W-2 Box 1 vs Box 3 vs Box 5: Why Your Three Wage Figures Differ

Quick answer

What Does Each Wage Box on Form W-2 Measure?

All three boxes start from the same paychecks, but each one applies a different tax's definition of wages. The IRS instructions to employers for 2026 describe them this way:

• Box 1, Wages, tips, other compensation: total taxable wages, tips and other pay for federal income tax, leaving out elective deferrals such as employee contributions to a 401(k) or 403(b) plan.
• Box 3, Social security wages: total wages before payroll deductions that are subject to employee Social Security tax, not counting Social Security tips and allocated tips. Boxes 3 and 7 together cannot exceed $184,500 for 2026.
• Box 5, Medicare wages and tips: the same wages and tips as Boxes 3 and 7, except that Medicare tax has no wage base limit.

The phrase before payroll deductions is why a 401(k) deferral stays in Box 3. Cafeteria plan benefits work differently: Publication 15 notes that benefits provided under cafeteria plans may qualify for exclusion from wages for Social Security and Medicare, so they can be missing from all three boxes rather than just Box 1.

The usual gap

Why Is Box 1 Lower Than Box 3 and Box 5?

The most common cause is a traditional retirement deferral. The employment tax table in Publication 15 shows elective 401(k) contributions as generally exempt from income tax withholding but taxable for Social Security and Medicare. The W-2 instructions tell employers to report deferrals listed in Box 12 under codes D, E, F, G and S in Box 3, even though they are not in Box 1. Code D is a 401(k) deferral and code E a 403(b) deferral. Roth contributions, codes AA, BB and EE, are different: they sit in Box 1 as well, so they do not open a gap.

Adoption benefits are another source of the same pattern: qualified amounts are kept out of Box 1 but must be reported in Boxes 3 and 5.

Wage base

Why Is Box 3 Lower Than Box 5?

Social Security tax stops at the contribution and benefit base, a limit the Social Security Administration adjusts each year with the national average wage index. For 2026 it is $184,500. Medicare has no ceiling. The IRS instructions illustrate the split with a $199,750 salary: the employer enters $184,500 in Box 3 and the full $199,750 in Box 5. The instructions also state that when wages are $184,500 or less, Boxes 3 and 5 will be the same. If you report tips, compare Box 5 with Boxes 3 and 7 added together instead.

Each employer applies the limit only to what it paid you. After a job change, both W-2s can show Social Security wages and tax, and your combined withholding may pass the annual maximum. The IRS says that excess can be claimed as a credit against your income tax on your return.

Blank box

Why Would Box 3 Be Empty While Box 5 Is Filled In?

Some public employees are outside Social Security for their job but still pay Medicare tax. The W-2 instructions tell a federal, state or local governmental agency with employees paying only Medicare tax to enter the Medicare wages in Box 5. With no Social Security wages, Boxes 3 and 4 stay empty, and Box 6 still shows Medicare tax. That is a coverage question tied to the job, not a payroll mistake.

Tax boxes

How Do Boxes 2, 4 and 6 Relate to Boxes 1, 3 and 5?

• Box 4 is employee Social Security tax: 6.2% of Box 3 plus Box 7. For 2026 it should not exceed $11,439, which is $184,500 times 6.2%.
• Box 6 is employee Medicare tax, 1.45% of Box 5, plus any Additional Medicare Tax. The employer must withhold that extra 0.9% on wages it pays you above $200,000 in the calendar year, and there is no employer share of it.
• Box 2 is federal income tax withheld. It depends on your pay and your Form W-4, so it has no fixed ratio to Box 1.

The $200,000 withholding trigger is not the same as what you finally owe. On your return, the 0.9% applies to Medicare wages above $250,000 for married filing jointly, $125,000 for married filing separately and $200,000 for everyone else, and you work it out on Form 8959, which draws your Medicare wages from Box 5. Boxes 4 and 6 report only the employee share; your employer's matching tax does not appear on your W-2.

One Salary, Three Different Wage Boxes

Illustrative 2026 W-2: $90,000 salary, $6,000 traditional 401(k) deferral, $2,400 of health premiums through a section 125 plan that excludes them from all three wage boxes.

Other boxes

Which Other W-2 Boxes Explain a Gap Between Boxes 1, 3 and 5?

Several smaller boxes act as footnotes to the three wage figures. Reading them first often explains a difference before you reach for a pay stub.

• Box 7, Social security tips: tips you reported to your employer. They share the same $184,500 limit as Box 3 and are part of Box 5, which is why a tipped worker's Box 3 can sit below Box 5 at any income level.
• Box 8, Allocated tips: tips allocated to you by a large food or beverage establishment. The IRS tells employers not to include this amount in Box 1, 3, 5 or 7, so it never explains a gap among them.
• Box 10, Dependent care benefits: the value of assistance under a dependent care program. Assistance up to $7,500 is nontaxable; any amount above that is taxable and also belongs in Boxes 1, 3 and 5.
• Box 12, code C: the taxable cost of group term life insurance over $50,000, which is also added to Box 1, to Box 3 up to the wage base, and to Box 5.
• Box 12, codes D and E: your traditional deferral total. If your only pretax items are that deferral and cafeteria plan benefits, and your pay stays under the wage base, Box 3 minus Box 1 equals this figure.

Check it yourself

How Do You Match Boxes 1, 3 and 5 to Your Final Pay Stub?

Take the last pay stub of the year and work from its year to date column.

• Box 1: YTD gross pay, minus traditional 401(k) or 403(b) deferrals, minus cafeteria plan items such as pretax health premiums and HSA contributions, plus taxable extras like group term life coverage over $50,000.
• Box 3: the same YTD gross, minus cafeteria plan items only, with the retirement deferrals left in, and capped at $184,500.
• Box 5: the Box 3 figure without the cap, plus reported tips.

When your results land within a few dollars of the form, the three boxes are consistent with your pay records. Box 16, state wages, belongs to the state and local section of the form, Boxes 15 through 20, and is not one of the three federal wage boxes; if it differs from Box 1, your state revenue department explains which deductions it allows. The calculator above shows how a pretax deduction moves each of the three figures.

Errors

What Should You Do If the Boxes Look Wrong?

Start with the employer. The IRS tells workers whose W-2 is missing or incorrect to contact the employer first, and employers correct a filed W-2 with Form W-2c. If a corrected form still has not arrived by the end of February, you can call the IRS at 800-829-1040; the IRS will contact the employer and also send you Form 4852. If time runs short, you may file using Form 4852 with your best estimate of wages and withholding, then file Form 1040-X if the corrected W-2 later shows different figures.

Two patterns are normal and need no correction: Box 1 below Boxes 3 and 5 when you defer to a traditional 401(k), and Box 3 stopping at $184,500 when you earned more. A Box 4 amount above $11,439 from a single employer for 2026, by contrast, is worth raising with payroll straight away.

This is general information, not tax advice.