How a 401(k) Affects Your Take-Home Pay
Putting money in a 401(k) makes your paycheck smaller, but by less than the amount you contribute. That is because a traditional 401(k) lowers the income you are taxed on.
The 2026 limits
- Employee contribution limit: $24,500.
- Catch-up for age 50 and over: an extra $8,000, for $32,500 total.
- Special catch-up for ages 60 to 63: $11,250 instead of $8,000.
- IRA limit: $7,500.
Source: IRS announcement of 2026 retirement plan limits.
Traditional vs Roth
A traditional 401(k) takes money out before income tax, so you pay less tax now and pay tax when you withdraw in retirement. A Roth 401(k) takes money out after tax, so take-home pay drops by the full amount, but qualified withdrawals later are tax-free. Our calculator models the traditional type.
Worked example
A single filer earning $75,000 in a state with no income tax:
| No 401(k) | 10% to 401(k) | |
|---|---|---|
| 401(k) contribution | $0 | $7,500 |
| Federal income tax | $7,670 | $6,020 |
| Social Security + Medicare | $5,738 | $5,738 |
| Take-home pay | $61,592 | $55,742 |
You contribute $7,500, but take-home pay falls only about $5,850. The difference, about $1,650, is federal income tax you did not pay this year. Social Security and Medicare tax do not change, since a 401(k) does not reduce those.
Employer match
Many employers add money when you contribute, often matching a percentage of your pay. A match is part of your pay, so contributing enough to get the full match is usually a strong first step.
State tax note
Most states follow the federal treatment, but Pennsylvania and New Jersey tax 401(k) contributions at the state level. Our calculator handles those two states that way.
Try different contribution levels in the salary after tax calculator. This is general information, not financial advice.
Last reviewed: October 2026. Figures are for tax year 2026. This guide is general information, not tax, legal or financial advice.
About the author
Hari Nepal, founder and editor of Kbtrim Salary. Hi, I'm Hari Nepal, based in Nepal. I built Kbtrim Salary to make money numbers easier to understand, with free calculators that explain how they work instead of hiding the math. I use published IRS and state tax figures and update them every year. I'm not a tax professional, so the tools give estimates, not advice. If you find a mistake, please email me at harinepal2062@gmail.com. More about this site.