What is “Cafe 125” on my W-2?

Plain English Benefits · Updated August 13, 2026 · Education, not tax advice

Why it's called that

Section 125 is the part of the federal tax code that lets employers offer a menu of benefits you can pay for with pre-tax dollars. Because you pick from a menu, the code calls it a “cafeteria plan” — hence “Cafe 125.” Nobody is deducting your lunch money.

What's usually inside that number

• Your share of health, dental, or vision premiums — if they come out of your paycheck pre-tax, they're in here.
• Health FSA contributions — money you set aside for medical expenses.
• Dependent care FSA contributions — though these also get their own line in Box 10.
• Sometimes group-term life or other benefits your employer runs through the plan.

Where it shows up, and what it changes

Employers usually print it in Box 14 (the “other stuff” box). The important part isn't where it appears — it's what already happened: that amount was left out of Box 1, your federal taxable wages. Your taxes are calculated on the smaller number. That's the whole benefit, and it already happened in payroll — automatically, all year.

The three questions everyone actually has

“Do I owe tax on it?” No. It was taken out before federal income tax (and usually Social Security and Medicare tax) was calculated.

“Can I deduct it?” No — and this is the trap. It was never taxed in the first place, so deducting it would be double-dipping. This is also why you generally can't claim pre-tax health premiums as an itemized medical deduction.

“Did my employer mess up?” Almost certainly not. Box 14 has no official required format, so employers label this all sorts of ways: CAFE 125, S125, SEC 125, “Less: other cafe 125.” Same thing, different label.

One honest caveat

A few states and localities treat some pre-tax benefits differently for state tax purposes. If your state return asks about cafeteria plan amounts, that's what it's asking about — your tax software or CPA will handle it from the W-2 as printed.