Section 125 Plan > Employee Benefits

How will my employees save money? The portion of salary which an employee directs to the FSA Plan is not taxed. The employee will save:

  • Federal income tax
  • State and local taxes (where applicable)
  • Social security tax (assuming the employee's salary is below the maximum social security wage base)

Your employees' savings will depend on the amount directed to the FSA Plan and the employees' tax rates.

The example below illustrates how one employee increased his monthly take-home pay by $27 through participation in his employer's FSA Plan.