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Indestata > Personal Finance > Taxes > What Are Pre-Tax Benefits and Deductions?
Taxes

What Are Pre-Tax Benefits and Deductions?

TSP Staff By TSP Staff Last updated: May 6, 2025 6 Min Read
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When evaluating a job offer, salary isn’t the only factor to consider. Pre-tax benefits can have a big impact on your take-home pay and overall financial health. You can save money for specific expenses before taxes, lowering your taxable income and the amount of income tax you owe to increase your spendable earnings. 

If you’re comparing job offers, benefits enrollment or annual tax planning, a financial advisor can help you evaluate how pre-tax and post-tax benefits play a role in your financial situation. 

What Are Pre-Tax Benefits and Deductions?

Employee benefits that are deducted from your paycheck before federal income taxes, Social Security taxes and Medicare taxes are calculated. These paycheck deductions lower your taxable income, and help employees save money to plan for the future.

However, pre-tax benefits may also reduce the wages reported on your W-2. This can impact how lenders assess your income for loans or mortgages. You’ll generally pay taxes on this money when you withdraw it, such as in the case of retirement accounts.