A Pre-tax Deduction is an amount subtracted from an employee’s gross pay before taxes are calculated, reducing taxable income, such as for health insurance or retirement plans.
- What is a pre-tax deduction?
Answer: It is an amount deducted from gross pay before taxes, reducing taxable income. - What are examples?
Answer: Examples include 401(k) contributions and health premiums. - What are the benefits?
Answer: It lowers tax liability and increases take-home pay. - Who authorizes it?
Answer: Employees authorize it via enrollment forms. - How does HR handle it?
Answer: HR processes deductions and updates payroll.
