What is the tax advantage of a Section 125 plan?

Employee pretax contributions to a Section 125 plan are not considered taxable wages (exempt from tax calculations) for federal and state withholding taxes. Contributions are also exempt from federal unemployment taxes and FICA taxes. To estimate your annual employer FICA tax savings, multiply your employees’ annual contributions by 7.65%. All other payroll taxes (such as city and local taxes) must be reviewed with your tax advisor to determine tax implications.

Note: Annual savings are projected estimates only. Actual savings can vary depending on state and local tax regulations. Annual savings do not include any administration charges to set up and manage the plan.

Federal Tax와 State Tax, 그리고 Social Security Tax, Medicare Tax (FICA) 등 각종 세금에서 면제를 받습니다.

따라서 Federal Tax Braket과 State Tax Bracket를 보시면, 정확히 몇 %의 혜텍을 받으시는지 알수 있습니다.