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Pre-tax payroll deductions
Pre-tax payroll deductions

This article describes how to account for pre-tax payroll deductions in your Plan.

Nancy Gates avatar
Written by Nancy Gates
Updated over a week ago

Pre Tax Payroll Deductions

If your employers provides health insurance and other benefits, and you pay for these benefits via pre-tax payroll deductions, you may be wondering how to account for these in your plan.


Common employer benefits paid via pre-tax payroll deductions include the following:

  • Employer paid healthcare insurance premiums:

    • Medical

    • Dental

    • Vision

  • Employer paid life, disability, and accidental death & dismemberment insurance.


If your employee benefit deductions are made in a pre-tax manner, they will reduce your taxable income. For this reason, we recommend excluding this income from your gross income in order to most closely account for your taxable income.

We then recommend excluding any expenses paid in this manner from your healthcare expenses in order to most closely represent your net cashflow.

NOTE: If you follow this method and also have income-linked contributions in your plan, we recommend using the specific dollar amount selection for contributions instead of the percentage amount to ensure accuracy.

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