The real cost of a contribution
A traditional 401(k) contribution comes out of your pay before federal income tax is figured. That lowers the tax withheld from the same paycheck, so your take-home falls by less than you put in. The difference is your tax savings, roughly your top federal rate plus your state’s top rate on the amount contributed.
This calculator runs the full 2026 paycheck calculation twice, once with no contribution and once with your percentage, and shows both checks side by side.
Worked examples
A single filer in Texas, paid every two weeks:
- $60,000 salary, 6%: $138.46 goes into the 401(k) each check. Federal withholding falls from $193.08 to $176.46, so take-home drops by only $121.84. Over the year that’s about $3,600 saved for retirement at a take-home cost of about $3,168.
- $90,000 salary, 10%: $346.15 per check goes in, but take-home falls by only $270.00, because the contribution comes out of the 22% bracket. That’s $76.15 of tax savings every payday.
In states with an income tax the savings are bigger, because most states also let 401(k) deferrals reduce state taxable wages.
Traditional vs Roth on your paycheck
- Traditional: reduces federal (and usually state) income tax now; withdrawals in retirement are taxed as income.
- Roth: comes out after tax, so your paycheck drops by the full contribution; qualified withdrawals in retirement, including the growth, are tax-free.
In the $60,000 Texas example, 6% as Roth costs the full $138.46 per check instead of $121.84. Switch the contribution type to compare. Both types still pay Social Security and Medicare.
2026 limits
| 2026 | |
|---|---|
| Employee deferral limit (401(k), 403(b), most 457(b)) | $24,500 |
| Catch-up, age 50 and older | +$8,000 |
| Catch-up, age 60 to 63 | +$11,250 (instead of $8,000) |
| Total employee and employer contributions | $72,000 |
The age that counts is the age you reach by December 31, 2026. Traditional and Roth deferrals share the one limit, and employer matching doesn’t count toward your $24,500.
New in 2026: if your Social Security wages from your employer in 2025 were over $150,000, any catch-up contributions you make must go in as Roth.
The result shows your yearly total against your limit. If your percentage would take you past it, the calculator shows roughly which paycheck reaches the limit; your plan stops deductions there, so the remaining checks of the year are bigger.
State taxes
Most states follow the federal rule and don’t tax traditional 401(k) deferrals when they’re paid. Pennsylvania is the exception in our 2026 data: it taxes wages before 401(k) deferrals, so in Pennsylvania a traditional contribution saves federal tax only. The calculator applies each state’s own rule automatically.
What isn’t included
- Employer match. It’s paid on top of your salary and never comes out of your check, so it doesn’t change take-home pay. It’s still worth contributing at least enough to get the full match.
- Investment growth and the tax on withdrawals in retirement.
- The Saver’s Credit and other credits you may claim on your return.
For your complete paycheck with health insurance, an HSA and other deductions, use the paycheck calculator.