Increasing your 401k deduction will DECREASE your take home pay and DECREASE you federal taxes in the current year. 401k deductions are essentially the amount of money taken out of each pay to be placed in a simple retirement plan. These deposits are non-taxable. Because of this, by increasing one's 401k deduction, one will not be receiving the maximum take home pay, however, they will have a lower amount of their pay going towards federal taxes for that year.