401k Contribution Limits 2025: How Much Can You Contribute?

The 2025 employee 401k contribution limit is $23,500. If you are 50 or older, you can contribute an additional $7,500 for a total of $31,000. The total combined limit including employer contributions is $70,000 (or $77,500 for those 50+).

What maxing out your 401k saves you in taxes: at a 22% federal tax bracket, contributing $23,500 reduces your federal tax bill by $5,170 this year. At the 24% bracket, the savings is $5,640. This is money you would have paid in taxes that instead goes into your retirement account to grow tax-deferred for decades. It is the single most efficient tax reduction strategy available to most workers.

How to actually max out your 401k on a practical level: $23,500 divided by 12 months equals $1,958 per month or $903 per biweekly paycheck. On a $75,000 salary, that is about 31% of your gross pay. That is a large percentage, which is why most people do not max out their 401k. But even increasing from 6% to 10% makes a significant difference — on a $75,000 salary, moving from 6% ($4,500/year) to 10% ($7,500/year) adds $3,000 per year to your retirement savings while only reducing your take-home pay by about $2,340 (because you save on taxes).

The employer match is free money you should never leave on the table. The most common match structure is 50% of contributions up to 6% of salary. On a $75,000 salary, if you contribute 6% ($4,500), your employer adds $2,250. If you only contribute 3%, you get $1,125 in match — leaving $1,125 of free money unclaimed. Always contribute at least enough to get the full employer match before doing anything else with your money.

The power of maxing out over a career: if you contribute $23,500 per year from age 30 to 65 with a 7% average return, your 401k grows to approximately $3.5 million. Even if you can only contribute $10,000 per year, you end up with approximately $1.5 million. Time and consistency matter more than the exact amount.

Use our free retirement gap calculator to see how your 401k contributions translate into projected retirement savings.

Frequently Asked Questions:

Can I contribute to both a 401k and an IRA? Yes. You can contribute $23,500 to your 401k and $7,000 to an IRA in the same year. However, the IRA tax deduction may be limited if you also have a 401k.

When should I choose Roth 401k vs traditional 401k? Choose Roth if you expect higher taxes in retirement. Choose traditional if you want the tax deduction now. If unsure, splitting 50/50 hedges your bets.

What happens if I contribute too much to my 401k? Excess contributions are subject to a 6% penalty tax. Most payroll systems prevent over-contribution but check if you switch jobs mid-year.

Should I max out my 401k before paying off debt? Capture the full employer match first, then pay off high-interest debt (above 7%), then increase 401k contributions. Low-interest debt below 5% can coexist with higher 401k contributions.

Does my employer match count toward the $23,500 limit? No. The $23,500 is your employee contribution limit only. Employer matches count toward the $70,000 total combined limit.