What Are Post-Tax Deductions on a Paycheck?

A paycheck outlines the journey from gross earnings to the final net amount received. Gross pay is the total compensation earned before any reductions are made. Various deductions are subtracted from this gross amount, ultimately determining the take-home pay. These deductions serve different purposes, ranging from mandatory taxes to voluntary contributions for benefits or savings.

Understanding Post-Tax Deductions

Post-tax deductions are amounts withheld from an employee’s gross pay after all applicable federal, state, and local income taxes, as well as Federal Insurance Contributions Act (FICA) taxes (Social Security and Medicare), have been calculated and withheld. This means that these deductions do not reduce the income subject to current taxation. Unlike pre-tax deductions, which are taken out before tax calculations, post-tax deductions are applied to the income that has already been taxed.

Common Examples of Post-Tax Deductions

Contributions to a Roth 401(k) are a primary example. These retirement savings are funded with after-tax dollars, meaning the employee pays taxes on the income before it is contributed. While there is no immediate tax reduction, qualified withdrawals from a Roth 401(k) in retirement are tax-free. Employees can contribute to a Roth 401(k) up to annual limits, with higher limits for those age 50 and older.

Wage Garnishments

Wage garnishments are another type of post-tax deduction. These are court-ordered or legally mandated withholdings from an employee’s pay to satisfy a debt, such as child support, defaulted student loans, or unpaid taxes. For child support, federal law allows up to 50% of disposable earnings to be garnished, or up to 60% in certain cases, with an additional 5% if payments are over 12 weeks late. Federal student loan garnishments can take up to 15% of disposable pay without a court order once the loan is in default. For unpaid taxes, the Internal Revenue Service (IRS) can issue a wage levy, garnishing a portion of wages after proper notice.

Union Dues

Union dues are typically deducted from an employee’s paycheck after taxes have been withheld. These dues are membership fees paid to labor unions or professional organizations. While generally post-tax, they are not deductible on federal tax returns for employees from 2018 through 2025.

Insurance Premiums

Certain types of insurance premiums, such as some disability insurance plans, are also paid with post-tax dollars. If premiums for disability insurance are paid with after-tax money, any benefits received from the policy are generally tax-free. This contrasts with pre-tax premium payments, where benefits would typically be taxable upon receipt.

Charitable Contributions

Charitable contributions made through payroll deduction are another example of post-tax withholding. Federal law does not permit these donations to be made on a pre-tax basis through payroll. Employees may still be able to claim these contributions as an itemized deduction on their tax return, provided they meet IRS recordkeeping requirements.

Impact on Your Paycheck and Taxable Income

Post-tax deductions directly reduce an employee’s net take-home pay. Since these amounts are withheld after taxes have been calculated and applied, they do not affect the employee’s taxable income for federal, state, or local income tax purposes. While the amount of money an employee receives is lower, their reported taxable wages on forms like a W-2 remain unchanged by these specific deductions.

Employees can identify post-tax deductions by reviewing their pay stub. Pay stubs itemize all deductions, clearly distinguishing between those taken before taxes and those taken after. Post-tax deductions are commonly listed in a separate section from pre-tax deductions and mandatory tax withholdings. Many post-tax deductions are voluntary, such as Roth 401(k) contributions or charitable giving, but mandatory garnishments also appear in this section.