Pre-tax 401(k) (US retirement savings)
A US employer-sponsored retirement plan where contributions reduce taxable income today and are taxed on withdrawal — annual limit $23,500 for 2025 (+$7,500 catch-up at 50+).
A pre-tax 401(k) is the most common US employer-sponsored retirement savings vehicle. Employee contributions are deducted from gross salary before federal income tax is computed — reducing taxable income dollar-for-dollar. (FICA still applies to the contribution amount; that's a common surprise.) The money grows tax-deferred and is taxed as ordinary income on withdrawal, typically in retirement when the taxpayer may be in a lower bracket.
For 2025 the annual employee contribution limit is $23,500 + a $7,500 catch-up for ages 50+. Most employers offer a match — commonly 50% of the first 6% of salary, up to $5,250 free per year for an employee earning $175,000. The combined employer+employee limit for 2025 is $70,000.
The US calculator on this site does NOT yet model 401(k) deductions in v1; gross is treated as taxable. A future release adds a 401(k) input field that reduces the taxable base before federal income tax (but not before FICA).
Calculator pages that use this term
See also
- FICA (Social Security + Medicare) — The US payroll tax that funds Social Security and Medicare — flat-rate, applies before federal income tax.
- Standard deduction (US federal) — The flat amount subtracted from gross income before federal-income-tax brackets apply — $15,000 single (2025).
- Social Security wage base (US FICA cap) — The annual ceiling above which the 6.2% Social Security portion of FICA stops applying — $176,100 (2025).
- Marginal tax rate — The percentage paid in tax on the next unit of income earned — distinct from the average effective rate.