2026 limits, single filer, federal-only

401(k) impact on take-home,
$1 in costs about $0.78 out

Pre-tax 401(k) contributions reduce federal income tax but NOT FICA. At a 22% bracket, $1 contributed costs about $0.78 of take-home. The 2026 limit is $23,500 (plus catch-up at 50+). Below: the math, the matrix at every common salary, and the trade-offs vs Roth 401(k).

The headline math

At 12% federal bracket: $1 contributed reduces take-home by ~$0.88 (you save 12 cents in federal tax).
At 22% federal bracket: $1 contributed reduces take-home by ~$0.78 (you save 22 cents).
At 24% federal bracket: $1 contributed reduces take-home by ~$0.76 (you save 24 cents).
Plus 5% state tax: add another 5 cents of savings (so $0.71 take-home cost at 24% federal + 5% state).

FICA does NOT apply this discount: 7.65% comes off your full gross wages regardless of 401(k) contribution. So the math above already accounts for FICA.

Tax estimate, not tax advice

Matrix

401(k) contribution: take-home reduction by salary

Each row shows how a 401(k) contribution at the indicated amount reduces annual take-home pay (federal-only, single filer, 2026). The smaller the take-home reduction relative to the contribution, the more federal tax you saved.

Salary	Marginal bracket	$3K contribution	$5K	$10K	$15K	$23.5K (max)
$50,000	12%	$2,411 save $590	$4,018 save $983	$8,035 save $1,965	$12,053 save $2,948	$18,913 save $4,587
$75,000	22%	$2,111 save $890	$3,518 save $1,483	$7,035 save $2,965	$11,010 save $3,990	$17,840 save $5,660
$100,000	22%	$2,111 save $890	$3,518 save $1,483	$7,035 save $2,965	$10,553 save $4,448	$16,532 save $6,968
$150,000	24%	$2,051 save $950	$3,418 save $1,583	$6,835 save $3,165	$10,253 save $4,748	$16,062 save $7,438
$200,000	24%	$2,237 save $764	$3,728 save $1,273	$7,455 save $2,545	$11,183 save $3,818	$17,023 save $6,477

"Take-home reduction" is the actual decrease in annual net pay. "Save" is the federal tax saved (the gap between contribution and reduction). Higher savings means higher tax-bracket benefit. State tax not included.

How it works

Pre-tax 401(k): the mechanism

The contribution leaves your paycheck before federal income tax

When you elect a traditional 401(k) contribution percentage, your employer subtracts that amount from each gross paycheck BEFORE computing federal income tax withholding (and most state income tax withholding). The W-2 you receive at year-end shows your taxable wages in Box 1 NET of the 401(k) contribution. So the IRS never sees the contribution as taxable income.

Result: the contribution effectively comes off the top of your tax stack. If your marginal federal bracket is 22%, every dollar contributed is a dollar that would have been taxed at 22%. So the federal tax savings on a $1 contribution is 22 cents. Add state income tax savings (where applicable) of typically 0% to 9%.

FICA does not discount

Social Security 6.2% and Medicare 1.45% (total 7.65%) apply to your FULL gross wages, including amounts contributed to a traditional 401(k). The IRS makes one exception: HSA contributions DO reduce FICA because HSA is uniquely structured under IRC Section 125 cafeteria-plan rules. 401(k) contributions are NOT under Section 125, so FICA still applies.

This is why the take-home reduction on a $1 401(k) contribution is roughly $0.78 (at 22% federal) rather than $0.7235 (which would be the case if FICA also applied to the contribution). The 7.65% FICA hits your full gross regardless of how much you defer to 401(k). Source: IRS Publication 15-T (2026) for the wage definitions.

When does the take-home cost go DOWN further?

Three additional savings layers can reduce the take-home cost of a 401(k) contribution below the federal-only $0.78:

State income tax savings. Most states with income tax also recognise the 401(k) deduction (Pennsylvania is a notable exception). At 5% state rate, an extra 5 cents of savings per $1 contributed.

Local income tax savings. NYC, Philadelphia, Columbus, Louisville, and other localities with income tax usually allow the 401(k) deduction. Add another 1-3 cents per $1.

Employer match. If your employer matches some percentage of your 401(k) contributions, the effective tax cost is even lower because the match is free additional retirement savings. A 50% match on the first 6% of salary effectively halves your contribution requirement to capture a given retirement-balance growth.

Traditional vs Roth 401(k)

When Roth 401(k) wins

Roth 401(k) contributions do NOT reduce current-year taxable income. You pay federal and state income tax on the full gross wages now. In exchange, qualified Roth withdrawals in retirement (after age 59.5 with the account open at least 5 years) are completely tax-free, including the investment growth.

The Roth-vs-traditional decision depends on your expected retirement tax bracket vs your current bracket. If you expect to be in a HIGHER bracket in retirement (rare for most people, but possible for early-career savers), Roth wins. If you expect a LOWER bracket in retirement (common: most people earn less in retirement than peak working years), traditional wins. The break-even calculation also depends on whether you can contribute the same dollar amount to both, since Roth contributions effectively contribute "more" because you are paying tax now from a different bucket.

