Pre-Tax Deductions on Your Paycheck
Pre-tax deductions lower federal and often state taxable income. They generally do not reduce Social Security and Medicare tax (except Section 125 plans in some cases).
Common pre-tax items
- 401(k): Reduces federal/state taxable wages; subject to annual IRS limits.
- Health insurance: Employer-sponsored premiums are often pre-tax under Section 125.
- HSA / FSA: Qualified contributions reduce taxable income when made through payroll.