If you contribute 7%, then your wages are reduced by that 7%, and the remaining 93% is Federally taxable for the year. State may be different.
Even if there is no company match, your contribution is not taxed when you make it, and your earnings grow tax-deferred.
https://www.irs.gov/retirement-plans/choosing-a-retirement-plan-403b-tax-sheltered-annuity-plan
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-403b-contribution-l...
https://turbotax.intuit.com/tax-tools/tax-tips/Retirement/-Are-403-b--Contributions-Tax-Deductible-/...