A common compromise: split contributions between traditional and Roth to hedge tax-bracket uncertainty. A 50/50 split is reasonable for mid-career savers in the 22-24% bracket who expect to be in roughly the same bracket in retirement. Below the 12% bracket, lean Roth (because traditional savings are small at low brackets). Above the 32% bracket, lean traditional (because the savings now is large and most retirees drop below 32% in retirement).

Calculator

Run your numbers

Enter your gross salary, then mentally subtract your annual 401(k) contribution to see the take-home difference. The calculator below uses the 2026 brackets.

Annual Salary

State

Filing Status

Sources

Where the 2026 numbers come from

2026 401(k) contribution limits. IRS 401(k) and Profit-Sharing Plan Contribution Limits.
Federal brackets and FICA definitions. IRS Publication 15-T (2026).
Roth 401(k) qualified-distribution rules. IRS Roth Account Comparison Chart.
Excess contribution corrections. IRS 401(k) Fix-It Guide.
Cafeteria plan FICA exemption (HSA reference). IRS Notice 2013-71.

Other deduction and paycheck pages

HSA impact

The only pre-tax deduction that also exempts FICA. True cost is roughly $0.71 per $1.

SS wage base impact

What happens to your paycheck after you cross the $184,500 cap.

$100K single

At 22% bracket, where 401(k) tax savings really matter.

$150K MFJ

At 22% MFJ bracket, plus typical employer-match math.

Bonus tax math

Why bonus withholding feels high (22% supplemental) but the actual tax matches your bracket.

Salary calculator

Try any salary and state to see your federal-plus-state base before 401(k).

Frequently Asked Questions

How much does a 401(k) contribution reduce my take-home pay?+

Less than dollar-for-dollar, because pre-tax 401(k) contributions reduce federal (and most state) income tax but NOT FICA. At a 12% federal bracket and no state tax, $1 contributed reduces take-home by about $0.88. At 22% federal, $1 reduces take-home by about $0.78. At 24% federal plus a 5% state, $1 reduces take-home by about $0.71. The exact reduction depends on your marginal bracket, your state, and the FICA cap. Use the table on this page for specific salary and contribution combinations.

What is the 2026 401(k) contribution limit?+

The 2026 employee elective deferral limit is $23,500 for traditional and Roth 401(k) combined. Plus a $7,500 catch-up contribution allowed for those age 50 or older (so $31,000 total). Plus a separate 'super catch-up' for ages 60-63 of $11,250 (so $34,750 total at that age band). Employer match contributions sit on top of these limits up to the overall annual addition limit of $70,000. Source: IRS Notice 2025-x on retirement-plan limits.

Should I contribute the full 401(k) limit?+

Depends on income, employer match, and other priorities. The standard advice: contribute at least enough to capture the full employer match (the match is free money). Beyond the match, the question is whether 401(k) tax savings beat alternative investments (Roth IRA, taxable brokerage, paying down debt). At 22%+ marginal federal bracket, traditional 401(k) tax savings are substantial; below 12% bracket, Roth 401(k) (taxed now, not later) is often better. Always max the match first, then consider HSA (if eligible) before maxing 401(k).

Does a 401(k) contribution save FICA tax?+

No. Traditional 401(k) contributions reduce your federal income tax base (and most state income tax bases) but FICA (Social Security 6.2% and Medicare 1.45%) applies to your full gross wages, including amounts contributed to 401(k). This is why HSA contributions are more tax-efficient than 401(k) at the same dollar amount: HSA reduces both income tax AND FICA, while 401(k) only reduces income tax. Source: IRS Pub 15-T for FICA definitions.

What is the difference between traditional and Roth 401(k)?+

Traditional 401(k): contributions reduce taxable income now, growth is tax-deferred, withdrawals in retirement are taxed at ordinary income rates. Roth 401(k): contributions do NOT reduce taxable income now, growth is tax-free, qualified withdrawals in retirement are tax-free. The same $23,500 limit applies (it is shared across traditional and Roth 401(k) combined). Choose traditional if you expect to be in a lower tax bracket in retirement than now; Roth if you expect to be in a higher bracket in retirement, or if you want tax diversification.

Can I deduct my 401(k) contribution on my tax return?+

No, because it is already excluded from your W-2 Box 1 (taxable wages). Your employer reports your wages NET of the traditional 401(k) contribution. So you do not need to claim a separate deduction; the tax savings is built into the wage figure on your W-2. Roth 401(k) contributions appear in Box 12 Code AA but do NOT reduce Box 1 wages.

What if I contribute more than the 401(k) limit by mistake?+

You have until April 15 of the following year to withdraw the excess contribution (plus any earnings on it). The excess is taxable in the year it was contributed; the earnings are taxable in the year withdrawn. If the excess is not removed by April 15, it is taxed twice: once when contributed and again when withdrawn in retirement. The error is more common when employees switch jobs mid-year and both employers' 401(k) plans contribute to the same calendar-year limit. Always check your year-to-date 401(k) totals when starting a new job.

401(k) impact on take-home,$1 in costs about $0.78 out