Texas residents can contribute up to $24,500 to a 401k in 2026 ($32,500 with the standard $8,000 catch-up for those age 50 and older). Texas has no state income tax, so there is no state-level tax on pre-tax deferrals or on most retirement distributions. Typical employer matches run about 3% to 6% of salary when you defer enough to qualify. If your plan offers a Roth 401k, you can choose after-tax contributions for federally tax-free qualified withdrawals. This page is educational only.
401(k) and IRA projections update as you type — educational only.
Texas: no state income tax — federal 401(k) deferrals and limits apply. Not financial or tax advice.
IRS cap $24,500/yr
Simplified model: 100% match up to this % of salary. Actual employer formulas vary (e.g. 50% up to 6%, tiered match, etc.)
Your contributions grow as your salary grows.
Projected balance
$1,472,304
The 4% rule is a general guideline, not a guarantee. This is not financial advice.
Balance breakdown (stacked)
| Type | 2026 Limit | Notes |
|---|---|---|
| Employee contribution | $24,500 | IRS limit, all states |
| Catch-up (age 50+) | +$8,000 | Total $32,500 |
| Catch-up (age 60–63, if eligible) | +$11,250 | Enhanced catch-up (federal) |
| Total with employer match | Up to $72,000 | Combined limit |
Because Texas does not tax wage income, pre-tax 401k deferrals reduce federal taxable income only — there is no separate Texas subtraction or addition. In retirement, Texas still has no broad personal income tax on most retirement income, so traditional 401k withdrawals are generally free of state tax while remaining subject to federal tax. Compare that to states that tax distributions at high marginal rates when planning a late-career move.
| Monthly Contribution | Years | 7% Return | Est. Balance |
|---|---|---|---|
| $500 | 20 | 7% | ~$262,000 |
| $1,000 | 20 | 7% | ~$524,000 |
| $2,042 ($24,500/yr) | 20 | 7% | ~$1,071,000 |
| $2,042 ($24,500/yr) | 30 | 7% | ~$2,467,000 |
With no Texas income tax, Roth 401k vs traditional is primarily a federal timing decision. Traditional deferrals lower federal taxable income now; Roth 401k contributions are after-tax federally but can provide tax-free qualified withdrawals later. A typical 3–6% employer match is usually contributed as traditional dollars even if you elect Roth deferrals — check your summary plan description. Many Texans max the match first, then split additional savings between traditional and Roth based on their federal bracket.
The IRS sets the same 401k employee deferral limit nationwide: $24,500 in 2026 for workers under 50. Those aged 50 and older can add an $8,000 catch-up contribution for a total of $32,500. Workers aged 60–63 may qualify for a higher catch-up under federal rules — confirm with your plan administrator.
Texas has no personal income tax, so there is no Texas state tax on your wages or on pre-tax 401k salary deferrals. You still receive the federal tax benefit of reducing taxable income when you contribute to a traditional 401k. Qualified Roth 401k withdrawals remain federally tax-free; Texas does not layer state tax on retirement income.
Many Texas employers match 3% to 6% of salary when you contribute enough to earn the full match (often 50% or 100% of the first 3–6% deferred). Always contribute enough to capture the full match — it is effectively free money. The combined employee plus employer limit for 2026 is $72,000 (plus catch-ups where applicable).
With no Texas income tax, the choice is mainly federal: Traditional 401k lowers taxable income now; Roth 401k uses after-tax dollars but qualified withdrawals are tax-free federally. If you expect higher federal tax rates in retirement or want to avoid RMD complexity on Roth balances, Roth 401k can make sense. Many plans offer both — you can split contributions.
Texas does not have a state income tax, so there is no separate state deduction — but you also do not pay Texas tax on contributions or on most retirement income. Focus on federal brackets and your plan’s match when deciding deferral rates.
If your employer’s plan offers a Roth 401k, contributions are after-tax for federal purposes; qualified withdrawals of earnings are tax-free federally, and Texas does not impose state income tax on them. You can pair Roth 401k with traditional deferrals to balance current vs. future tax exposure.
Educational estimates only. Not financial or tax advice.