401(k) Paycheck Impact 2026
See how much a 401(k) contribution really costs per paycheck, and how much you save in taxes.
$10,000/year
Per-paycheck cost
$264
less in take-home per paycheck
Annual tax savings
$3,130
Employer match
$3,000/yr
Effective cost: $69¢ per $1 saved (after tax savings)
Total annual retirement savings: $13,000 (your $10,000 + employer $3,000)
Estimates based on 2026 tax rates. Models traditional (pre-tax) 401(k) contributions only. Does not account for local taxes, credits, or Roth contributions. Consult a tax professional for advice.
How it works
This calculator compares your take-home pay with and without a traditional 401(k) contribution. It runs a full paycheck calculation for each scenario using 2026 federal brackets, state tax rates, and FICA.
Pre-tax deduction: Traditional 401(k) contributions reduce your federal and state taxable income, which lowers your income tax. However, 401(k) contributions do NOT reduce your FICA wages — you still pay Social Security (6.2%) and Medicare (1.45%) on the full gross amount.
Effective cost per dollar: Because of the tax savings, every $1 you put into your 401(k) costs less than $1 in take-home pay. For example, if your combined marginal rate is 32%, saving $1 only costs you $0.68 in take-home pay.
Employer match: The calculator adds your employer's matching contribution to show the total annual retirement savings. Employer match is free money — contributing at least enough to get the full match is generally the first step in retirement planning.
FAQ
How does a 401(k) reduce my taxes?
Traditional 401(k) contributions are deducted before federal and state income taxes, lowering your taxable income. They do not reduce FICA (Social Security + Medicare).
What is the 401(k) contribution limit for 2026?
$23,500 for employees under 50. $31,000 if you are 50 or older (includes $7,500 catch-up). Employer match does not count toward the employee limit.
What is a good 401(k) contribution percentage?
At minimum, contribute enough to get the full employer match. Financial advisors commonly recommend 10–15% of salary including employer match. Use this calculator to see the actual per-paycheck cost at different levels.
Should I choose Roth or traditional 401(k)?
Traditional is better if your current tax bracket is higher than your expected retirement bracket. Roth is better if you expect higher taxes in retirement. Many advisors suggest a mix. This calculator models traditional (pre-tax) only.
Related tools
- Paycheck Estimator — full take-home pay with 401(k) and health insurance
- Tax Bracket Calculator — see your federal and state brackets
- Salary to Hourly — convert annual salary to hourly rate
- Pay Raise Calculator — see the real impact of a raise after taxes
Estimates based on 2026 tax rates and standard deductions. Does not account for local taxes, itemized deductions, tax credits, or Roth 401(k). Consult a tax professional for advice.