# Pre-Tax vs After-Tax Deductions on a Pay Stub > How pre-tax deductions (401(k), health premiums) and after-tax deductions (Roth 401(k), garnishments, dues) affect taxes and take-home pay, with an example. Source: https://www.paystubnest.com/guides/pre-tax-vs-after-tax-deductions Published: 2026-09-25 Publisher: PayStubNest.com ## Short answer Pre-tax deductions come out of pay before certain taxes are calculated, lowering taxable wages; traditional 401(k) contributions reduce income tax wages but not FICA, while cafeteria-plan health premiums generally reduce both. After-tax deductions, such as Roth 401(k) contributions, union dues and garnishments, come out after taxes and do not lower them. Deductions on a pay stub fall into two families: pre-tax and after-tax. The label tells you whether a deduction lowers the wages that taxes are calculated on. Getting it right affects withholding, year-end W-2 figures and take-home pay. ## Pre-tax deductions A pre-tax deduction is subtracted from gross pay before some or all taxes are figured. Not every pre-tax deduction reduces every tax, which is the part most people miss. ### Traditional 401(k) and 403(b) contributions Employee contributions to a traditional 401(k) reduce wages subject to federal income tax (and most state income taxes). They do **not** reduce wages subject to Social Security and Medicare. The IRS sets an annual limit on employee deferrals: **$24,500 for 2026**, with an additional catch-up of $8,000 for most people aged 50 and older and a higher catch-up for those aged 60 through 63, according to the [IRS](https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500). ### Health, dental and vision premiums through a cafeteria plan When an employer offers benefits under a Section 125 cafeteria plan, the employee's share of premiums is generally excluded from federal income tax wages *and* from Social Security and Medicare wages. The same usually applies to health savings account (HSA) contributions made through the plan and to health or dependent care flexible spending accounts. ### Other common pre-tax items - Qualified commuter and transit benefits, within their monthly limits - Some group term life insurance premiums State treatment can differ from federal, so a deduction may be pre-tax for federal purposes but taxable for a particular state. ## After-tax deductions After-tax deductions come out of pay once taxes have been calculated. They do not change the tax withheld for the period. ### Roth 401(k) contributions Roth contributions are taxed now in exchange for potentially tax-free qualified withdrawals later. They share the same annual deferral limit as traditional 401(k) contributions, so a combination of the two cannot exceed the yearly limit. ### Wage garnishments A garnishment is a legally required withholding, for example for child support, a court-ordered debt, unpaid taxes or defaulted student loans. It is calculated on *disposable earnings*, meaning pay after legally required deductions such as taxes. Federal law under the Consumer Credit Protection Act limits how much can be garnished in most cases, and some states set lower limits. The U.S. Department of Labor explains the rules on its [Wage and Hour Division fact sheets](https://www.dol.gov/agencies/whd/fact-sheets). ### Other after-tax items - Union dues - Charitable giving through payroll - Voluntary insurance not offered under a cafeteria plan - Repayment of a pay advance ## A side-by-side example For example, an employee earns $2,000 gross in a biweekly period and has these deductions, using illustrative round numbers: - Traditional 401(k): $100 (pre-tax for income tax only) - Health premium through a cafeteria plan: $50 (pre-tax for income tax and FICA) - Roth 401(k): $40 (after-tax) - Union dues: $20 (after-tax) The wages used for each tax are: 1. **Federal income tax wages:** $2,000 minus $100 minus $50 = $1,850 2. **Social Security and Medicare wages:** $2,000 minus $50 = $1,950 Social Security is 6.2% of $1,950, about $121; Medicare is 1.45% of $1,950, about $28. Federal income tax is then calculated on $1,850 using the W-4. The Roth contribution and dues come out afterwards and do not change any of those tax figures. If the $100 had gone into the Roth instead of the traditional 401(k), income tax wages would be $1,950 and withholding would be somewhat higher. ## Why the order matters Payroll follows a sequence: start with gross pay, subtract pre-tax deductions for each tax type, calculate taxes, then subtract after-tax deductions to reach net pay. Garnishments usually come last because they depend on disposable earnings. Our guide on [gross pay vs net pay](https://www.paystubnest.com/guides/gross-pay-vs-net-pay) walks through the whole flow. ## How this shows up on the W-2 Because pre-tax deductions reduce different wage types, the three wage boxes on Form W-2 often differ. Box 1 (federal wages) is usually the lowest because it excludes 401(k) and cafeteria-plan amounts; Boxes 3 and 5 (Social Security and Medicare wages) include 401(k) contributions. Tracking each deduction's [year-to-date total](https://www.paystubnest.com/guides/year-to-date-totals-on-a-pay-stub) makes the year-end match easy to check. ## A note on getting advice Whether a particular benefit is pre-tax depends on how the employer's plan is set up and on state law. Employers should confirm plan details with their benefits provider, and individuals with specific questions should talk to a tax professional. ## Adding deductions to a pay stub When you [create a pay stub](https://www.paystubnest.com/app/new) in PayStubNest, you can add each deduction and mark it pre-tax or after-tax so the calculator applies it to the right taxes. For more on the rest of the stub, see [how to read a pay stub](https://www.paystubnest.com/guides/how-to-read-a-pay-stub) and [Social Security and Medicare (FICA)](https://www.paystubnest.com/guides/social-security-and-medicare-fica).