US Tax Guide

How much does a 401(k) save on taxes? 2026

A traditional 401(k) contribution lowers your federal taxable income but does not reduce FICA (Social Security + Medicare). Here is exactly how much you save at every income level, using 2026 IRS brackets from the Wealthy Employee calculator.

2026 limits

The 2026 elective deferral limit is $24,500 (under 50), $32,500 (50+), or $35,750 (ages 60-63 super catch-up under SECURE 2.0). The IRA limit is $7,500. These are the highest limits in history (IRS Rev. Proc. 2025-32).

Federal tax savings by salary

Single filer, full $24,500 deferral, no state tax shown. Figures from the calculator.

FICA is always $0 because 401(k) deferrals reduce income tax only, not Social Security (6.2%) or Medicare (1.45%). This is the key difference from an HSA, which avoids both. See the HSA triple advantage guide.

Employer match: the free money

88% of US employers offer a 401(k) match (2026). The most common formula is 50 cents per dollar up to 6% of salary. On an $80,000 salary, that is $2,400/year of free money. Over 30 years at 8% return, that uncaptured match costs $272,000.

Always contribute at least enough to capture the full match before funding a Roth IRA or taxable brokerage. See the 401(k) vs Roth IRA guide for the full priority order.

Calculate your exact saving

Enter your salary in the free calculator. The strategy dashboard shows your optimal 401(k) contribution alongside Roth IRA and HSA.