Retirement Tax Savings Calculator

Taxable income already reflects the standard deduction

First, gross income is reduced by the standard deduction to find taxable income, which is what the brackets are applied to. A single filer on $85,000 has $68,900 of taxable income under the 2026 standard deduction.

The marginal rate is read from that taxable income. It is the rate the next pre-tax dollar is taken away at, which is what a retirement contribution is: a dollar removed from the taxable pile. That is why the saved amount tracks the marginal rate rather than the average rate, and why the bracket you sit in, not your overall income, is what prices the decision.

The marginal rate prices the contribution

The saved amount is computed by walking the brackets twice - once with the contribution and once without - and taking the exact difference. That handles the case where a large contribution drops you into a lower band, which a flat contribution-times-bracket shorthand would misprice.

The plan page shows the taxable income, the tax before and after the contribution, and the saved figure, so the arithmetic is visible rather than asserted. The marginal rate is printed beside them, and even a single dollar of income that leaves taxable income at zero is reported as a saving of zero rather than a shorthand estimate.

Plan limits cap the saving

The 2026 elective deferral limits are $24,500 for a 401(k), $17,000 for a SIMPLE IRA and $7,500 for a traditional IRA, each with a $50-and-older catch-up - the 401(k) catch-up steps up again between ages 60 and 63. A contribution above the limit is priced only up to it, and the saving-at-the-limit scenario is shown next to the figure for comparison.

The age field picks the right limit by rounding to a whole year, so a 50-year-old sees the catch-up included automatically and savers closer to 60 get the larger 401(k) catch-up. The same calculation caps the contribution before the brackets are walked, so the cap and the saving are always consistent.

Pre-tax versus Roth is a separate bet

This page prices the ordinary income tax saved today. A Roth contribution costs the tax now and grows tax free, so the pre-tax route wins when today's marginal rate is higher than the rate you expect at withdrawal - the reverse of the usual advice to young savers in low brackets.

Payroll tax is untouched because retirement contributions do not reduce FICA, and a traditional IRA deduction can phase out at higher incomes, especially when a workplace plan is available - the tool notes that possibility rather than assuming it away. What this page prices is the ordinary income tax saved today by a pre-tax contribution, nothing more.

What happens to the tax you did not pay today

The tax saved is not a gift, it is a deferral. The contribution and everything it earns are taxed as ordinary income when withdrawn, so the whole calculation rests on two things: the rate today against the rate at withdrawal, and what you do with the tax that was not paid this year.

Reinvesting it is what makes the pre-tax route work. A $10,000 contribution at the 22% marginal rate frees about $2,200 that would otherwise have gone to the IRS; left in a taxable account, that difference compounds alongside the retirement balance and after thirty years can be worth more than the extra tax owed later.

Two lines matter at the withdrawal end. Required minimum distributions start at 73 for most savers under current law, which can push a large pre-tax balance into a higher bracket in retirement, and a state that taxes withdrawals is not always the state that gave you the deduction. A Roth conversion in a low-income year is the standard way to price that risk down.