Benefits of Pre Tax Health Insurance Deductions

The benefits of pre taxing health insurance and other deductions are many. The primary advantage of pre-taxing health insurance contributions is that you lower your taxable income; therefore saving on taxes! A second benefit of pre tax medical contributions is tax savings for your employer.

Pre tax contributions can cut taxes in six different ways. Some are obvious and apply to almost everyone. Others are hidden gems - but apply to a smaller group. Scroll down the page to learn more.

6 Ways Pre Tax Insurance Deductions Save Money

Federal Income Tax Relief

Pre tax medical insurance premiums and other deductions lower reportable W2 income, thus lowering the amount of Federal Income Taxes paid. The amount of tax relief will depend upon the level of deductions, filing status, and income bracket.

State Income Tax Help

Pre tax health insurance premiums and other deductions lower reported W2 income, thus lowering the amount of State Income Taxes paid.

Medical Expense Deductions

Pre tax medical insurance premiums and contributions to a Flexible Spending Account help maximize tax savings from qualified medical expense deductions in two ways: lowing Adjusted Gross Income, and providing first dollar tax savings.

Alternative Minimum Tax Savings

Pre tax medical insurance premiums and other deductions help minimize exposure to the Alternative Minimum Tax (AMT). The lower reportable W2 income lowers the damage, and a flexible spending account reduces AMT triggers.

Child Tax Credit

Pre tax medical insurance premiums and other deductions help maximize the child tax credit. The lower reportable W2 the bigger the credit.

Earned Income Tax Credit

Pre tax elections lower your reportable W2 income - preserving your eligibility for the Earned Income Tax Credit, and helping to maximize the value of the credit.

Interrelated

Benefits of Pre Tax Health Insurance Deductions

6 Ways Pre Tax Insurance Deductions Save Money