How much does a 401(k) contribution actually cost me?

Less than you put in. On a $100,000 salary in California, deferring $6,000 into a traditional 401(k) reduces your take-home pay by only $4,122 — so $1,878 of it is tax you would otherwise have paid. That is an immediate 31.3% return before the money is even invested.

Why does a health premium save more tax than a 401(k)?

Because of which taxes it escapes. A traditional 401(k) avoids federal and state income tax but still pays Social Security and Medicare. A Section 125 health premium, HSA or FSA contribution avoids income tax and FICA. On the same $6,000, the health premium costs you $3,591 versus $4,122 for the 401(k) — a $531 difference, which is the 7.65% FICA saving.

Is a Roth 401(k) worse?

Not worse — different. A Roth contribution gives you no deduction now, so $6,000 costs you the full $6,000 of take-home pay. In exchange, the growth and withdrawals are tax-free in retirement. Traditional wins if your tax rate will be lower in retirement; Roth wins if it will be higher.

What is the 401(k) contribution limit for 2026?

$24,500 of employee deferrals, shared across traditional and Roth — it is one combined limit, not one each. Savers aged 50 and over can add a catch-up contribution on top. Employer matching does not count toward this limit.

Should I contribute enough to get the full employer match?

Essentially always, before anything else. An employer match is an immediate 50% to 100% return on the money, which no other part of your financial life will offer. Not capturing the full match is leaving contractual compensation unclaimed.

401(k), HSA and FSA: How Pre-Tax Deductions Cut Your Tax Bill

Pre-tax deductions are the only lever on this list that reliably increases your net worth without increasing your salary. But they are not all equal — and the difference comes down to which taxes each one escapes.

Two tiers of pre-tax

Your W-2 has separate boxes for income tax wages (Box 1) and FICA wages (Boxes 3 and 5). Deductions differ in which boxes they reduce:

Which taxes each deduction avoids
Deduction	Federal & state income tax	Social Security & Medicare
Traditional 401(k)	Avoided	Still paid
Health insurance premium	Avoided	Avoided
HSA (via payroll)	Avoided	Avoided
FSA	Avoided	Avoided
Roth 401(k)	Still paid	Still paid

The health, HSA and FSA row is why benefits people call them "Section 125" or "cafeteria plan" deductions. Escaping FICA as well as income tax makes them worth an extra 7.65% per dollar.

What $6,000 actually costs

A single filer on $100,000 in California, putting $6,000 aside three different ways:

Cost to take-home pay of setting aside $6,000, $100,000 salary, California, single filer
Vehicle	Take-home pay	Real cost to you	Tax saved
Nothing set aside	$72,802	—	—
Health premium / HSA / FSA	$69,211	$3,591	$2,409
Traditional 401(k)	$68,680	$4,122	$1,878
Roth 401(k)	$66,802	$6,000	—

The traditional 401(k) line is the one worth sitting with. You moved $6,000 into an investment account and your take-home pay fell by $4,122. The other $1,878 came out of tax you would have paid anyway — an instant 31.3% uplift, before any market return.

The practical order of operations

Contribute enough to capture the full employer match. A 50% match is a 50% instant return; nothing else comes close.
Max the HSA if you have a high-deductible plan. It is the only triple-tax-advantaged account in the US system: deductible going in, growth untaxed, and withdrawals untaxed for medical costs. It also dodges FICA when taken through payroll.
Fund an FSA up to what you will genuinely spend. Same tax treatment, but largely use-it-or-lose-it, so do not over-commit.
Then fill the 401(k) toward the $24,500 limit, splitting traditional and Roth according to whether you expect a lower or higher tax rate in retirement.

One state-level caveat: Pennsylvania taxes 401(k) deferrals at the state level even though the federal government does not, so the saving there is smaller than this example suggests. Our Pennsylvania page models this correctly.

Put your own numbers in — the calculator has fields for 401(k), Roth, HSA, FSA and health premiums, and shows the effect on every line of your paycheck as you change them.