Your Federal W-2 Decoded: Every Box, Every Federal-Specific Quirk (2026 Edition)

Last Updated: May 20, 2026 Reading Time: 10 min

Your federal W-2 arrives in January and immediately raises questions. Box 1 is thousands of dollars lower than your salary. Box 3 is higher than Box 1. Box 14 has a stack of codes your tax software doesn't recognize. Box 13 has an X that could affect your IRA.

This guide covers every box that affects federal employees differently from the private sector, with the complete Box 14 code table and a plain-English explanation of what each entry means for your return.

Key Takeaways

• Box 1 is lower than your salary because traditional TSP contributions and FEHB premiums (under premium conversion) are excluded from federal taxable wages.
• Box 12 Code D = traditional TSP. Code AA = Roth TSP. Agency matching does NOT appear on your W-2.
• Box 14 entries are almost entirely informational. No federal Box 14 entry creates taxable income or generates a deduction unless state law requires it.
• The Box 13 retirement plan checkbox may limit your traditional IRA deduction if your income exceeds the 2025 thresholds.
• FERS-RT in Box 14 is your pension contribution. It is not deductible.

Why Your Federal W-2 Looks Different

A federal employee earning $95,000 gross might have Box 1 showing $78,000. That's not an error. Those missing dollars went to pretax benefits most federal employees get by default: FEHB premiums through premium conversion, traditional TSP contributions, health and dependent care FSA contributions, and SmartBenefits transit.

The formula:

Box 1 = Gross Pay minus Traditional TSP minus FEHB (premium conversion) minus FSA/DCFSA minus Transit benefit plus Roth TSP plus any taxable fringe benefits

The additions that can push Box 1 UP include Roth TSP contributions (already taxed), taxable moving allowances, agency-paid life insurance on coverage above $50,000 (Code C in Box 12), employer student loan repayments, and child care subsidy over $5,000.

Box-by-Box Walkthrough

Box 1: Federal Taxable Wages

The starting point for your federal income tax liability. Lower than gross pay for most active feds. Higher than expected if you have Roth TSP contributions or taxable fringe benefits.

Cross-check: Take your final pay stub's gross pay, subtract your year-to-date traditional TSP, subtract your year-to-date FEHB (labeled as a pre-tax deduction), subtract FSA and transit. The result should closely match Box 1.

Box 2: Federal Income Tax Withheld

Based on your Form W-4 elections. If you significantly changed your withholding, check that you didn't under-withhold and owe a penalty.

Box 3 and Box 4: Social Security Wages and Tax

2025 wage base: $176,100. Box 3 is capped there; Box 4 is 6.2% of Box 3 (maximum $10,918.20 for 2025).

The key difference from Box 1: traditional TSP contributions do NOT reduce Box 3. TSP reduces your income tax base but not your FICA base. That's why Box 3 is typically higher than Box 1 for anyone contributing pre-tax to TSP.

Box 3 does exclude FEHB premium conversion, FSA contributions, and transit benefits, the same as Box 1. So the gap between Box 3 and Box 1 equals roughly your traditional TSP contributions for the year.

Box 5 and Box 6: Medicare Wages and Tax

Box 5 has no wage cap. For federal employees under $176,100, Box 5 roughly equals Box 3. Above the Social Security wage base, Box 5 will be higher.

Box 6 is 1.45% of Box 5. If your wages exceeded $200,000, your employer withheld an additional 0.9% on the amount above that threshold. This is the Additional Medicare Tax. Your final liability is reconciled on Form 1040, so if you have multiple jobs or a dual-income household, you may owe more than was withheld.

Box 10: Dependent Care Benefits

Box 10 shows dependent care FSA (DCFSA) contributions and any employer-provided child care subsidy. The first $5,000 is excluded from Box 1. Any amount over $5,000 is taxable and folds back into Box 1. Cross-reference this with Form 2441.

Box 12: The TSP Codes

Box 12 uses standardized IRS letter codes. For federal civilians, four matter most:

Code	What it is	Tax effect
D	Traditional (pre-tax) TSP elective deferrals, including catch-up	Reduces Box 1; included in Box 3 and Box 5
AA	Roth TSP elective deferrals, including catch-up	Already in Box 1, 3, 5. Informational for IRS tracking
DD	Total cost of employer-sponsored health coverage (FEHB, both your share and the government's share combined)	Purely informational. Not taxable
C	Cost of group-term life insurance over $50,000	IS included in Box 1 as taxable income

The combined total of Code D plus Code AA cannot exceed the annual TSP limit: $23,500 for 2025 (or $31,000 if age 50+, or $34,750 if you turned 60, 61, 62, or 63 in 2025 under the SECURE 2.0 super catch-up). There is no separate catch-up code. All contributions, including catch-up, fold into Code D or Code AA.

