What Is a Deduction Code? Pre-Tax, Post-Tax, and W-2 Codes

The deduction codes on your pay stub are short labels that identify each amount subtracted from your gross pay, one code per type of withholding. Some cover taxes the government requires. Others cover benefits you signed up for. A few cover court-ordered payments. Once you can match each code to a category and a dollar figure, you can check that your employer is withholding the right amounts and that you’re getting the tax breaks you elected.

The Codes You’ll See Most Often

Payroll systems use abbreviations rather than full descriptions, and the abbreviations aren’t always intuitive. A handful show up on nearly every stub in the country:

FIT or FED: federal income tax withheld based on your W-4.
SIT or ST: state income tax, in states that have one.
FICA: the combined Social Security and Medicare tax, sometimes split into two separate lines.
SS or OASDI: the Social Security portion alone (6.2%).
MED: the Medicare portion alone (1.45%).

Beyond taxes, you’ll see employer-specific codes for benefits: 401K for retirement contributions, HSA for a health savings account, DNTL for dental, VIS for vision, LTD for long-term disability, LIFE for life insurance. No federal standard governs how employers label voluntary benefits on a stub, so the same benefit can appear under different codes at different companies. When a code isn’t obvious, payroll or HR can tell you what it maps to.

Mandatory Tax Withholdings

Federal law requires certain taxes to come out of every paycheck. These aren’t optional, and they appear regardless of what benefits you elected.

Social Security and Medicare (FICA)

FICA has two components. Social Security tax runs at 6.2% of wages up to the 2026 wage base of $184,500.¹² Once your year-to-date earnings pass that number, the Social Security line drops to zero for the rest of the year. Medicare tax is 1.45% with no cap. If you earn more than $200,000 ($250,000 for married couples filing jointly), an extra 0.9% Medicare surtax applies to wages above that threshold.

Federal and State Income Tax

Federal withholding depends on what you entered on Form W-4: filing status, adjustments for dependents, other income, and any additional amount you asked to be withheld.³ If you completed only the required parts of the W-4, withholding defaults to your filing status’s standard deduction and bracket schedule with no other adjustments.⁴ Most states with an income tax use a similar state form. Your stub reflects the per-period amount those forms produce.

Voluntary Benefit Deductions

Voluntary deductions come out because you elected a benefit. You picked the plan and, in many cases, the contribution level.

401(k), 403(b), and 457

Retirement contributions appear as either a flat dollar amount or a percentage of pay. For 2026, elective deferrals to a 401(k), 403(b), or governmental 457 plan are capped at $24,500. Workers 50 and over can add a catch-up of up to $8,000; workers aged 60 through 63 get a higher catch-up of $11,250 under SECURE 2.0.⁵ Traditional (pre-tax) contributions reduce your taxable wages for the period. Roth contributions come out after tax and use a separate code.

Health Premiums and HSA

Health, dental, and vision premiums are typically deducted pre-tax through a Section 125 cafeteria plan, meaning the premium is subtracted before federal income tax, Social Security, and Medicare are calculated.⁶ HSA contributions work the same way if you have a qualifying high-deductible health plan. The 2026 HSA limits are $4,400 for self-only coverage and $8,750 for family coverage.⁷

Involuntary Deductions: Garnishments and Levies

If you see a code for a garnishment or support order, it exists because a court or agency ordered it. Neither you nor your employer can waive it.

For ordinary consumer debt, federal law caps the garnishment at 25% of your disposable earnings for the week, or the amount your disposable earnings exceed 30 times the federal minimum wage, whichever leaves you with more. Child support follows a different scale: 50% of disposable earnings if you support another spouse or child, 60% if you don’t, with an additional 5% each when the order covers arrears more than 12 weeks overdue.⁸ Federal and state tax levies aren’t bound by those caps and can take a larger share.

If a garnishment code appears that you don’t recognize, ask payroll for the underlying order. You have a right to know the creditor, the total debt, and the per-period amount.

Pre-Tax vs. Post-Tax and Why the Order Matters

Payroll doesn’t subtract everything in a single step. Pre-tax deductions come out first and shrink the wages your taxes are calculated on. Post-tax deductions come out after.

