Pre-tax Deduction

HR Glossary for HR Professionals

Glossary of the most common HR terms and acronyms to assist professionals navigating the ever-growing and ever-changing world of HR terminology.

Pre-tax Deduction

What is a Pre-tax Deduction?

A pre-tax deduction is a deduction taken from an employee’s paycheck before taxes are withheld. Because these deductions are removed from gross pay, pre-tax deductions reduce an employees’ taxable income. Examples of pre-tax deductions include 401(k), HSA or FSA deductions, and commuter benefits.

Related Terms: Taxable Income, Commuter Benefits, 401 (k)

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