"Cafe 125" is a code that sometimes appears on an employee W-2 tax form. This is short for cafeteria plan, so-called because employees are able to choose which benefits they want and which they do not. The "125" simply signifies that these cafeteria plans are regulated by Section 125 of the tax code.
What The Reported Amount Means
The dollar value listed on a W-2 under Cafe 125 is simply the amount of money an employee has contributed toward cafeteria plan benefits throughout the year. Benefits offered under cafeteria plans often include things such as accident and health benefits, dependent care assistance and life insurance. Section 125 of the Internal Revenue Code allows money to be paid toward cafeteria plan benefits before income or Social Security taxes are taken out, so the number reported on your W-2 should not affect the way an individual files his taxes at the end of the year.