Pre-tax items typically include traditional 401(k) contributions, cafeteria-plan health premiums, and HSA contributions. If you earn $4,000 in a pay period with $500 in pre-tax deductions, only $3,500 gets taxed. Every pre-tax dollar saves you the combined marginal rate you would otherwise pay in income tax and FICA.

Post-tax deductions don’t reduce your current tax bill. Roth 401(k) and Roth 403(b) contributions fall in this bucket because you’re paying tax now for tax-free withdrawals later. Supplemental life insurance, after-tax disability premiums, and union dues also come out post-tax.

Imputed Income for Group-Term Life

One code trips people up more than most: imputed income for employer-provided life insurance. If your employer gives you group-term life coverage over $50,000, the cost of the excess coverage counts as taxable income even though no cash changes hands.⁹ Your stub shows a small addition to earnings (often labeled IMP LIFE or GTL) with a corresponding tax withholding. On your W-2 it appears in Box 12 with Code C. It looks strange until you know what it is.

How the Codes Show Up on Your W-2

At year-end, your W-2 rolls up the totals from every stub. Two boxes carry most of the detail.

Box 12 Letter Codes

Box 12 uses IRS-standardized letter codes. The ones you’re most likely to see:¹⁰

Code C: taxable cost of group-term life insurance over $50,000.
Code D: elective deferrals to a 401(k).
Code E: elective deferrals to a 403(b).
Code G: elective deferrals and employer contributions to a 457(b).
Code W: employer and cafeteria-plan HSA contributions.
Code AA: designated Roth contributions to a 401(k).
Code BB: designated Roth contributions to a 403(b).
Code DD: cost of employer-sponsored health coverage (informational only, not taxable).

For 2026, the IRS added three codes tied to the One, Big, Beautiful Bill Act: Code TA for employer contributions to a Trump account, Code TP for total cash tips reported to the employer, and Code TT for qualified overtime compensation.¹⁰ If you received tax-free tips or overtime under the new law, the amounts appear here.

Box 14 Employer-Defined Codes

Box 14 is a catch-all. Employers can report anything without its own box and label it however they choose. Common entries include state disability insurance, union dues, uniform allowances, and educational assistance.¹⁰ The same benefit might read “UNITE DUES” at one employer and “UD” at another. If a Box 14 entry puzzles you at tax time, ask payroll before guessing which category to enter in your tax software.

Boxes 18 Through 20

If a city, county, or school district taxes your income, those withholdings appear in Box 18 (local taxable wages), Box 19 (local tax withheld), and Box 20 (locality name). Most parts of the country don’t have local income tax, so these are often blank.

If a Deduction Looks Wrong

Compare the stub against your source documents. Pull your W-4 to check federal withholding, your benefits enrollment summary to verify premium and contribution amounts, and any court order for a garnishment figure. When something doesn’t line up, put the discrepancy in writing and give it to HR or payroll with the supporting documents attached. Verbal complaints get lost; written ones create a record.

For deductions that push your pay below the federal minimum wage, the Fair Labor Standards Act protects you. Employers can’t make deductions that drop wages below the federal minimum, even for uniforms or a cash register shortage.¹¹ If your employer refuses to correct an improper deduction, you can file a complaint with the Department of Labor’s Wage and Hour Division.

Catching a withholding error also matters more mid-year than at W-2 time. Federal income tax over-withholding can generally be corrected only if the employer discovers and reimburses it in the same calendar year the wages were paid. For prior years, only administrative errors (where the amount reported on Form 941 didn’t match what was actually withheld) can be corrected.¹² Reviewing your stubs each pay period is worth more than a careful W-2 review in January.

1
Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
2
Social Security Administration. What Is the Current Maximum Amount of Taxable Earnings for Social Security
3
Internal Revenue Service. About Form W-4, Employees Withholding Certificate
4
Internal Revenue Service. FAQs on the 2020 Form W-4
5
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
6
Office of the Law Revision Counsel. 26 USC 125 – Cafeteria Plans
7
Internal Revenue Service. Expanded Availability of Health Savings Accounts Under the OBBBA
8
Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment
9
Office of the Law Revision Counsel. 26 USC 79 – Group-Term Life Insurance Purchased for Employees
10
Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026) – Specific Instructions for Form W-2
11
U.S. Department of Labor. Fact Sheet 16 – Deductions From Wages for Uniforms and Other Facilities Under the FLSA
12
Internal Revenue Service. Instructions for Form 941-X