Does maxing out your 401k reduce your taxable income by that respective amount so that you can reduce your tax liability at the end of the year? Sorry if it’s obvious/dumb!

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Yup! it is a dollar-for-dollar reduction. Meaning if you make 100K and contribute 10k(10%) to the traditional 401k, your taxable income will be 90k

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That’s what I was thinking, thanks a lot. So even if you contribute most of it at the end of the year your refund wouldn’t be impacted

Depends on the type of 401K account you have setup. Roth (No) vs. traditional (Yes).

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Yep

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I think your tax withholding each paycheck would also be adjusted for the amount of income that is being reduced. So you’ll end up saving tax $$ in each paycheck vs getting a large refund at the end of the year.

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I was thinking that, but if I play catch up and contribute 30% through year end, there will have been a lot of paychecks from earlier this year at the higher income tax rate. Dono if remainder of paychecks would account for that…or maybe they would since I’m not thinking about the math all the way through

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