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Employee Savings
Here's an example of the increase in take-home pay for an employee who contributes $100 per month for insurance premiums using pre-tax dollars.
| |
Without PTP |
With PTP |
| Annual salary |
$25,000 |
$25,000 |
| Less premium contributions (before taxes) |
n/a |
-1,200 |
| |
|
|
| Taxable income |
25,000 |
23,800 |
| Less estimated taxes* |
-6,913 |
-6,581 |
| |
|
|
| Annual income after taxes |
18,087 |
17,219 |
| Less premium contributions (after taxes) |
-1,200 |
n/a |
| |
|
|
| Total annual take-home pay |
$16,887 |
$17,219 |
| |
|
|
| Increase in Annual Take-Home Pay |
$332 |
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| * Based on 15% federal, 7.65% FICA, and 5% state tax rates (Estimated taxes will be lower in states without income tax.) |
Employer Savings
Here is an example of how much an employer could save on FICA taxes when employees use pre-tax dollars to pay their premiums.
| Number of Participants |
25 |
Each Participants Monthly
Contribution |
x $100 |
| FICA Tax Rate |
x .0765 |
| |
|
| Monthly FICA Tax Savings |
$191 |
| |
|
| Employer's Annual FICA Savings |
$2,292 |
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