W-2 Box 14 Section 125 Category: What to Pick When You File

• Box 14 is the "Other" box on Form W-2, and the IRS General Instructions for Forms W-2 and W-3 (2026) let employers use it for items such as health insurance premiums deducted, with no standard code required.
• Most major tax software does not have a dedicated Section 125 category, so entering it under a general Other or Not classified option is the accepted approach, per IRS guidance on Box 14 reporting (2026).
• Health premiums paid through a Section 125 cafeteria plan are already excluded from Box 1, Box 3 and Box 5 wages before the W-2 is issued, per IRS Publication 15-B (2026).
• Employee FICA is 7.65% in 2026, so a Box 14 Section 125 total of $2,000 already saved at least $153 in payroll tax before you ever open your tax software, per IRS Publication 15 (2026).
• The one Box 14 exception that does require action is dependent care benefits, which must be reported separately on Form 2441 if you also see an amount in Box 10, per IRS Instructions for Form 2441 (2026).

You open your tax software, type in the numbers from your W-2, and it asks you to pick a category for whatever is sitting in Box 14. Your W-2 just says "SEC125" or "S125" and a dollar amount, and none of the dropdown options say that. This guide explains what that entry means, which category to pick, and the one situation where Box 14 actually changes your return.

Reviewed by a licensed benefits professional. Last reviewed: September 27, 2026.

What does Section 125 in Box 14 of my W-2 mean?

Section 125 in Box 14 of your W-2 is the yearly total of premiums or other benefits you paid pre-tax through your employer's Section 125 cafeteria plan. The label varies by payroll system, so the same deduction can show up as SEC125, S125, SE125, CAF125 or Section 125.

The IRS General Instructions for Forms W-2 and W-3 (2026) let employers use Box 14 as a catch-all "Other" field for items that do not have their own numbered box, including health insurance premiums deducted through payroll. There is no IRS-standard code for this label, which is exactly why tax software rarely recognizes it by name.

Benecor Health's guide to the H125 deduction on a pay stub and W-2→ and the W-2 Box 14 and Section 125 guide→ cover the payroll side of this same deduction in more detail.

What category do I pick for Section 125 in Box 14 tax software?

You pick a general Other or Not classified category for a Section 125 entry in Box 14, because almost no major tax software has a specific Section 125 or cafeteria plan option in its Box 14 dropdown. Entering the amount under a general category is the accepted approach and does not change your refund.

1. Find the Box 14 line on your W-2. It will show a short label and a dollar figure, with no separate box number reference.
2. Enter the label and amount exactly as printed. Do not round or guess at a fuller name for the code.
3. Select the closest category, or Other. Most software accepts "Other" without asking further questions for this kind of entry.
4. Confirm your software does not add the amount back to income. A correctly configured program treats Box 14 informational entries as $0 impact on your federal taxable income.

Is a Section 125 amount in Box 14 taxable?

A Section 125 amount in Box 14 is not taxable. It is a record of pre-tax premiums that have already been excluded from your Box 1 federal wages, your Box 3 Social Security wages and your Box 5 Medicare wages, per IRS Publication 15-B (2026).

Health premiums paid through a Section 125 cafeteria plan are excluded from federal income tax, Social Security and Medicare tax withholding. That exclusion happens on your paycheck throughout the year, long before your W-2 is generated. Box 14 is simply where your employer chose to disclose the running total.

Worked example: checking your Box 14 number against your pay stubs

Take a hypothetical employee paid every two weeks who sees $2,000 in Box 14 labeled SEC125 on their W-2.

1. Divide the Box 14 total by 26 paychecks: $2,000 divided by 26 is about $76.92 per paycheck.
2. Compare that to your final pay stub's year-to-date Section 125 line. The two numbers should match within a dollar or two.
3. Confirm the FICA saved: 7.65% of $2,000 is $153.00 in Social Security and Medicare tax already avoided.
4. Enter $2,000 in your tax software under Other. Your federal taxable income does not change based on this entry.

When does Box 14 actually require action on my tax return?

Box 14 actually requires action on your tax return only when you also have an amount in Box 10 for dependent care benefits, which must be reconciled on Form 2441, per the IRS Instructions for Form 2441 (2026). A plain Section 125 health premium entry in Box 14 does not require any form.

Two situations are worth double-checking with a tax professional instead of guessing:

• Box 10 shows an amount. Dependent care benefits paid through your Section 125 plan must be reported on Form 2441 even though the amount was already excluded from Box 1 wages.
• Your employer used a nonstandard label you cannot identify. If Box 14 shows something other than a health premium or dependent care code and you are unsure what it covers, ask HR before you file rather than guessing at a category.

Benecor's guide to the W-2 code DD health coverage cost→ explains the separate, larger health coverage total that shows up in Box 12, which is a different number from Box 14 and also does not add to your taxable income.

What should I ask HR about a confusing Box 14 entry?

You should ask HR which benefit a confusing Box 14 entry pays for and whether the amount matches your own pay stub records. A written answer settles most filing-season questions in one email.

For the employer side of Box 14 reporting, see Summit Health Benefits' W-2 Box 14 codes guide↗. If your Box 14 number does not match your pay stubs, request a free W-2 walkthrough→ with a Benecor benefits expert.

Sources: IRS General Instructions for Forms W-2 and W-3 (2026); IRS Publication 15-B, Employer's Tax Guide to Fringe Benefits (2026); IRS Publication 15, Employer's Tax Guide (2026); IRS Instructions for Form 2441, Child and Dependent Care Expenses (2026); 26 CFR 1.125-4, Permitted election changes (2026); Internal Revenue Code Section 125 (2026).