One of the golden rules of personal finance is to contribute enough to an employer-based retirement fund to secure the full company match, but what happens to your paycheck if you max out your 401(k)?
To get the answer, it’s essential not to think of 401(k) contributions as saving for retirement, but instead to view them as the purchase of a very big tax cut.
A Six-Figure Earner Maxes Out
In 2026, the IRS allows a maximum contribution of $24,500 to traditional 401(k) plans. Since Bureau of Labor Statistics (BLS) data shows the median weekly wage is $1,204, it’s unrealistic for the typical earner to contribute $471 per week — nearly 40% of their pay before taxes — to a retirement fund.
Therefore — and for the sake of round numbers — the following example profiles a hypothetical worker who earns an even $100,000 annually and went from contributing $0 in 2025 to the maximum $24,500 in 2026.
It assumes the worker is an unmarried single filer younger than 50, contributing to a traditional pre-tax 401(k) over 26 biweekly pay periods and taking the standard deduction.
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401(k) Contributions: Buying a Lower Tax Bill
The worker will have $24,500 saved and earning tax-deferred growth at the end of 2026, but that’s not the only, or even the most consequential, benefit of maxing out contributions.
Since the IRS calculates the 7.65% FICA tax on your pre-contribution gross taxable wages, people earning $100,000 pay $7,650 into Social Security and Medicare per year, regardless of whether they contribute to a 401(k) — but those are comparatively small potatoes.
In 2025, the standard deduction was $15,750, which would have reduced the $100,000 earner’s taxable income to $84,250. In 2026, the standard deduction is $16,100, which reduces the taxable portion to $83,900. However, the $24,500 in pre-tax 401(k) contributions drops it all the way down to $59,400 — a difference of $24,850 in taxable income from the year before.
With much less money landing in the 22% tax bracket, the 2026 taxpayer owes $7,780 in federal taxes, compared to $13,010 in 2025, for $5,230 in savings.
So, What Does That Do to Your Paycheck?
In 2026, the $100,000 earner has $19,270 less in take-home pay — $60,070 compared to $79,340 in 2025 — after FICA taxes, 401(k) contributions and a dramatically reduced federal income tax bill.
The earner’s biweekly paycheck falls by $741, from $3,051 to $2,310 — a small price to pay for financial security and mercy from the taxman.
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This article originally appeared on GOBankingRates.com: Here’s What Happens to Your Paycheck When You Max Out Your 401(k) in 2026
