FICA Reduction · Section 125 · California Employers
Cut Your FICA Taxes in
California — Without Cutting Benefits
California has the highest payroll costs in the nation — minimum wages topping $16–$20/hour, SDI contributions, and some of the largest FICA burdens for employers. A Section 125 plan legally reduces your taxable payroll, saving an average of $620 per employee per year. Zero cost to implement. IRS-compliant. Running in 30 days or less.
How Section 125 Works for California Employers
California's towering payroll costs — high minimum wages, SDI contributions, and large labor forces — make Section 125 one of the most powerful tax reduction tools available to CA employers.
How Section 125 Works in California
A Section 125 Cafeteria Plan allows employees to pay for qualified benefits with pre-tax dollars. This reduces their W-2 wages, which means you pay FICA on a smaller payroll — saving an average of $620 per employee per year. In California, this also reduces CA state income taxes on employee wages, delivering compounded savings for both employer and employee.
Which California Industries Benefit Most
California's massive restaurant industry, healthcare sector, tech companies, and retail chains are prime candidates. Any CA employer with 5+ hourly W-2 employees earning $16–$60/hour qualifies for analysis. With CA minimum wages at $16–$20/hour (higher in some cities), the savings per worker are among the highest in the nation.
California's Payroll Tax Landscape
Beyond federal FICA (7.65%), California employers face SDI contributions (1.1% on employee wages), making CA one of the most expensive states for payroll. Section 125 legally reduces the wage base subject to both FICA and CA income taxes. For businesses across Los Angeles, the Bay Area, San Diego, and the Central Valley, this means real dollar savings that go straight to the bottom line.
California Industries That Qualify
Does Your California Business Qualify?
Calculate Your California FICA Savings
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