Section 125 Benefit Plan: What Shows on Your W2

Section 125 health plan contributions, made through cafeteria plans, typically reduce the amount of taxable income reported in Box 1 of your W-2. Because these deductions are made on a pre-tax basis, they are excluded from federal income tax calculations. However, depending on the benefit type, they may still appear in Boxes 3 and 5, which report wages subject to Social Security and Medicare taxes.

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