CAF125: What the Cafeteria 125 Line on Your Pay Stub and W-2 Means

• A cafeteria plan is a written plan that lets employees choose between cash and qualified benefits, per IRS Publication 15-B (2026).
• Employee FICA is 7.65% (6.2% Social Security plus 1.45% Medicare), per IRS Tax Topic 751 (2026).
• The Social Security wage base is $184,500 in 2026, per IRS Tax Topic 751.
• Every $1,000 of premiums paid through CAF125 saves at least $76.50 in employee payroll tax if the premium is exempt from FICA.
• The 2026 Form W-2 has Box 14a for other information, so your employer may print a Section 125 amount there, per IRS W-2 instructions (2026).

You see "CAF125" next to a dollar amount on your pay stub, or "CAF 125" in Box 14 of your W-2, and you do not know what it is. In most cases it is your share of benefit premiums, taken out before tax. This page shows how to confirm that and what it saves you.

Reviewed by a licensed benefits professional. Last reviewed: October 10, 2026.

What does CAF125 mean on a pay stub?

CAF125 means "cafeteria plan, Section 125." It is a payroll label for pre-tax deductions made through an employer's Section 125 cafeteria plan. Most employers use it for your share of medical, dental and vision premiums.

A cafeteria plan is a written employer plan that lets you choose between taxable pay and certain tax-favored benefits (IRS Publication 15-B, 2026). Section 125 is the part of the Internal Revenue Code that allows it.

The IRS does not publish a list of pay stub labels. One payroll system shows "CAF125," another shows "CAFE 125," and another shows "S125" or "H125." They usually mean the same kind of deduction. For the health-only version, see our guide to the H125 deduction→.

Does CAF125 lower my taxes?

Yes, usually. Health premiums paid through a cafeteria plan are taken out before federal income tax, and generally before Social Security and Medicare tax (IRS Publication 15-B, 2026). That lowers the wages your employer reports to the IRS.

Employee FICA is 6.2% for Social Security plus 1.45% for Medicare, or 7.65% (IRS Tax Topic 751, 2026). The Social Security part applies only to wages up to $184,500 in 2026.

This is an illustration, not a quote. Your employer also saves 7.65% on the same wages, which is why many employers offer a Section 125 plan.

Where does CAF125 show up on my W-2?

CAF125 usually appears in Box 14 as "CAF 125" or "SEC 125" with a dollar amount. Box 14 is an "other information" box with no IRS-required wording, so each employer labels it differently (IRS General Instructions for Forms W-2 and W-3, 2026).

Your Box 1 wages are lower than your gross pay because the CAF125 amount was never counted as income. Box 14 simply tells you how much that was. For a full walkthrough, read our W-2 Box 14 Section 125 guide→.

How do I check that my CAF125 amount is right?

Add up your pre-tax premium deductions on one pay stub and compare the total to the CAF125 line. Then multiply the per-paycheck amount by your number of paychecks and compare it to Box 14 on your W-2.

1. Find your benefits confirmation from open enrollment. It lists each premium.
2. Add medical, dental and vision premiums per paycheck.
3. Compare that sum to the CAF125 line on your pay stub.
4. Multiply by your pay periods in the year.
5. Compare the result to Box 14 on your W-2.

If the numbers differ, one of the premiums may be paid after tax, or a life change may have updated your election. Ask your payroll team for a deduction breakdown.

Can I stop a CAF125 deduction?

Usually only during open enrollment or after a qualifying life event, such as marriage, a birth or loss of other coverage. Cafeteria plan elections are generally fixed for the plan year (26 CFR 1.125-4).

If a deduction started that you did not choose, ask your employer for the signed plan document and your election form first. A Benecor benefits expert can explain what options may exist. We cannot promise an opt-out.

What should employers do about confusing pay stub labels?

Employers should print plain labels, such as "Medical premium (pre-tax)," instead of one combined CAF125 line, and give employees a yearly deduction summary. Clear labels cut HR questions and help employees see the value of their benefits.

Employers who do not yet have a plan can read our Section 125 cafeteria plan guide→ to see how a plan reduces payroll tax and how setup works.

Sources: IRS Publication 15-B, Employer's Tax Guide to Fringe Benefits (2026); IRS Tax Topic 751, Social Security and Medicare Withholding Rates (2026); IRS General Instructions for Forms W-2 and W-3 (2026); 26 CFR 1.125-4, permitted election changes.