Why is my W-2 Box 1 less than my salary?

Box 1 shows taxable wages, which are reduced by pre-tax deductions. Common deductions that lower Box 1 include traditional 401(k) contributions, health insurance premiums paid pre-tax through your employer, FSA and HSA contributions, and transit or parking benefits.

What is the difference between Box 1 and Box 3 on my W-2?

Box 1 is reduced by 401(k) and most pre-tax benefits. Box 3 Social Security wages are not reduced by 401(k) contributions, so you still pay Social Security tax on that income.

What does it mean if Box 2 is higher than expected?

Box 2 shows federal income tax withheld. If it seems high, check your W-4 settings - you may have requested extra withholding, had a large bonus withheld, or used a filing status that withholds more than your final tax liability.

How do I check if my employer withheld the correct amount?

Compare Box 2 to your estimated federal tax liability using the calculator at /w4-withholding-calculator/. If they are close, your withholding is likely aligned with your annual tax estimate.

When should I receive my W-2?

Employers must send W-2 forms by January 31 each year for the prior tax year. If you have not received it by mid-February, contact your employer's payroll department.

What is Box 12 on my W-2?

Box 12 contains one or more codes representing various types of compensation and deductions. Common codes include D for traditional 401(k) contributions, W for employer HSA contributions, and DD for employer-paid health insurance premiums.

How to Read Your W-2 Form in 2026 - Every Box Explained

Reviewed by Kevin Marshall, CPA

Reviewed by ExactTakeHome Editorial Team · June 2026 · Sources: 2 official authorities

Your W-2 form shows total wages and withholding for the year. Box 1 is often lower than your actual salary because pre-tax deductions - 401(k) contributions, health insurance premiums, FSA contributions - reduce it. Box 2 shows federal income tax withheld. Boxes 15-17 show state wages and withholding.

Key Findings

Box 1 is taxable wages after pre-tax deductions.
Box 3 and Box 5 can stay closer to gross salary.
Box 12 codes explain retirement and benefit amounts.

Box	Label	Meaning
1	Wages, tips	Taxable wages after pre-tax deductions
2	Federal income tax withheld	What your employer sent to the IRS
3	Social Security wages	Usually closer to gross pay
4	Social Security tax withheld	6.2% of Box 3 up to the wage base
5	Medicare wages	Usually the same as gross pay
6	Medicare tax withheld	1.45% of Box 5 plus any additional Medicare tax
12	Various codes	Retirement, health, and other payroll items
16	State wages	May differ from Box 1
17	State income tax withheld	What employer sent to the state

Example: an $80,000 salary with $5,000 of pre-tax deductions could show Box 1 near $75,000.

Check your withholding with the calculator →