401(k) Contribution Calculator 2026
See exactly how a 401(k) contribution changes your paycheck — including tax savings, employer match, and your real net cost. Updated with 2026 IRS limits.
Quick Answer
A 6% 401(k) contribution on a $75,000 salary ($4,500/year) reduces your federal taxable income by $4,500, saving approximately $990 in federal taxes. Your paycheck shrinks by about $130 bi-weekly — but the real cost is only $68 after tax savings. The 2026 limit is $23,500.
Match % of salary
Up to % of your contrib
Paycheck Reduction
-$38
per bi-weekly
Tax Savings
$990
per year
Net Cost
$3,510
real cost of contrib
Employer Match
$135
free money/year
💡 Your employer match is $135/year — that's free money. Don't leave it on the table.
Bi-weekly Paycheck Comparison
| Item | Without 401(k) | With 401(k) |
|---|---|---|
| Gross Pay | $2,885 | $2,885 |
| 401(k) Contribution (yours) | — | −$173 |
| Employer Match (free money) | $0 | $5 |
| Taxable Income | $2,885 | $2,712 |
| Federal Tax | $303 | $265 |
| State Tax | $0 | $0 |
| FICA (SS + Medicare) | $221 | $221 |
| Net Take-Home Pay | $2,361 | $2,399 |
Effective tax rate (without): 18.1%
Effective tax rate (with): 16.8%
Annual 401(k) Summary
Your contribution
$4,500
Employer match
$135
Total 401(k) per year
$4,635
Net cost to you
$3,510
One of the most common mistakes I see people make is avoiding their 401(k) because they don't want to reduce their paycheck. The math doesn't work the way most people think. When you contribute $375/month (6% of a $75,000 salary), you're not losing $375 from your take-home — you're losing about $230 because the pre-tax contribution reduces your federal and state income taxes simultaneously.
The even bigger mistake is not contributing enough to capture the full employer match. A typical 3% match on a $75,000 salary is $2,250/year in free money. That's an instant 100% return on investment — no stock market needed.
The Real Cost of a 401(k) Contribution — 2026
This table shows what a 401(k) contribution actually costs in take-home pay (not the full contribution amount) for a single filer:
$75,000 salary, Single filer, Texas (no state tax)
| Contribution | Annual Amount | Tax Savings | Real Cost | Paycheck Reduction |
|---|---|---|---|---|
| 3% | $2,250 | $495 | $1,755 | −$68/month |
| 6% | $4,500 | $990 | $3,510 | −$135/month |
| 10% | $7,500 | $1,650 | $5,850 | −$225/month |
| 15% | $11,250 | $2,475 | $8,775 | −$338/month |
| IRS max | $23,500 | $5,170 | $18,330 | −$706/month |
Tax savings based on 22% federal marginal rate. State tax varies.
Frequently Asked Questions
How does a 401(k) contribution reduce my taxes?
Traditional 401(k) contributions are made pre-tax, which means they reduce your taxable income before federal and state income taxes are calculated. If you contribute $6,000/year and you're in the 22% federal bracket, you save approximately $1,320 in federal taxes alone — plus whatever your state tax rate is. You still owe taxes when you withdraw in retirement, but the tax-deferred growth can be powerful.
What is the 401(k) contribution limit for 2026?
The IRS limit for 2026 is $23,500 for employee contributions (up from $23,000 in 2024). If you're 50 or older, you can contribute an additional $7,500 in catch-up contributions, for a total of $31,000. These limits apply to traditional and Roth 401(k) contributions combined.
How does employer match work?
Employer match is free money your company adds to your 401(k) when you contribute. A common structure is '100% match up to 3% of salary' — meaning if you earn $75,000 and contribute at least 3% ($2,250), your employer adds another $2,250. Always contribute at least enough to get the full match. Not doing so is leaving guaranteed compensation on the table.
Does a 401(k) contribution affect my Social Security and Medicare taxes?
No. Traditional 401(k) contributions reduce your federal and state income tax, but FICA taxes (Social Security at 6.2% and Medicare at 1.45%) are calculated on your gross wages before any 401(k) deductions. So your Social Security and Medicare taxes remain the same whether you contribute to a 401(k) or not.
What is the difference between traditional and Roth 401(k)?
Traditional 401(k) contributions are pre-tax — you reduce your taxable income now and pay taxes on withdrawals in retirement. Roth 401(k) contributions are after-tax — you pay taxes now, but qualified withdrawals in retirement are completely tax-free. Traditional is generally better if you expect to be in a lower tax bracket in retirement. Roth is better if you expect higher tax rates in retirement or want tax-free income flexibility.
What is the 2026 401(k) contribution limit?
The IRS employee contribution limit for 2026 is $23,500 — up from $23,000 in 2024. Workers aged 50 and older can make an additional $7,500 catch-up contribution, for a total of $31,000. For workers aged 60–63, the SECURE 2.0 Act provides a higher catch-up limit of $11,250 in 2026, for a total of $34,750. These limits apply to contributions to traditional and Roth 401(k) plans combined.
What happens if I exceed the 401(k) contribution limit?
If you contribute more than the annual IRS limit ($23,500 in 2026), the excess is called an excess deferral. It will be taxed twice — once in the year contributed and again when withdrawn. You must withdraw the excess plus any earnings by April 15 of the following year to avoid double taxation. Most payroll systems prevent over-contributions automatically, but this can happen if you change employers mid-year and contribute to two plans.
Traditional vs Roth 401(k) — which is better for me?
The key question is whether your tax rate will be higher now or in retirement. If you're early in your career (lower bracket now, higher later), Roth is often better — you pay taxes at a low rate today and withdraw tax-free later. If you're in your peak earning years (high bracket now), traditional lowers your current tax bill more aggressively. Many financial planners recommend splitting contributions between both to diversify your tax exposure in retirement.