Agency matching is invisible on your W-2. The government's match (1% automatic plus up to 4% matching for FERS employees) goes directly to your TSP account. It does not appear in Box 12, Box 1, or anywhere else on your W-2. You'll see it in your TSP.gov account or on your annual TSP participant statement.

Starting 2026, catch-up for high earners shifts to Roth. TSP participants with prior-year wages at or above $145,000 (indexed) must direct catch-up contributions to Roth TSP. Those amounts will show in Code AA rather than Code D on the 2026 W-2. If you're in this category, expect your Code AA figure to jump.

Box 13: The Retirement Plan Checkbox

A single X in Box 13 means you are covered by a qualified employer retirement plan. Almost every active federal civilian employee has this box checked, since both FERS and CSRS qualify.

Box 13 may limit your traditional IRA deduction if your modified adjusted gross income (MAGI) exceeds these 2025 thresholds:

Filing status	Phase-out range (2025)
Single	$79,000 to $89,000
Married filing jointly (covered spouse)	$126,000 to $146,000
Married filing jointly (non-covered spouse)	$236,000 to $246,000

Above the top of the range, traditional IRA contributions are still allowed, just not deductible. Roth IRA contributions have their own separate income limits and are unaffected by Box 13.

Box 14: Federal Employee Codes

Box 14 is the IRS's catch-all disclosure field. Employers can report anything here. Federal payroll providers use it to show items excluded from Box 1 so employees understand why their taxable wages are lower than gross pay.

The most important rule: almost nothing in Box 14 requires action on your federal return. The amounts were already handled in Boxes 1 through 6. Box 14 is informational disclosure, not a trigger for additional tax or deductions.

The one exception: certain state-specific items, such as Oregon's Statewide Transit Tax (labeled OR TRANSIT), which must be reported on Oregon state returns.

The Complete Federal Box 14 Code Table

Label	What it is	Taxable?	Action needed?
FEHB or FEHBA	Your share of FEHB health premiums, paid pretax via premium conversion	No	None. Informational.
ER FEHB	Government's (employer's) share of FEHB premium. ACA reporting requirement	No	None. Informational.
DENTL or FEDVIP	Pretax FEDVIP dental or vision premiums	No	None. Informational.
HCFSA	Health Care FSA contributions	No	None. Informational.
DCFSA	Dependent Care FSA contributions	No (up to $5,000)	None federally. Cross-check Box 10 and Form 2441.
TRANSIT or TRANS	Qualified transit/commuter benefit (SmartBenefits), up to $325/month in 2025	No (within monthly limit)	None federally. Some states tax.
FERS-RT or FERS	Your FERS retirement contribution (0.8%, 3.1%, or 4.4% by hire cohort)	Not currently deductible; builds pension cost basis	None on your return.
FERS-FRAE	Same as above, specifically identifies FERS-FRAE tier (hired Jan 2014 or later, 4.4%)	Not deductible	None on your return.
CSRS-RT or CSRS	Your CSRS retirement contribution (roughly 7% of basic pay)	Not deductible; builds pension cost basis	None on your return.
TSP Prior Yr Refund	Excess TSP contributions returned from a prior year, now added to current wages	Yes, already in Box 1	Verify against Box 1. No additional entry needed.
V	Pretax FEHB incentive from a specific agency program	No	None. Informational.
OR TRANSIT	Oregon Statewide Transit Tax	Yes, Oregon-specific	Required for Oregon state tax return.

FEHB Premium Conversion: The Default Most Employees Don't Think About

Most active federal employees participate in premium conversion automatically under 5 CFR Part 892. Your share of FEHB premiums comes out of your pay before federal, Social Security, and Medicare taxes are computed. That's why FEHB reduces Box 1, Box 3, and Box 5 simultaneously.

You can waive premium conversion during FEHB Open Season or after a qualifying life event. If you waive it, you pay your FEHB share with after-tax dollars. The upside: those premiums may then qualify as an itemized medical deduction on Schedule A, subject to the 7.5% AGI floor.

For most people, premium conversion saves more in taxes than itemizing would. But the math changes if you have high out-of-pocket medical costs and already plan to itemize.

Federal retirees are always post-tax. OPM withholds FEHB from annuity checks after tax, since retirees are not in an active payroll system. This means retirees can potentially deduct FEHB as a medical expense on Schedule A, which is covered in the Tax Planning for Federal Retirees 2026 guide.

Your FERS Contribution Rate and What It Means at Tax Time

Your FERS tier depends on when you first entered FERS-covered employment. The rate appears in Box 14 as FERS-RT, FERS, or FERS-FRAE.

Hire period	Tier	Employee contribution rate
Before January 1, 2013	FERS (Classic)	0.8% of basic pay
January 1, 2013 through December 31, 2013	FERS-RAE	3.1% of basic pay
January 1, 2014 or later	FERS-FRAE	4.4% of basic pay

At tax time, this amount is not deductible. FERS contributions reduce your take-home pay but are not excluded from Box 1 (unlike TSP contributions). They build the cost basis that the IRS Simplified Method uses to calculate the small tax-free fraction of each monthly pension payment once you retire.

