Your 401K contribution reduces the taxable wages on your return. Box 12 of your W-2 will have a code of D and dollar amount. This is for a Traditional 401K contribution. A contribution to to a Roth 401K is NOT deductible and does not reduce your taxes (however is not taxed when you later retire and withdraw from the Roth).
For example if I was in the 25% federal tax bracket and had a $2,500 contribution during 2016 to a Traditional 401K, I would save $625 ($2,500 X 25%) on my Federal Taxes and probably more if I have a state return.
Look at page 14 of this link to check what tax rate you are in. https://www.irs.gov/pub/irs-pdf/i1040tt.pdf
A 401K or other retirement account is an excellent method to save for retirement.
Note: Due to possible other items on your return it may not come to exactly 25% in my example above.
