Texas Paycheck After 401(k) Contributions

By Team SalaryCalculate · 7/23/2025

When you contribute to a 401(k) in Texas, your paycheck gets smaller — but not as much as you might think. That’s because 401(k) contributions come out of your pre-tax income, which lowers how much federal income tax you owe. For example, if your salary is $80,000 and you contribute 10% to your 401(k), your taxable income drops to $72,000. No state income tax in Texas means this adjustment only affects federal taxes, Medicare, and Social Security. So your take-home pay shrinks a little, but your future retirement savings grow.

In 2025, you can contribute up to $23,000 to a 401(k) plan — or $30,500 if you're 50 or older. But how much does this actually change your paycheck week to week or month to month? And how do those contributions stack up if your employer offers matching? Below, we’ll walk through real numbers, show how paycheck withholding works in Texas, and explain what to expect depending on your income and contribution level.

What Happens to Your Paycheck When You Contribute to a 401(k)?

Detail	Without 401(k)	With 10% 401(k)
Gross Salary	$80,000	$80,000
401(k) Contribution (10%)	$0	$8,000
Taxable Income (Federal)	$80,000	$72,000
Approx. Federal Tax	$9,174	$7,674
Social Security (6.2%)	$4,960	$4,960
Medicare (1.45%)	$1,160	$1,160
Net Take-Home Pay	~$64,706	~$60,206

You can try this with your numbers using a net salary calculator

Federal Taxes Are the Only Thing That Changes

Texas doesn’t have a state income tax, so your 401(k) contributions only affect federal tax withholding. You’ll still pay:

- Social Security (6.2%) on income up to $168,600 (2025 cap)

- Medicare (1.45%) on all wages (plus 0.9% extra if you earn over $200k as an individual)

That means your paycheck reduction from a 401(k) contribution won’t be quite as dramatic as it would in a state with income tax. Want to see all the differences? Here's a breakdown of Texas paycheck vs W2 income that explains how what you earn and what you keep are often two different numbers.

How Much Should You Contribute?

Here are a few common strategies:

- Start with your employer match.

- 10–15% rule.

- Max it out.

If you’re wondering how to make room in your budget for that extra 401(k) contribution, this guide on how to increase my takehome pay in texas has practical tips.

What If You Use Roth 401(k) Instead?

A Roth 401(k) works differently. Contributions are made after tax, so they don’t lower your taxable income today. But withdrawals in retirement are tax-free.

	Traditional 401(k)	Roth 401(k)
Contributions	Pre-tax	After-tax
Lowers Current Tax?	Yes	No
Tax-Free Growth	Yes	Yes
Tax-Free Withdraw?	No	Yes

401(k) Paycheck Examples at Different Incomes

Scenario	Contribution	Take-Home Pay	Impact
$50k income	5%	~$3,380/mo	~$104/mo lower
$90k income	10%	~$5,460/mo	~$520/mo lower
$160k couple	12%	~$9,050/mo	~$900/mo each

Edge Cases and Considerations

- Maxed out contributions too early in the year? Check if employer matching stops.

- Changing jobs mid-year? You track total limits across jobs.

- Self-employed in Texas? Consider Solo 401(k) or SEP IRA.

- Multiple W-2 jobs? Watch your combined contribution total.

FAQs

Do 401(k) contributions affect Social Security taxes?

No. You’ll still pay 6.2% on your full income, up to the cap.

Does a 401(k) lower my Medicare tax?

Also no. Medicare applies to all earned income.

How often does the IRS increase contribution limits?

Usually each year, based on inflation. For 2025, it’s $23,000.

Can I contribute to a 401(k) and an IRA?

Yes — but deductibility of your IRA might be limited depending on your income and workplace coverage.

Summary: Is It Worth It?

Yes. A 401(k) saves you tax now, builds retirement savings, and often comes with an employer match. Even if your paycheck drops by $100–$300 a month, you may be saving twice that in long-term benefits.

Want to test it with your exact numbers? Try our net salary calculator and see how 401(k) contributions affect your Texas paycheck in real time.