What Is a Pre-Tax Deduction?
A pre-tax deduction is an amount taken from an employee's gross pay before certain taxes are calculated, which lowers taxable wages. Common examples in the United States include traditional 401(k) contributions, HSA contributions made through payroll, and many employer health insurance premiums. Post-tax deductions are taken after taxes, such as Roth 401(k) contributions.
Which Taxes Are Reduced
It depends on the deduction: traditional 401(k) contributions reduce income tax withholding but not Social Security and Medicare tax, while qualifying health premiums under a cafeteria plan can reduce both.
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Paycheck Calculator (2026)
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401(k) Calculator
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HSA Contribution Calculator
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🔗 Related Terms
More Taxes Terms
- Additional Medicare Tax
- Adjusted Gross Income (AGI)
- Alternative Minimum Tax (AMT)
- Capital Gains Tax
- Capital Loss
- Child Tax Credit
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.