When you make a pre-tax contribution, the money is taken out of your pay cheque before taxes are figured up. When you sign up for a pre-tax section 125 plan, you choose how much of your income you want to save for the next year. After then, the sum is split up over pay periods and taken out of your pay cheque automatically. You don't have to pay taxes on that amount because it's pre-tax. https://fitness-bgb.hashnode.dev/how-pre-tax-section-125-plans-offer-valuable-tax-benefits-for-health-expenses