U.S. · W-2 boxes
W-2 box 1 vs box 3 vs box 5.
Three wage boxes, three different rules. Enter your pay and see why they differ.
Box 1 is your taxable wages for income tax. Box 3 is wages for Social Security tax and stops at $184,500 in 2026. Box 5 is wages for Medicare tax with no cap. Pre-tax 401(k), 403(b) and 457(b) deferrals lower box 1 only. Cafeteria-plan benefits such as health premiums lower all three.
Reconcile your wage boxes
Result
The short answer
The three boxes start from the same pay but each one answers a different question. Box 1 is what you report as wages on Form 1040. Box 3 is what Social Security tax was figured on. Box 5 is what Medicare tax was figured on. The IRS instructions list which items are left out of one box and kept in another, and that is the whole reason the numbers do not match. If all three are identical, you probably have no pre-tax retirement deferrals, no cafeteria benefits and pay under the wage base.
What each box includes
- Box 1: wages, tips and other compensation. Pre-tax elective deferrals under codes D, E, F, G and S are not included. Designated Roth contributions (AA, BB, EE) are included. Employee HSA contributions made outside a cafeteria plan are included, and so are nonqualified moving reimbursements.
- Box 3: Social Security wages, capped. The IRS says deferrals under codes D, E, F, G and S are reported in box 3 "even though the deferrals are not includible in box 1." The total of boxes 3 and 7 cannot exceed $184,500 (the 2026 maximum Social Security wage base). Employee HSA contributions made through a cafeteria plan are not included.
- Box 5: Medicare wages and tips. The same items as box 3, "except that there is no wage base limit for Medicare tax."
Why box 1 is smaller than box 5
The usual reason is a pre-tax retirement plan. Every dollar you defer into a 401(k), 403(b), governmental 457(b), SIMPLE or SEP drops out of box 1 but stays in boxes 3 and 5, so the gap between box 1 and box 5 is at least your code D, E, F, G and S total. If you also have a cafeteria plan, its pre-tax benefits (Publication 15-B lists accident and health benefits, adoption assistance, dependent care, group-term life and HSAs among the qualified benefits) come out of all three boxes, so they widen neither gap.
Other items that add to boxes 1, 3 and 5 together include taxable group-term life insurance over $50,000 (code C), the spread on nonstatutory stock options (code V) and taxable HSA money. Tips add to box 7 and box 5 and are included in box 1.
Why box 3 is smaller than box 5
Box 3 stops at the Social Security wage base and box 5 does not. The IRS gives the example directly: an employee paid $199,750 has 184500.00 in box 3 and 199750.00 in box 5. If the pay was $184,500 or less, boxes 3 and 5 are the same. Box 4 for the same worker cannot exceed $11,439, which is $184,500 times 6.2%.
Worked example
Sam earns $120,000, defers $12,000 into a 401(k) and pays $4,800 in cafeteria-plan health premiums. Box 1 is $120,000 − $12,000 − $4,800 = $103,200. Box 3 is $120,000 − $4,800 = $115,200, since the 401(k) stays in it and the cap is not reached. Box 5 is also $115,200. Box 12 shows D 12000.00, which explains the $12,000 gap between box 1 and boxes 3 and 5. The $4,800 premium is the reason all three boxes are below Sam's $120,000 salary.
What to check when the numbers look wrong
- Add the code D, E, F, G and S amounts in box 12 to box 1. The result should be close to box 5 for a worker under the wage base.
- If box 3 is smaller than box 5, check whether pay passed $184,500.
- If box 1 is higher than expected, look for a Roth code (AA, BB, EE), taxable fringe, or HSA money that was not run through the cafeteria plan.
- If a gap does not tie to any code, ask payroll for the wage reconciliation. A corrected form is a W-2c.
For what each letter in box 12 means, use the W-2 box 12 codes lookup.
Sources
Primary sources opened on November 1, 2026. The plain-English parts of this page are our summary, not official guidance.
- IRS, General Instructions for Forms W-2 and W-3 (2026), Box 12, Codes (read 2026-11-01): box 1, 3, 4, 5 and 7 instructions, the $184,500 wage base and the $199,750 example
- IRS, Publication 15-B (2026), Employer's Tax Guide to Fringe Benefits (read 2026-11-01): qualified benefits that can be offered through a cafeteria plan
- IRS news release: 401(k) limit increases to $24,500 for 2026 (read 2026-11-01): 2026 retirement plan limits
Frequently asked questions
Why is box 1 lower than box 3 and box 5 on my W-2?
Because pre-tax deferrals to a 401(k), 403(b), 457(b), SIMPLE or SEP are excluded from box 1 but still included in boxes 3 and 5.
Why is box 3 lower than box 5?
Box 3 is capped at the Social Security wage base, $184,500 for 2026. Box 5 has no cap, so high earners see a higher box 5.
Which box do I use on my tax return?
Box 1 is the figure that goes on Form 1040 for wages. Boxes 3 and 5 are for Social Security and Medicare tax.
Do health insurance premiums lower box 1, 3 and 5?
Premiums paid through a cafeteria plan are generally excluded from all three. Premiums paid after tax are not.
Does a Roth 401(k) change the difference between the boxes?
No. The IRS says designated Roth contributions are reported in boxes 1, 3 and 5, so they appear in all three.
Can box 1 be higher than box 3 or box 5?
Box 1 can be higher than box 3 when pay is above the Social Security wage base, because box 3 is capped. Box 1 higher than box 5 would be unusual, so ask payroll to explain it.
Not tax advice
This page summarizes IRS instructions written for employers and is not tax advice. Your payroll provider or a tax professional can explain the figures on your own W-2. Everything runs in your browser; nothing you enter is sent anywhere.