A traditional 401(k) contribution comes out before federal and most state income tax (but not FICA). So contributing $100 per paycheck reduces take-home pay by only about $100 × (1 − your marginal rate). In the 22% federal bracket with a 5% state tax, $100 costs about $73 of take-home pay.
2026 limits
The IRS sets the employee deferral limit each year — check the current figure on irs.gov — with extra catch-up contributions for workers 50 and older. Always contribute at least enough to get any employer match: it is an instant 50–100% return.
Roth 401(k) contributions are after-tax: take-home falls dollar for dollar, but withdrawals in retirement are tax-free.