Does a Roth 401(k) reduce taxable wages?

No. Roth contributions are post-tax, so they don't reduce current taxable wages. Qualified withdrawals are tax-free in retirement.

Why doesn't my 401(k) reduce my FICA?

Pre-tax 401(k) is exempt from federal income tax but NOT from FICA. Section 125 cafeteria plan deductions (most health insurance, FSA) reduce FICA wages. 401(k) does not.

Are HSA contributions pre-tax or post-tax?

Pre-tax when made through payroll under a Section 125 cafeteria plan. After-tax HSA contributions you make outside payroll do not reduce FICA.

Pre-Tax vs Post-Tax Deductions

Some paycheck deductions reduce your taxable wages before tax is calculated. Others come out after tax. The difference is real money over the course of a year. Here is the structure.

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.

Pre-tax deductions

Come out of gross before federal (and most state) income tax is calculated. Examples:

Traditional 401(k), 403(b), 457(b) elective deferrals
Traditional HSA contributions through payroll
Health FSA contributions
Dependent Care FSA contributions
Most employer-sponsored health, dental, vision insurance under Section 125
Commuter benefits (transit and parking) under Section 132

Post-tax deductions

Come out after taxes are withheld. Examples:

Roth 401(k), 403(b), 457(b) elective deferrals
Wage garnishments
Charitable contributions via payroll
Some life insurance, AD&D, disability insurance premiums
Union dues (in many cases)
401(k) loan repayments

The FICA exception

Most pre-tax deductions reduce both income tax wages and FICA wages. But pre-tax 401(k), 403(b) and 457(b) do NOT reduce FICA wages. Only Section 125 cafeteria plan deductions and Section 132 commuter benefits reduce FICA.

How they show on your stub

Pre-tax deductions usually appear in their own section, separate from withholding taxes. The pay stub may label the section "pre-tax" or just show the items. The "Federal Taxable Wages" line is reduced by these.

Post-tax deductions appear in another section, after the tax lines.

Why it matters

A $200 monthly traditional 401(k) contribution at a 22 percent federal bracket saves $44 per month in federal tax versus the same contribution to a Roth. Across a year, $528. Across a career, that is real money.

The flip side: pre-tax means you owe tax later in retirement. Whether pre-tax or Roth wins depends on your current vs retirement bracket.

Frequently asked questions

Does a Roth 401(k) reduce taxable wages?: No. Roth contributions are post-tax, so they don't reduce current taxable wages. Qualified withdrawals are tax-free in retirement.
Why doesn't my 401(k) reduce my FICA?: Pre-tax 401(k) is exempt from federal income tax but NOT from FICA. Section 125 cafeteria plan deductions (most health insurance, FSA) reduce FICA wages. 401(k) does not.
Are HSA contributions pre-tax or post-tax?: Pre-tax when made through payroll under a Section 125 cafeteria plan. After-tax HSA contributions you make outside payroll do not reduce FICA.
Are union dues pre-tax?: Almost always post-tax.