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All of these accounts HRAs, FSAs and HSAs are tax-advantaged, meaning the contributions, or the funds you put into the account, are untaxed. You can put the funds toward eligible expenses for medical, vision and dental care.
For instance, a section 125 plan or cafeteria plan allows employees to pay qualified medical, dental, vision, or dependent care expenses on a pre-tax basis, which can reduce their taxable income as well as their employers Social Security (FICA) liability, federal income, and unemployment taxes (FUTA), and state
A Section 125 plan is the only means by which an employee is permitted to use pre-tax dollars to contribute towards employer sponsored benefits (e.g. health insurance premiums, dental or vision premiums, disability premiums, life insurance, and FSA accounts).
Some types of income are exempt from Pennsylvania state income tax, including child support, alimony, unemployment payments, and some capital gains on the sale of a primary residence. Some deductions are allowed for contributions to educational savings accounts and medical or health savings accounts.
Note: In Pennsylvania, contributions to Health Care and Limited-Purpose FSAs are exempt from state income tax. Dependent Care FSAs are subject to Pennsylvania state income tax but remain exempt from federal tax.
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People also ask

If I participated in a Health Care FSA, do I need to report anything on my personal income tax return at the end of the year? No. There are no reporting requirements for Health Care FSAs on your income tax return.
Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax. If the plan allows, the employer may also contribute to an employees FSA.
CAFETERIA PLAN BASICS A Section 125 plan provides employees with an opportunity to pay for certain benefits on a pre-tax basis, allowing them to increase their take-home pay. Employers may also make nontaxable contributions to a Section 125 plan for their employees.

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