Updated October 17, 2026. Quick answer: Box 1 of Form W-2 shows the taxable wages, tips and other compensation your employer paid you during the year, and it leaves out elective deferrals such as 401(k) and 403(b) contributions. That is why box 1 is often lower than box 3 and box 5. The Instructions for Employee on the form say where it goes: on the wages line of your tax return.
More IRS forms and schedules for individual filers, read line by line: Form 2106 instructions, Schedule H W-2 and W-3 for household employees and who can still use Form 2106.
Read box by box from the IRS form text: Form W-2c boxes c to i.
What box 1 reports
The employer-side instructions open the box with a plain definition: “Show the total taxable wages, tips, and other compensation that you paid to your employee during the year.” The instructions are addressed to the employer, so read “you” there as the company that issued your form, and “your employee” as you.
The same sentence carries the key limit: “However, do not include elective deferrals (such as employee contributions to a section 401(k) or 403(b) plan) except section 501(c)(18) contributions.” In other words, if you put money into a workplace retirement plan out of your paycheck, the box 1 number is meant to exclude it. The rest of the form is laid out in the W-2 boxes 1 to 8 guide.
What is in box 1 and what is left out
After the definition, the instructions list what the employer includes. The table below sets the entries that most often matter to an employee side by side with the instruction text.
| Kind of pay or deduction | What the box 1 instructions say |
|---|---|
| Elective deferrals such as a 401(k) or 403(b) contribution | “do not include elective deferrals (such as employee contributions to a section 401(k) or 403(b) plan)” |
| Ordinary pay, bonuses and prizes | “Total wages, bonuses (including signing bonuses), prizes, and awards paid to employees during the year.” |
| Noncash pay and fringe benefits | “Total noncash payments, including certain fringe benefits.” |
| Tips you reported to your employer | “Total tips reported by the employee to the employer (not allocated tips).” |
| Taxable cost of group-term life insurance | “Taxable cost of group-term life insurance in excess of $50,000.” |
| Designated Roth contributions | “Designated Roth contributions made under a section 401(k) plan, a section 403(b) salary reduction agreement, or a governmental section 457(b) plan.” |
Two lines in that table pull in the opposite direction from deferrals. Designated Roth contributions are on the include list, while ordinary pre-tax deferrals are on the leave-out list. For how a Roth versus pre-tax choice changes a paycheck, see the Roth versus pre-tax 401(k) paycheck page.
Why box 1 can be lower than box 3 and box 5
Box 3 has its own instruction on deferrals: “Report in box 3 elective deferrals to certain qualified cash or deferred compensation arrangements and to retirement plans described in box 12 (codes D, E, F , G, and S) even though the deferrals are not includible in box 1.”
So a deferral is subtracted from box 1 but not from box 3. Box 5 follows the same rule list: the box 5 instruction sends the employer to the box 3 payments, and says the wages and tips “are the same as those subject to social security tax (boxes 3 and 7)” apart from the wage base limit. The two boxes are explained on the box 3 page and the box 5 page.
A labelled illustration, not an IRS example: suppose you were paid $60,000 in wages and put $5,000 of it into a 401(k) as an elective deferral, and nothing else applies. Box 1 would show $55,000 (that is $60,000 minus $5,000), and box 3 and box 5 would each show $60,000. The $5,000 gap between box 1 and box 3 is the deferral. The code in box 12 that labels the deferral is covered on the code D page and the wider comparison on the box 12 vs box 1 page.
Where box 1 goes on your return
The Instructions for Employee printed on the form give the destination in one line: “Enter this amount on the wages line of your tax return.” If you have several W-2s, each has its own box 1, and each is entered the same way. The withholding box is a separate line on the return, covered on the box 2 page.
The 2026 edition adds a qualifier, quoted in the edition section below. Whichever edition you hold, box 1 is the figure to use for the wages line, not box 3 or box 5, because it is the box that already leaves out the elective deferrals. The return itself is walked through on the Form 1040 page.
Tips, benefits and other items that show up in box 1
Several less obvious items sit on the include list. For tips: “Total tips reported by the employee to the employer (not allocated tips).” Allocated tips are a separate item with their own box, described on the box 8 page, and tips counted for social security are on the box 7 page.
For benefits, the instructions include “Taxable benefits from a section 125 (cafeteria) plan if the employee chooses cash.” The numbered list also names health savings accounts: “Employee contributions to a health savings account (HSA).” The box 3 instructions carve out contributions made through a cafeteria plan, so read the HSA lines together; the HSA savings limits are on the HSA contribution limits page.
Edition and box numbers
The primary read for this page is the 2025 edition of Form W-2, the one an employee receives in early 2026 for tax year 2025. The printed form carries the line “Wage and Tax Statement 2025”, and the matching General Instructions for Forms W-2 and W-3 (2025) were read alongside it. The 2026 edition of the form and of the General Instructions was the current one irs.gov was serving on 2026-10-17, and both were compared. The box 1 definition and the include list read the same in the 2025 and 2026 General Instructions, apart from the railroad retirement cross-references in the include list, which point to box 14a in the 2026 edition where the 2025 edition says box 14. The Instructions for Employee on the form differ. The 2025 form reads “Enter this amount on the wages line of your tax return.” The 2026 form reads “Enter this amount on the wages line of your tax return unless those instructions direct you to report it elsewhere.” Box 1 is box 1 in both editions. Check the tax year printed on the form you received, because the figures and wording on your copy come from that year’s edition, and the box numbers on your copy are the ones to follow.
Common mistakes
- Using box 3 or box 5 as your wages. The box 1 instructions say “do not include elective deferrals”, and the box 3 instructions say deferrals are reported there “even though the deferrals are not includible in box 1”.
- Adding a deferral back to box 1. The form says to “Enter this amount on the wages line of your tax return.” Use the amount as printed, not a figure rebuilt from your pay stubs.
- Leaving out tips. The include list names “Total tips reported by the employee to the employer”, so tips you reported to your employer are part of box 1 and not additional to it.
Related: W-2 box 12 vs box 1, Roth versus pre-tax 401(k) paycheck impact, HSA contribution limits, Form 1040, and W-2 box 12 code D.
Sources
- General Instructions for Forms W-2 and W-3 (2025): IRS archived PDF (irs.gov)
- Form W-2, Wage and Tax Statement (2025), with the Notice to Employee and Instructions for Employee: IRS archived PDF (irs.gov)
- Form W-2, Wage and Tax Statement (2026), with the Notice to Employee and Instructions for Employee: https://www.irs.gov/pub/irs-pdf/fw2.pdf
Read from the IRS documents linked above on October 17, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.