401(k) tax savings calculator
See how a traditional pre-tax contribution can change modeled federal and state income taxes, annual take-home pay, and each paycheck.
Worked examples
Computed by the same engine as the calculator above, on 2026 rules reviewed through 2026-08-09. Use the tool for your own figures.
Deferring $8,500 on a $85,000 salary
A traditional contribution is not taxed as income in the year it is made, so the tax bill falls but take-home falls by less than the amount contributed. The gap between those two numbers is the whole point of the account.
| Contribution | $8,500 |
| Income tax saved this year | $1,870 |
| Take-home actually gives up | $6,630 |
| Net cost | $6,630 of take-home to move $8,500 into the account |
Single filer in Texas, which levies no wage income tax, so this isolates the federal and FICA effect. FICA still applies to the contribution — a deferral reduces income tax, not Social Security or Medicare.
The same contribution in California
The saving is not a fixed share of the contribution: it is whatever the deferred dollars would have been taxed at, so it grows with the state's own rate. Same salary, same contribution, different state.
| Saved in Texas | $1,870 |
| Saved in California | $2,635 |
| Difference the state makes | $765 |
California treats a traditional deferral as deductible for state tax as well as federal. A handful of states do not — Pennsylvania taxes the deferral outright — which is why the state matters here rather than being a detail.
Common questions
Does a 401(k) contribution reduce Social Security and Medicare tax?
No. A traditional deferral reduces income tax only. Social Security at 6.2% and Medicare at 1.45% are both charged on the full salary before the contribution is taken out, which is why the take-home drop above is smaller than the contribution but never zero.
How much can be contributed in 2026?
The employee deferral limit is $24,500. From age 50 an additional catch-up of $8,000 is allowed, and a higher catch-up of $11,250 applies in a narrow age band. Employer matching sits on top of these and does not count against the employee limit.
Is a Roth 401(k) better?
It is a different trade rather than a better one: a Roth contribution gives up the deduction shown above in exchange for tax-free withdrawal later. This calculator models the traditional pre-tax case only, so the saving it reports does not apply to Roth contributions.
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