For most FERS employees, that tax-free fraction is small, typically under 5% of each monthly annuity check, because contribution rates are low compared to what CSRS employees paid (roughly 7%).

Watch your 2026 W-2 if you're in classic FERS. Under the One Big Beautiful Budget Act (signed July 4, 2025), classic FERS employees (0.8% rate) face a phased contribution increase: 2.6% in 2026 and 4.4% from 2027 onward. If that provision takes effect, the FERS-RT dollar amount in Box 14 will increase noticeably on your 2026 W-2. The amount is still not deductible, but your take-home pay will decrease.

Calculate Your FERS Pension

Your FERS contributions shown in Box 14 will eventually translate into a monthly pension. Use the free FERS Retirement Calculator to estimate your pension at your target retirement date, including the impact of your High-3 average salary and years of service.

Common Questions Federal Employees Ask

Why is Box 1 on my W-2 lower than my salary?

Box 1 reflects your federal taxable wages after pretax deductions. Take your gross pay for the year, subtract your traditional TSP contributions, subtract your FEHB premiums (if you're on premium conversion), subtract FSA and transit benefits. The result should match Box 1 closely. If you also have Roth TSP contributions, those stay in Box 1 since they were already taxed.

Where is my TSP shown on my W-2?

Traditional (pretax) TSP: Box 12, Code D. Roth TSP: Box 12, Code AA. Your agency's matching contributions (up to 5%) do not appear anywhere on your W-2. You'll find them in your TSP account statement at TSP.gov.

Use the TSP Calculator to project how your current contribution rate compounds over your remaining federal career.

Is my FEHB pretax or post-tax?

Pretax for active employees enrolled in premium conversion (the default). You'll see it in Box 14 as FEHB or FEHBA. Post-tax for retirees, since OPM deducts it from your annuity after taxes are applied. The FEHB Calculator can help you compare plan costs and see how your premium affects your take-home pay.

What is ER FEHB in Box 14?

The government's share of your FEHB premium. Under ACA employer reporting rules, employers must disclose the combined cost of health coverage on the W-2. The ER FEHB figure is purely informational. It is not taxable income and requires no entry on your return. The IRS explains this reporting requirement at irs.gov.

Why is Box 3 higher than Box 1?

Because traditional TSP contributions reduce your income tax base (Box 1) but not your FICA base (Box 3 and Box 5). TSP deferrals avoid federal income tax now but still face Social Security and Medicare tax. The result: Box 3 typically runs $20,000 to $23,500 higher than Box 1 for an employee who maxes out traditional TSP.

I see FERS-RT in Box 14. Is that amount deductible?

No. Your FERS retirement contribution is not deductible on your federal return. It's collected from your paycheck to fund the pension system and builds your cost basis for the IRS Simplified Method calculation when you retire. For a deeper look at how your pension is taxed in retirement, see the Tax Planning for Federal Retirees 2026 guide.

Does the Box 13 check affect my ability to contribute to a Roth IRA?

No. The Box 13 retirement plan check only affects the deductibility of traditional IRA contributions above certain income levels. Roth IRA contributions have completely separate income phase-outs (single filers phase out between $150,000 and $165,000 MAGI in 2025; MFJ between $236,000 and $246,000). Box 13 has no bearing on those.

My W-2 shows code DD in Box 12. What is that?

Code DD is the total cost of your employer-sponsored health coverage: your share of FEHB plus the government's share, combined. The ACA requires employers to report this on the W-2. It is not taxable and does not affect Box 1. It's there so you know what your health benefit actually costs in full.

What if I contributed to both traditional and Roth TSP?

Both Code D and Code AA will appear in Box 12. The combined total must not exceed the annual limit: $23,500 for 2025, $31,000 if you are 50 or older, or $34,750 if you turned 60 through 63 in 2025. Per TSP Bulletin 24-2, the SECURE 2.0 super catch-up limit took effect January 1, 2025.

Related Resources

• Tax Planning for Federal Retirees 2026: How FERS pension income, TSP withdrawals, and FEHB costs interact at tax time
• TSP 1099-R Tax Guide 2026: What to do when your TSP distributions start showing up on a different form
• FEHB Calculator: Compare health plan costs and model your premium under different plan tiers
• GS Pay Calculator: See your estimated gross pay by grade, step, and locality before benefits reductions
• IRS General Instructions for Forms W-2 and W-3: Official IRS source
• GSA: Explanation of 2025 IRS Form W-2: The official federal payroll provider breakdown
• OPM: FEHB Premium Conversion: OPM's official guidance on pretax premium treatment