Medical Reimbursement Plans are classified as which under state taxes?

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Multiple Choice

Medical Reimbursement Plans are classified as which under state taxes?

Medical Reimbursement Plans are treated as pre-tax reimbursements for state income taxes. The money intended to cover medical expenses is set aside from gross pay before taxes are calculated, which lowers the amount of income subject to state tax. That pre-tax treatment is why this is classified as PRE. If it were post-tax, the reimbursement would come after taxes have been taken, which would not reduce taxable income. Calling it exempt or not taxable would imply no tax impact at all, which isn’t how these plans are typically categorized in state tax codes; the standard treatment is a pre-tax deduction, hence PRE.

Medical Reimbursement Plans are treated as pre-tax reimbursements for state income taxes. The money intended to cover medical expenses is set aside from gross pay before taxes are calculated, which lowers the amount of income subject to state tax. That pre-tax treatment is why this is classified as PRE. If it were post-tax, the reimbursement would come after taxes have been taken, which would not reduce taxable income. Calling it exempt or not taxable would imply no tax impact at all, which isn’t how these plans are typically categorized in state tax codes; the standard treatment is a pre-tax deduction, hence PRE.

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