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
Contributing 6% to a 401(k) on a $75,000 salary ($4,500/year) only reduces your take-home pay by about $144/month — not $375 — because the tax savings offset most of the contribution. Your real cost is ~$1,728/year after tax savings, while you're investing $4,500.
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
401(k) Calculator by State
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.