Which tax is included in cafeteria plan exemptions alongside Social Security and Medicare?

The correct answer highlights that the Federal Unemployment Tax Act (FUTA) tax is included in cafeteria plan exemptions alongside Social Security and Medicare. Cafeteria plans allow employees to choose among a variety of pre-tax benefits, and certain taxes, including FUTA, are typically exempt from being withheld from the benefits offered within these plans.

FUTA primarily funds the federal government's unemployment insurance program, and benefits offered through a cafeteria plan are not subject to FUTA taxation. Therefore, it’s important for employers and employees to understand that these benefits can help reduce the overall taxable income and may also lead to a more favorable tax situation for both parties.

Other taxes listed, such as FICA, which includes Social Security and Medicare contributions, are taxed differently. FICA taxes are generally not exempt from the payroll calculations within cafeteria plans since they are directly related to wage earnings and contributions to the social insurance program. Similarly, State Unemployment Insurance and Supplemental Income Tax have specific regulations that may not align with the exemptions provided to benefits under a cafeteria plan. The clarity surrounding FUTA helps payroll professionals navigate how various benefits impact overall payroll calculations and employee tax obligations.