What a 401(k) really costs your paycheck
A traditional 401(k) contribution comes out before income tax, so your paycheck drops by less than the amount you save. For a single filer earning $60,000 who puts in 6% ($3,600 a year), take-home pay falls by $3,168, not $3,600, because $432 less federal income tax is withheld. Each dollar contributed costs about 88 cents of take-home pay.
A Roth 401(k) is taxed before it goes in, so it costs the full amount: $3,600 less take-home pay, with no tax saved this year. The tax comes later: traditional withdrawals are taxed in retirement, and qualified Roth withdrawals are not.
What a 401(k) does not change
Social Security and Medicare are still figured on your full pay, so a contribution does not lower those taxes. Most states follow the federal treatment of 401(k) contributions for state income tax, which the calculator applies when you pick a state. State payroll deductions such as California disability insurance are also calculated on your full pay.
2026 contribution limits
- You can contribute up to $24,500 of your own pay in 2026, across traditional and Roth contributions combined.
- If you are 50 or older, a catch-up contribution of $8,000 is allowed on top, and for ages 60 to 63 the catch-up is $11,250. The calculator caps entries at the standard limit.
- Employer matching contributions do not count toward your own limit.
Why the employer match matters
A match is part of your pay package, so not contributing enough to receive it leaves part of that package unused. Enter your employer's match as a share of pay to see how much goes into the account in total. Matching rules differ between employers, so check your plan documents.
401(k) paycheck FAQ
How much will a 401(k) reduce my paycheck?
For a traditional 401(k), less than the amount you contribute, because it lowers your income tax. The table above shows the exact difference for your salary, state and pay frequency.
Is a traditional or a Roth 401(k) better?
It depends on whether you expect your tax rate in retirement to be higher or lower than it is now. Traditional lowers your tax today. Roth gives tax-free withdrawals later. Many plans allow a mix.
Does a 401(k) contribution lower my Social Security tax?
No. Only income tax is reduced.
Estimates assume 2026 rules and the standard deduction and ignore other deductions. Limits are from IRS Notice 2025-67. This is not tax or investment advice.