Every deduction on your paystub comes out at one of two moments: before your taxes are calculated, or after. That timing is the whole difference between a pre-tax and a post-tax deduction, and it decides whether the deduction lowers your tax bill.
A pre-tax deduction comes out of your gross pay first, and your taxes are then calculated on the smaller amount that's left. So you're taxed on less. A post-tax deduction comes out after taxes are already figured, so it lowers your take-home but not your taxable wages.
Pre-tax deductions
These reduce the wages your taxes are based on:
- Traditional 401(k) or 403(b) contributions
- Health, dental, and vision insurance premiums (a Section 125 / "cafeteria" plan)
- HSA (Health Savings Account) contributions
- FSA (Flexible Spending Account), including dependent-care FSA
Because your taxable wages are lower, less income tax comes out — and, for some of these, less FICA too (more on that below). The money still leaves your check, but the government taxes a smaller number.
Post-tax deductions
These come out after taxes are calculated, so they don't lower your taxable wages:
- Roth 401(k) contributions — you pay tax on this money now so you can withdraw it tax-free in retirement, the opposite trade from a traditional 401(k)
- Wage garnishments — court- or agency-ordered, like child support or a tax levy
- Some voluntary benefits and after-tax insurance
A garnishment lowers your take-home the same dollar amount a pre-tax deduction would, but you're still taxed on the full wages first.
Which taxes each type actually lowers
Not every pre-tax deduction reduces every tax. This is the part people get wrong, so here's exactly how Payrollix handles it:
- Section 125 deductions — health, dental, vision, HSA, FSA — reduce BOTH your income tax AND your FICA wages. They come out before Social Security and Medicare are calculated, so you pay less of both. This is the strongest tax break on your stub.
- Traditional 401(k) and 403(b) reduce your income tax, but NOT your FICA. Social Security and Medicare are still calculated on your full pay, including the amount you defer. So a 401(k) contribution lowers your federal (and usually state) income tax, but your FICA lines don't move.
That difference is why a $200 health premium and a $200 401(k) contribution don't affect your paycheck identically, even though both are "pre-tax." The health premium dodges FICA; the 401(k) doesn't.
Post-tax deductions like a Roth 401(k) or a garnishment don't reduce any tax — they come out of money that's already been taxed.
Where to see this on your stub
Pre-tax and post-tax deductions both appear in the Deductions section of your paystub, rolled into Total Deductions. The tax savings show up indirectly: your Federal Income Tax line (and Social Security / Medicare lines, for Section 125) are calculated on the reduced wages, so they come out smaller than they would on your full gross. Walk through it in how to read your paystub line by line.
Related: Read your paystub line by line · Gross pay vs. net pay · Federal income tax withholding.