Ever feel like your paycheck is shrinking before it even hits your bank account? You aren't imagining it. Between federal income tax, state tax, and FICA, a huge chunk of your hard-earned money disappears.
But what if you could keep more of it legally?
Welcome to the second half of our deep dive into the Section 125 Plan. While Part 1 focused on how this benefits the business owner, today we are talking about you: the person doing the work. This is about your lifestyle, your family, and your bottom line.
Most people think the only way to get more money is to ask for a salary bump. While we love a good raise, Section 125 offers a "hidden raise" by changing how you are taxed.
When you participate in a Section 125 (or Cafeteria) plan, you are paying for your essential benefits: like health insurance, dental, and vision: before the government takes its cut.
"You can save between 28% and 48% in total taxes on every dollar you contribute."
That isn't a typo. By using pre-tax dollars, you lower your taxable income. When your taxable income goes down, the amount the IRS grabs goes down with it. It’s a simple shift that puts real cash back in your pocket every single pay period.
Let’s keep it simple. If you earn $4,000 a month and pay $500 for health insurance after you get your check, you’re paying taxes on the full $4,000.
Under a Section 125 plan, that $500 is deducted first. Now, the IRS only sees $3,500. You aren't paying Social Security, Medicare, or Federal income tax on that $500. Over a year, that adds up to thousands of dollars in savings that stay exactly where they belong: with you.
The list of qualified benefits is longer than most people realize. Unlike those limited "basic" plans offered anywhere else, a robust Section 125 plan through UniFirst Financial and Tax Consultants can cover:
At UniFirst Financial and Tax Consultants, we believe that being a good steward of your resources is a spiritual principle. In Proverbs 21:5, we are reminded: "The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty."
Taking the time to understand your payroll structure is the definition of being diligent. It is about making sure your family is provided for and that you aren't wasteful with the fruits of your labor. You work hard for your money; don't give the government a "tip" they didn't earn.
If your employer hasn't implemented a Section 125 plan yet, they are missing out too. Every dollar you contribute pre-tax saves them roughly 7.65% in matching FICA taxes. It is a rare win-win in the financial world. You get a higher take-home pay, and they save on overhead.
If you are a business owner reading this, realize that this is one of the best retention tools in your arsenal. Giving your team a "tax-free raise" creates loyalty and financial stability without increasing your gross payroll costs.
Stop settling for less than you've earned. Whether you are an employee looking to understand your benefits or an employer ready to upgrade your team's lifestyle, we are here to help.
We offer a no-obligation free assessment to show you exactly how much money is being left on the table. No complex jargon, just straight talk about your money.
UniFirst Financial and Tax Consultants
205 Van Buren St., Suite 120
Herndon VA 20170
Phone: (888) 581-3320
Email: patrick@unifirstfinancial.com
Website: https://unifirstfinancial.com
Contact Us for Your Free Assessment
Don't wait for next tax season to wish you had started today. Reach out to us in Herndon and let's get that extra money back into your pocket where it belongs!
Our strategies are unlike those offered anywhere else in the financial industry
- we offer a no obligation free assessment so you can put our claim to the test.