What is the difference between a pre-tax and a post-tax deduction?

A pre-tax deduction (such as a traditional 401(k) or Section 125 health premium) comes out of pay before income tax is calculated, lowering taxable wages. A post-tax deduction (such as a Roth 401(k) or union dues) comes out after tax, so it does not reduce taxable wages.

Do 401(k) contributions reduce my FICA taxes?

No. Pre-tax traditional 401(k) contributions reduce your federal income tax wages, but they do not reduce Social Security or Medicare (FICA) wages. Section 125 health premiums, by contrast, usually reduce both.

Which deductions are mandatory?

Federal income tax withholding and FICA (Social Security and Medicare) apply to nearly every paycheck, and state or local income tax applies where the state levies it. Voluntary deductions like 401(k) or health insurance appear only if you elect them.

Paycheck Deductions Explained (US)

Paycheck Deductions Explained

The gap between your gross pay and your take-home pay is made up of deductions. Some are mandatory taxes, some are benefits you chose, and the order they come out in changes how much tax you owe. The dedicated guides below explain each type.

In short

US paycheck deductions fall into a few groups: mandatory taxes (federal income tax withholding, FICA for Social Security and Medicare, and state or local income tax where it applies), and voluntary deductions you elect. Voluntary deductions are either pre-tax (like a traditional 401(k) or Section 125 health premium, which lower taxable wages) or post-tax (like a Roth 401(k), which do not).

PayslipIQ provides educational information and estimated calculations only. It does not provide tax, legal, financial, accounting, employment, benefits, or payroll advice. PayslipIQ is not a CPA firm, law firm, financial advisor, payroll provider, or tax authority. Always verify your paycheck, deductions, withholdings, and tax position with your employer's payroll department, a qualified CPA, the IRS, your state tax authority, or another appropriately qualified professional. Calculations are estimates; your actual paycheck may differ based on factors specific to your employer, location, benefits elections, and personal tax situation.

See the dedicated guides:

Frequently asked questions

What is the difference between a pre-tax and a post-tax deduction?: A pre-tax deduction (such as a traditional 401(k) or Section 125 health premium) comes out of pay before income tax is calculated, lowering taxable wages. A post-tax deduction (such as a Roth 401(k) or union dues) comes out after tax, so it does not reduce taxable wages.
Do 401(k) contributions reduce my FICA taxes?: No. Pre-tax traditional 401(k) contributions reduce your federal income tax wages, but they do not reduce Social Security or Medicare (FICA) wages. Section 125 health premiums, by contrast, usually reduce both.
Which deductions are mandatory?: Federal income tax withholding and FICA (Social Security and Medicare) apply to nearly every paycheck, and state or local income tax applies where the state levies it. Voluntary deductions like 401(k) or health insurance appear only if you elect them.