Section 125 Cafeteria Plan Savings Calculator
Model the possible employer and employee tax effect of a Section 125 cafeteria plan using clear assumptions. Use the estimate as planning context before a licensed advisor, TPA, payroll provider, or tax professional reviews the details.
Primary next step after estimating
Organize plan documents, payroll treatment, and provider questions in a Benefits Readiness Snapshot before licensed review.
Estimated Annual Savings
Modeled Combined Annual Estimate
$0
Employer + employee tax-effect estimate each year
Employer Estimate
$0
FICA + SUTA tax savings
Employee Estimate
$0
FICA + income tax savings
Per Employee Estimate
$0
Average annual benefit per person
5-Year Modeled Projection
$0
With 3% annual salary growth
Participating Employees
0
Based on participation rate
Estimate Breakdown
| Source | Employer | Employee | Combined |
|---|---|---|---|
| Modeled Annual Total | $0 | $0 | $0 |
5-Year Savings Projection
Assumes 3% annual salary growth and stable participation.
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How we calculate: Employer FICA is modeled at up to 7.65% (6.2% Social Security on wages up to $184,500 + 1.45% Medicare). Employee FICA mirrors employer rates. Federal income tax uses an illustrative 22% marginal bracket estimate. State income tax uses the selected state's top marginal rate. SUTA is estimated at 2.7% on the first $10,000 of wages (varies by state).
Social Security wage base: For employees earning above $184,500 (2026), only the 1.45% Medicare portion applies on wages above the base. This calculator adjusts for that threshold.
These estimates are illustrative and do not provide tax, legal, insurance, payroll, or benefits advice. Verify plan-specific calculations and implementation decisions with a licensed advisor, TPA, payroll provider, or qualified tax professional.
Sources: IRS Topic 751 (FICA rates and wage base); IRS Publication 15 (Circular E); IRS Publication 15-B (cafeteria plan / IRC ยง125 framework). State income tax and SUTA figures are simplifying assumptions, not IRS citations.
How This Works
A Section 125 cafeteria plan can allow eligible employees to pay for certain benefits with pre-tax dollars. When implemented correctly, this may reduce taxable wages for payroll-tax and income-tax purposes.
The model estimates employer FICA/SUTA effects and employee FICA/income-tax effects. Actual results depend on wage-base rules, state rules, elections, payroll setup, and plan design.
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Have questions?
Sarah can explain how estimates are calculated and help identify what may deserve Snapshot or professional review.
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Disclaimer: Savings estimates are illustrative and based on general FICA tax rates and assumptions. Actual savings vary based on your organization's size, payroll structure, employee participation rates, plan design, and applicable state/federal regulations. Consult your tax advisor or benefits consultant for projections specific to your situation.
