WHAT ARE PRE-TAX AND POST-TAX PAYROLL DEDUCTIONS?

Payroll deductions are amounts taken out of an employee’s paycheck each pay period. There are both mandatory and voluntary payroll deductions. Examples of payroll deductions include federal, state, and local taxes, health insurance premiums, and job-related expenses. 


Many people often call pre-tax and post-tax deductions voluntary payroll deductions. This is because those are non-mandatory tax withholdings, such as state and local taxes that are required by law. They are usually withholdings related to retirement plans, health insurance and life insurance. 

Some payroll deductions are voluntary and may be taken out of a paycheck on a pre-tax or post-tax basis as long as the employee provided written authorization. Taxes and wage garnishments, on the other hand, are mandatory and employers who fail to accurately withhold these deductions may be liable for the missing amounts. 

You will deduct post-tax deductions after you withhold pre-tax deductions and taxes.


A Pre-tax deduction is money that is taken out of your employee’s gross pay before any taxes are withheld from their paycheck.

The most common Pre-tax deductions include:

  • Retirement Funds and 401(k) contributions (this can also be post-tax) 
  • Health Insurance Premiums 
  • FSA (Flexible Spending Account)
  • HSA (Health Savings Account) 
  • Life Insurance Premiums 
  • Commuter Benefits

A Post-tax deduction is money that is taken out of your employee’s paycheck after all applicable taxes have been withheld.

The most common Post-tax deductions include:

  • Individual Retirement Account. (IRA) 
  • Disability Insurance 
  • Union Fees
  • Wage Garnishments 

Calculating a paycheck can get tricky, so it’s always best to consult a CPA or use a payroll provider to make sure everything is deducted correctly. If you have any questions about this, you can get in touch with our accounting team at 323-538-5358 or write to us via info@alajiangroup.com