Federal Taxable Wages Definition

Federal taxable wages are the wages taxed that support the Federal Income Tax system. It is calculated as gross pay minus Section 125 pretax deductions and minus 401k/403b/457 deductions.

Federal Taxable Wages Extended Definition

This is the amount of an employee’s pay that is subject to federal income taxes. An employee might also have non-taxable wages, like a qualifying expense reimbursement, that is not subject to income tax withholding.