Take Home Pay Calculator
To see how your pre-tax contribution might affect your take home pay, enter the following information, then click on the Calculate button. For additional information, see How are these numbers calculated?
How are these numbers calculated?
This calculator is designed to show you how making a pre-tax contribution to your retirement savings plan could affect your take home pay.
When you make a pre-tax contribution to your retirement savings account, you add the amount of the contribution to your account, but your take home pay is reduced by less than the amount of your contribution. That represents an increase in your take home pay compared to what would happen if you contributed the same amount to a taxable account.
In the following boxes, you'll need to enter or select:
- Annual Gross Salary Total annual salary before any deductions
- Pay Period How frequently you are paid by your employer
- Federal Income Tax Rate Choose from the dropdown list. Note that the tax calculations are based on your overall tax rate.
- State/Local Tax Rate Percentage to estimate your combined state and local income tax rate; this entry is optional.
- Contribution Rate Percentage of your salary you're currently contributing to your plan account. If you contribute a portion of your salary on a dollar deferral basis, you can convert your dollar deferral portion to a percentage for purposes of this calculator.
This area indicates the amount of your contribution and an example of how your take home pay could change if your contribution is made pre-tax (deducted from your paycheck before income taxes are calculated).
Tax deferral can make a difference. Current income taxes on your before-tax contributions and all of your investment earnings are deferred as long as your money remains in the Plan. Your earnings can compound and have the potential to grow more without taxes taking a portion each year. Over time, this tax advantage can make a big difference, and can be a major factor in your account balance at retirement. Of course, taxes will be due when you withdraw money from your Plan. For example, if you made $30,000 last year, and put $3,000 in your retirement plan account on a pre-tax basis, your taxable income for the year would have been $27,000. (Note that other pre-tax benefits could lower your taxable income further.) After-tax contributions are those you make from your net pay, that is, your income after taxes.
Additional Savings Opportunity
If you will be age 50 or older during the calendar year, and reach the plan or IRS limit, you may receive a significant benefit. If your plan rules allow, the law gives you the opportunity to make "catch-up" contributions to your retirement plan. You may now make an additional pre-tax contribution to your plan. The amount of catch-up contribution is $7,500 for 2023. Catch-up contributions are treated the same way as any other pre-tax contributions - the amount of contribution decreases your taxable income in the current year.
Fidelity does not provide legal or tax advice, and the information provided above is general in nature and should not be considered legal or tax advice. Consult with an attorney or tax professional regarding your specific legal or tax situation.
Pretax contributions are subject to the annual IRS dollar limit.