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Pre vs. Post tax

edited September 2010 in General Payroll Topics
Are benefits such as vision, dental, medical coverage pre or post tax deductions?


  • That depends on the type of plans the company has chosen. Some plans are pre-tax and many others are post-tax. Be careful to make sure you get it right before you make a real mess out of the payroll.
  • Tough question - it was about benefits - did not mention deductions from employee pay - employer paid benefits paid under a plan (that does not need to be in writing) for employee medical expenses are excluded from employee gross income. Employee voluntary wage reductions to pay for benefits are only pre tax deductions if there is a Sec 125 plan - in this case the payments are considered employer paid and excluded from gross income. Otherwise deductions from employee pay is considered employee paid and the amount deducted remains in gross income. The employee got the cash and then paid for the benefit - receiving the cash or being able to chose to receive the cash instead of the benefit without a Sec 125 plan means the amount remains taxable income.
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