Home >> Calculators >> Taxation >> Section 125 Cafeteria Plan

Calculators

Section 125 Cafeteria Plan

A "Section 125 Cafeteria Plan", often referred to as a "Flexible Spending Account", helps you keep more of your paycheck by reducing your Federal and state taxes. It allows you to pay certain expenses before taxes are deducted from your paycheck. These expenses include daycare, insurance premiums and most out-of-pocket medical costs. Use this calculator to see how participating in your employer's "Section 125 Cafeteria Plan" can help you pay less tax, and increase your net take home pay. This calculator has been updated to use the new withholding schedules for 2010.

This Financial Calculator requires SUN's Java� Plug-in. If you see this message you will need to download SUN's Java� Plug-in. This can be done automatically by clicking the yellow bar at the top of your browser and choosing �Install ActiveX Control�.

    You can also get SUN's Java� Plug-in here: Get the Java� Plug-in!

    For more information about this Plug-in please visit: SUN's Java� Plug-in
    For more information about these financial calculators please visit: Financial Calculators from KJE Computer Solutions, LLC

Definitions

Pay period
This is how often you are paid. Your selections are: Weekly (52 paychecks per year), Every other week (26 paychecks per year), Twice a month (24 paychecks per year), Monthly (12 paychecks per year), and Annually (one paycheck per year).

Gross pay
This is your gross pay, before any deductions, for the pay period. Please enter a dollar amount from $1 to $1,000,000.

Filing status
This is your income tax filing status. The choices are "Single" and "Married". Choose "Married" if you are married or file as "head of household". Choose "Single" if you file your taxes as a single person or if you are married but file separately.

Number of allowances
When your Federal income tax withholdings are calculated, you are allowed to claim allowances to reduce the amount of the Federal income tax withholding. In 2010, each allowance you claim is equal to $3,650 of income that you expect to have in deductions when you file your annual tax return. The number of allowances you should claim depends largely on the number of dependents you have and your itemized deductions. This calculator allows from 0 to 99 allowances.

401(k)/403(b) plan withholding
This is the percent of your gross income you put into a taxable deferred retirement account such as a 401(k) or 403(b). While increasing your retirement account savings does lower your take home pay, it also lowers your Federal income tax withholdings. The impact on your paycheck might be less than you think. While your plan may not have a deferral percentage limit, this calculator limits deferrals to 80% to account for FICA (Social Security and Medicare) taxes. Please note that your 401(k) or 403(b) plan contributions may be limited to less than 80% of your income. Check with your plan administrator for details. For 2010 there has been no change to the maximum contribution to a 401(k) or 403(b) which is $16,500 per year for individuals under 50 and $22,000 for individuals 50 or older.

State and local taxes
This is the percentage that will be deducted for state and local taxes. We take your gross pay, minus $3,650 per allowance, times this percentage to calculate your estimated state and local taxes. Please note, this calculator can only estimate your state and local withholdings.

"Section 125 Cafeteria Plan" expenses per pay period
The amounts that you wish to have deducted from your paycheck each pay period for your "Section 125 Cafeteria Plan". The expenses are broken down into four categories. All amounts you enter here are considered pre-tax deductions from your paycheck when you participate in your company's "Section 125 Cafeteria Plan". We consider all of these expenses to be ordinary after-tax expenses if you do not participate in your "Section 125 Cafeteria Plan" .

FICA OASDI
FICA Old Age Survivors and Disability Insurance is calculated as your gross earnings times 6.2%. Please note that this calculator does not make any assumptions as to the total FICA OASDI paid for the current year. For 2010, incomes over $106,800 that have already had the maximum FICA OASDI amount of $6,621.60 withheld will not have additional FICA OASDI withholdings.

FICA Medicare
FICA Medicare is calculated as the gross earnings times 1.45%. Unlike FICA OASDI, there is no annual limit to FICA Medicare deductions.

Federal tax withholding calculations
Federal income tax withholdings were calculated by:

  1. Multiplying taxable gross wages by the number of pay periods per year to compute your annual wage.
  2. Subtracting the value of allowances allowed (for 2010, this is $3,650 multiplied by withholding allowances claimed).
  3. Determining your annual tax by using the tables below (single and married rates, respectively).
  4. Dividing the amount of tax by the number of pay periods per year to arrive at the amount of federal withholding tax to be deducted per pay period.

Single Withholding Rates*

Annual taxable income between these amounts

Annual withholding

Withhold additional % of income over this amount

$0.00

$6,050.00

$0.00

 

$6,050.00

$10,425.00

$0.000

plus 10% of income over $6,050.00

$10,425.00

$36,050.00

$437.50

plus 15% of income over $10,425.00

$36,050.00

$67,700.00

$4,281.25

plus 25% of income over $36,050.00

$67,700.00

$84,450.00

$12,193.75

plus 27% of income over $67,700.00

$84,450.00

$87,700.00

$16,716.25

plus 30% of income over $84,450.00

$87,700.00

$173,900.00

$17,691.25

plus 28% of income over $87,700.00

$173,900.00

$375,700.00

$41,827.25

plus 33% of income over $173,900.00

$375,700.00

(no limit)

$108,421.25

plus 35% of income over $375,700.00

Married Withholding Rates*

Annual taxable income between these amounts

Annual withholding

Withhold additional % of income over this amount

$0.00

$13,750.00

$0.00

 

$13,750.00

$24,500.00

$0.00

plus 10% of income over $13,750.00

$24,500.00

$75,750.00

$1,075.00

plus 15% of income over $24,500.00

$75,750.00

$94,050.00

$8,762.50

plus 25% of income over $75,750.00

$94,050.00

$124,050.00

$13,337.50

plus 27% of income over $94,050.00

$124,050.00

$145,050.00

$21,437.50

plus 25% of income over $124,050.00

$145,050.00

$217,000.00

$26,687.50

plus 28% of income over $145,050.00

$217,000.00

$381,400.00

$46,883.50

plus 33% of income over $217,000.00

$381,400.00

(no limit)

101,085.50

plus 35% of income over $381,400.00

Information and interactive calculators are made available to you as self-help tools for your personal independent use and are not intended to provide investment advice. We can not and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.