What Are Pre-Tax and After-Tax Deductions?

After-tax deductions are subtracted from your gross earnings after federal, state and local income taxes and Social Security and Medicare taxes are withheld. Pre-tax deductions are subtracted from your gross earnings before any taxes are taken out, lowering your tax liability. Many deductions that are not subject to income taxes may be subject to Social Security and Medicare taxes.

Pre-Tax Deductions

Pre-tax deductions include contributions to a 401(k) or other qualifying retirement fund. Contributions to most employer-sponsored pension and retirement funds are pre-tax deductions. A 529 plan, which is a savings plan for a child's college fund, may be subject to state taxes but not federal taxes. Whether the fund is subject to state taxes depends on the fund you choose and how your state treats the contributions.

Other Deductions

After-tax deductions include money for union dues, disability insurance and life insurance policies. Flexible savings accounts and some health care benefit and savings accounts are not subject to income taxes or Social Security and Medicare taxes.


Garnishments are deducted from your paycheck after taxes, pre-tax and after-tax deductions have been subtracted. Specific garnishments include court-ordered child support, tax payments levied against you by the federal or state government for money owed on back taxes and judgments against you by a creditor such as a credit card company. Student loans can be garnished from your payroll check, but only after any child-support orders are deducted.


Pre-tax deductions that lower your Social Security taxes can affect your Social Security benefits when you are ready to retire. When you have pre-tax deductions that aren't used to calculate your Social Security tax, you reduce the wages used to define your benefit amount. Because of the way Social Security benefits are calculated, higher-wage earners may not see a decline in their benefits. However, someone making about $40,000 would see a decrease.