401(k) Contribution Limits 2025

The IRS increased the 401(k) employee contribution limit for 2025. Whether you are just starting to save or trying to maximize retirement contributions, here is everything you need to know.

2025 401(k) Contribution Limits

Contribution Type	2025 Limit	2024 Limit	Change
Employee elective deferrals	$23,500	$23,000	+$500
Catch-up (age 50-59, 64+)	+$7,500	+$7,500	No change
Catch-up (age 60-63, new SECURE 2.0)	+$11,250	N/A	New
Total employee limit (under 50)	$23,500	$23,000	—
Total employee limit (50-59 or 64+)	$31,000	$30,500	—
Total employee limit (60-63)	$34,750	—	New
Total 401(k) limit (all sources)	$70,000	$69,000	+$1,000

How 401(k) Contributions Reduce Your Taxes

Traditional 401(k) contributions are made pre-tax, reducing your current taxable income:

Annual Salary	401(k) Contribution	Taxable Income	Federal Tax Saved
$60,000	$10,000	$50,000 – $14,600 = $35,400	~$2,200
$80,000	$10,000	$70,000 – $14,600 = $55,400	~$2,200
$80,000	$23,500 (max)	$56,500 – $14,600 = $41,900	~$5,170
$100,000	$23,500 (max)	$76,500 – $14,600 = $61,900	~$5,170
$130,000	$23,500 (max)	$106,500 – $14,600 = $91,900	~$5,640

Tax savings calculated at marginal bracket rate. At 22%: $23,500 × 22% = $5,170.

Roth 401(k) Option

Some employers offer Roth 401(k) plans, which use after-tax dollars but provide tax-free withdrawals in retirement. The contribution limits are the same as traditional 401(k):

	Traditional 401(k)	Roth 401(k)
Tax treatment	Pre-tax contributions	After-tax contributions
Current tax benefit	Reduces current taxable income	None
Retirement tax benefit	Taxed on withdrawal	Tax-free withdrawals
Best for	Higher earners expecting lower rates in retirement	Younger workers expecting higher future tax rates

Employer Match: Free Money

Most employers match a percentage of your contributions. Common structures:

Employer Match	If You Earn $80K	Free Money/Year
3% straight match	$2,400	$2,400
50% match up to 6%	$2,400	$2,400
100% match up to 4%	$3,200	$3,200

Always contribute at least enough to get the full employer match — it is an instant 50-100% return on that portion of your contribution.

Self-Employed: SEP-IRA and Solo 401(k) in 2025

Self-employed individuals and small business owners have higher limits:

Account Type	2025 Limit
SEP-IRA	25% of net self-employment income, up to $70,000
Solo 401(k) — employee contributions	$23,500
Solo 401(k) — employer contributions	Up to 25% of compensation
Solo 401(k) — total combined	$70,000

The Compounding Effect of Maxing a 401(k)

Contributing $23,500/year at 7% average annual return:

Years	Account Balance
10	~$325,000
20	~$968,000
30	~$2,230,000
40	~$4,700,000

Maxing your 401(k) from age 25 to 65 could produce $4-5 million in retirement savings assuming typical market returns — on contributions that were also deducted from your taxable income each year.

Use our Paycheck Calculator to see how a 401(k) contribution affects your net take-home pay.

See Also

• Federal income tax brackets 2025
• How to reduce taxable income
• Standard deduction 2025
• Social Security tax 2025