. From an HR and employer perspective, these benefits are designed to attract and retain talent, boost employee morale, and enhance overall workplace satisfaction.

Typically, employers choose between various types of discretionary benefits to align them with their organizational goals and workforce needs. This way, the organization creates a competitive advantage while fostering a more supportive, engaging work environment.

The most common examples of discretionary benefits are:

• Health and wellness programs: Subsidized gym memberships, mental health support, and wellness stipends
• Retirement plans: Employer contributions to 401(k) and other retirement savings plans
• Paid time off (PTO): Generous vacation days, personal days, floating holidays, and unlimited PTO policies
• Professional development: Tuition reimbursement, certification funding, and access to learning platforms
• Flexible work arrangements: Remote work options, flexible hours, and shorter workweeks
• Childcare assistance: On-site childcare and subsidies for daycare services
• Employee discounts: Discounts on company products, local services, and partnerships
• Recognition programs: Bonuses, awards, and other incentives to reward achievements

The key difference between discretionary and non-discretionary benefits lies in the employer’s obligation to provide them. Non-discretionary benefits are mandated by federal or state law and ensure basic protections such as income security, health coverage, and workplace safety. Employers must provide them to employees to comply with government regulations.

On the other hand, employers offer discretionary benefits as they please. These perks aren’t legally required, but are used as incentives to attract, retain, and motivate employees, creating a competitive edge in the job market.

Discretionary benefits and fringe benefits are similar, but not exactly the same. While discretionary benefits are voluntary and go beyond what is legally required, fringe benefits encompass a broad category of non-salary perks that can be mandatory or discretionary.

Some of the most common fringe benefits are health insurance, retirement contributions, use of a company vehicle, childcare assistance, and gym memberships. In summary, all discretionary benefits are fringe benefits, but not all fringe benefits are discretionary.

Here is a list of the main trends regarding discretionary benefits in 2025:

Employers increasingly prioritize mental well-being by offering various mental health benefits, including therapy stipends, 24/7 access to counseling services, mindfulness app subscriptions, and designated mental health days. By addressing issues like stress and burnout, companies foster healthier, more resilient teams and demonstrate commitment to employee wellness.

Flexibility has been a top priority for employees since the COVID-19 pandemic, when remote work became commonplace. While some companies are forcing workers back into the office full-time, others are sticking to their hybrid and remote models by offering home office stipends, coworking space reimbursement, and flexible scheduling. This adaptability improves work-life balance and helps organizations tap into a broader, more geographically diverse talent pool.

Economic uncertainties worldwide make financial security a growing concern, leading employers to introduce innovative financial wellness benefits. These perks include access to financial advisors, financial planning workshops, emergency savings match programs, and student loan repayment assistance. By easing financial stress, companies help employees improve their personal well-being and, ultimately, their job performance.

Career growth is taking center stage as a key discretionary benefit, with companies offering tailored development opportunities to employees in all industries. More employers are investing in AI-driven training platforms, industry certifications, and mentorship programs so employees can upskill, align their career goals with company needs, and feel valued for their contributions.

Sustainability-focused benefits reflect employees’ growing desire to work for socially responsible organizations. Popular initiatives include electric vehicle subsidies, incentives for sustainable commuting, carbon offset programs, and paid volunteering days. These perks appeal to environmentally-conscious employees and strengthen the company’s reputation as a values-driven employer.

Discretionary benefits are more than just optional perks—they are strategic tools for building a thriving workplace and attracting top talent. By tailoring these benefits to employee needs, companies can foster loyalty, boost morale, and gain a competitive edge in the job market.

As 2025 unfolds, trends like mental health support, flexible work options, and sustainability-focused perks highlight the evolving priorities of both employers and employees. To stay ahead, businesses should evaluate their offerings, align them with workforce expectations, and embrace innovative ways to enhance the employee experience.

To leverage discretionary benefits as a strategic tool, HR teams should look attentively to their PTO policies, since they are one of the most crucial elements in retaining top talent today. Click below to download our sample PTO policy and ensure your workforce is more engaged and productive!

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Rafael Spuldar