Guides on pre-tax and post-tax deductions, and garnishments.
A deduction is any amount subtracted from gross pay before it becomes net pay, and where it falls - before taxes are calculated or after - changes both the size of the paycheck and what shows up on the year-end W-2. Some deductions are elections an employee makes; others are mandatory taxes nobody opts into; a smaller category is court-ordered and the employer has no choice at all.
These guides cover the difference between pre-tax and post-tax deductions, how mandatory FICA taxes work alongside voluntary benefit elections, and how wage garnishments are handled when a court or agency orders money withheld directly from a paycheck.
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Every category of payroll deduction explained: mandatory taxes, pre-tax benefits, and post-tax deductions, with a worked example showing the math.
Pre-tax deductions come out of gross pay before federal income tax is calculated, which lowers the wages reported in Box 1 of a W-2. A traditional 401(k) contribution and a Section 125 cafeteria-plan premium (health, dental, vision) are the two most common examples. Because they reduce taxable wages, the same dollar contributed pre-tax costs the employee less in take-home pay than a post-tax dollar would.
Post-tax deductions come out after taxes are already calculated and withheld. A Roth 401(k) contribution is the clearest example - it is post-tax by design, since the tradeoff for a Roth is paying tax now so withdrawals are tax-free later, and it does not reduce Box 1 wages the way a traditional contribution does. Wage garnishments, union dues and after-tax insurance riders also fall in this category.
Social Security and Medicare are not optional and are not elections - they are FICA, and the employer withholds and matches both. Social Security is 6.2% of wages up to an annual wage base that adjusts each year, and Medicare is 1.45% with no wage cap at all. Employees earning above $200,000 also have an Additional Medicare Tax of 0.9% withheld on the excess, which the employer withholds but does not match.
Because pre-tax deductions reduce Box 1 federal taxable wages but not necessarily Box 3 or Box 5, the three wage figures on a W-2 rarely match. Box 3, Social Security wages, is capped at the annual wage base; Box 5, Medicare wages, is not capped at all. A gap between gross pay and any of these boxes is expected, not an error.
Health, dental and vision premiums run through a Section 125 cafeteria plan are typically pre-tax, which is why they appear before tax lines on a properly itemized stub rather than after. Retirement contributions split the same way: traditional 401(k) is pre-tax, Roth 401(k) is post-tax, and a stub that lumps them into one generic retirement line without separating them is hiding a distinction that matters for the year-end W-2.
Life insurance, disability coverage, HSA and FSA contributions, and commuter benefits each have their own tax treatment, and getting the pre-tax or post-tax placement wrong on a stub throws off every downstream total - net pay, Box 1 wages, and the employee's own budgeting.
A wage garnishment is a court or agency order requiring an employer to withhold part of an employee's pay and send it to a creditor, the IRS or a state agency. The Consumer Credit Protection Act caps how much of a paycheck can be garnished for most ordinary debts, protecting a floor of income the employee keeps regardless of the order. Child support orders operate under their own, higher limits set separately from the general CCPA cap, because federal law treats support obligations differently from consumer debt.
Employers don't choose whether to comply - a valid garnishment order is a legal obligation, and it has to appear on the stub as its own line, separate from voluntary deductions, so the employee can see exactly what was withheld and why.
A pre-tax deduction comes out of gross pay before federal income tax is calculated, lowering the wages reported in Box 1 of a W-2 - a traditional 401(k) contribution is the standard example. A post-tax deduction, like a Roth 401(k) contribution or a wage garnishment, comes out after taxes are already withheld and does not reduce Box 1.
A traditional 401(k) contribution does - it lowers Box 1 wages on your W-2 because it's deducted before federal income tax is calculated. A Roth 401(k) contribution does not, because it's a post-tax deduction by design; the tradeoff is that Roth withdrawals in retirement are tax-free.
Box 1 is wages subject to federal income tax, reduced by pre-tax deductions like a 401(k) or Section 125 health premiums. Box 3 is Social Security wages, capped at the annual wage base. Box 5 is Medicare wages, which has no cap. All three can legitimately be different numbers on the same W-2.
It depends on the type of debt and is capped by the Consumer Credit Protection Act for most ordinary garnishments, which protects a floor of income you keep regardless of the order. Child support orders are governed by their own, separately set limits that can allow a higher percentage to be withheld than a standard consumer-debt garnishment.
No. A valid garnishment order from a court or government agency is a legal obligation, not a choice the employer makes. It has to be applied and shown as its own line on the pay stub, separate from voluntary deductions like insurance or retirement contributions.
Usually before. Premiums run through an employer's Section 125 cafeteria plan are typically pre-tax, reducing taxable wages the same way a traditional 401(k) contribution does. Some supplemental or after-tax insurance riders are the exception and are deducted post-tax instead.
