Why saving costs less than it looks
A traditional 401(k) contribution comes out of pay before federal income tax and, in most states, before state income tax. Social Security and Medicare are still taken on it. So each dollar you save lowers your take-home pay by less than a dollar: the difference is the income tax you no longer pay on that dollar.
On $75,000 in California, 6% of pay is $4,500 a year, $173.08 a paycheck. Take-home pay falls by $119.77 a paycheck, because $1,386 of federal and state income tax goes away over the year. Saving 10% instead puts $7,500 away for a take-home cost of $199.62 a paycheck. The cost per dollar saved is 69.2% in this example.
The state makes a difference
The tax saving depends on your state. In Texas, with no state income tax, the same 6% costs $135.00 a paycheck, more than in California, because there is no state tax to save. Pennsylvania is the exception among income-tax states: it taxes your own 401(k) contributions, so only federal tax is saved and the cost is $135.00 a paycheck.
Limits, catch-ups and the employer match
For 2026 you can put in up to $24,500, or $32,500 at 50 and over and $35,750 at ages 60 to 63. Payroll stops your contributions once you reach the limit, which the calculator shows: on $200,000 with every dollar of pay directed to the plan, contributions stop at $24,500. Pick the age band that applies to you at the end of the year.
An employer match is extra pay that does not touch your paycheck at all. A match of 3% of salary on $75,000 adds $2,250 a year to the account, but usually only if you contribute at least that much yourself. Contributing less than the match is the most expensive 401(k) mistake there is.
Raising your contribution a step at a time
If a big jump feels too much, raise the percent by one point each year or with each raise. On $75,000 in California each extra point of pay costs about $19.96 a paycheck in take-home pay, less than the $28.85 it adds to the account. Many plans can do this for you automatically. Timing the step with a raise means your take-home pay still goes up, just by less.
The contribution is taken from each paycheck as a percent of that paycheck's pay, so a bonus may carry its own deferral too, depending on the plan's rules. Check your plan's summary for which pay counts.
What the inputs mean
- Salary and pay frequency: yearly pay before tax and how often you are paid.
- Contribution percent: the share of each paycheck you elect for a traditional 401(k).
- Age band: sets the yearly limit, including catch-ups.
- State and filing status: decide the income tax the contribution saves.
Common mistakes
- Contributing below the match to keep take-home pay up. The match is a return no investment can promise.
- Front-loading to the limit early in the year when the employer matches each paycheck. Once contributions stop, so does the match, unless the plan has a true-up.
- Counting the HSA and IRA in the same limit. They have their own: $4,400 for self-only HSA coverage and $7,500 for an IRA.
401(k) questions
How much will a 6% 401(k) contribution reduce my paycheck?
On $75,000 in California, paid every two weeks, 6% puts $173.08 a paycheck into the 401(k) but lowers take-home pay by only $119.77. Over the year you save $4,500 and pay $1,386 less income tax.
What is the 401(k) limit for 2026?
$24,500 of your own contributions. Workers aged 50 and over can add a catch-up of $8,000, for $32,500, and those aged 60 to 63 a larger catch-up of $11,250, for $35,750. Employer matches do not count toward these limits.
Traditional or Roth 401(k)?
A traditional contribution lowers tax now and is taxed when you withdraw it; a Roth contribution is taxed now and comes out tax-free in retirement. If you expect a lower tax rate in retirement than today, traditional usually wins; if higher, Roth. Many people split between the two. This calculator shows the traditional option, which is the one that changes take-home pay less than the amount saved.
Sources
Rules checked . How we calculate.