Taxable Wages

Taxable wages are the part of your pay that a given tax is figured on, after the deductions that tax allows. The same paycheck can have three different taxable wage amounts: one for federal income tax, one for Social Security and one for Medicare.

A traditional 401(k) lowers federal income tax wages but not Social Security or Medicare wages. Health premiums through a cafeteria plan and HSA contributions lower all three. Social Security wages also stop at the wage base. See pre-tax deduction and whether a 401(k) reduces taxable income.

Your Form W-2 shows each one: Box 1 for federal income tax, Box 3 for Social Security and Box 5 for Medicare. That is why Box 1 is often lower than your salary. Pay stubs may print them as Fed Taxable, OASDI Taxable or Medicare Taxable. Start from gross pay to follow the math.