Pre-tax deductions on a pay stub
Pre-tax deductions come out of pay before some taxes are worked out, so those taxes are lower. They don't all lower the same taxes: a 401(k) deferral generally lowers federal income tax withholding but not social security or Medicare, while section 125 cafeteria-plan benefits, such as health premiums or HSA contributions through the plan, aren't wages for employment taxes at all.
Add a pre-tax 401(k) amount to see how federal income tax changes and FICA doesn't.
See a 401(k) in a paycheckWhich taxes each one lowers
| Deduction | Federal income tax | Social security and Medicare |
|---|---|---|
| 401(k) elective deferral | Lowered (generally exempt) | Not lowered (taxable) |
| Section 125 cafeteria plan, e.g. health premiums | Lowered (not wages) | Lowered (not wages) |
| HSA contribution through a cafeteria plan | Lowered (not wages) | Lowered (not wages) |
| After-tax deductions, e.g. Roth 401(k), garnishments | Not lowered | Not lowered |
Worked example: $100 401(k) on a $2,000 paycheck
Single, 2026 W-4, paid every two weeks. Without the 401(k), federal income tax is $156.15. With $100 deferred, federal taxable wages are $1,900 and federal income tax is $144.15 ($12 less), while social security ($124.00) and Medicare ($29.00) stay on the full $2,000.
On the pay stub
Pay stubs often show federal taxable wages separately from gross pay, which is why the two differ. Year-to-date totals should track the same split.
Questions
Do pre-tax deductions lower FICA?
It depends. Section 125 cafeteria-plan benefits do; 401(k) deferrals don't.
Is health insurance taken out before tax?
When it's paid through a section 125 cafeteria plan, yes: it isn't wages for income tax withholding, social security or Medicare.
Sources
Official sources checked September 25, 2026. This guide explains how pay documents work; it is not tax or legal advice.