Why Go Pre-tax Payroll Deduct?

What is a pre-tax deduction?

  • With pre-tax deduction your gross pay is reduced by the deduction prior to federal and state tax withholding. This means you do not pay taxes on the amount deducted as a pre-tax deduction.
  • Pre-tax payroll deduction allows your permit cost to be deducted directly from your paycheck on a bi-weekly or monthly basis.

What are the benefits of using pre-tax payroll deduction?

  • The pre-tax deduction is not reported on the W2 for tax filing.
  • Payroll deduction saves you money. The amount saved will depend on your tax status, but the withholding rates vary from 10% to 35%.

Example benefit of using pre-tax payroll deduction:

  • For every $40 withheld, you could save anywhere from $4 to $14 in taxes.