Payroll Tax Exemptions

Some deductions withheld from employees’ paychecks are exempt from some payroll taxes. For example,

Cafeteria plan contributions

pretax deductions for things like health insurance premiums, retirement, child care, etc. (Note – employers must have the proper cafeteria plan documentation in place in order to qualify for these exemptions.)

FICA – Exempt
Federal & State withholding – Exempt
FUTA & STUA – Exempt

401-K contributions – pre tax

FICA – Taxable
Federal & State withholding – Exempt
FUTA & STUA – Taxable

401-K Roth contributions (after tax)

FICA – Taxable
Federal & State withholding – Taxable
FUTA & STUA – Taxable

Simple IRA contributions

FICA – Taxable
Federal & State withholding – Exempt
FUTA & STUA – Taxable

Disability Insurance

Can be taxable or exempt – it’s the employer’s choice. If it’s treated as exempt, then any disability benefits received by an employee will be fully taxable. If it’s taxed, then there will be no taxes on the benefits.