pre-tax deductions

Pre-tax deductions are any amount of money subtracted from an employee’s gross wages before taxes are withheld. Since these deductions are withheld before the wages are taxed, they lower the taxable income and any money an employee might owe to the government. 

It may also reduce taxes under the Federal Insurance Contributions Act (FICA) – such as Social Security and Medicare (hospital insurance tax) – and employer-paid contributions like State Unemployment Insurance (SUI) arrears, Federal Unemployment Tax (FUTA), and FICA. Among these, the statutory deductions include FICA taxes, federal income tax, and state and local taxes.