Roth vs Traditional IRA (2026)

The question this calculator answers

Traditional IRA contributions may be deductible now, lowering taxable income today while taxing withdrawals later. Roth IRA contributions are not deductible now, but qualified withdrawals can be tax-free in retirement. The better choice depends almost entirely on whether your marginal tax rate is higher now or later—and whether you actually invest the tax savings from a traditional contribution.

This calculator compares after-tax wealth at retirement for the same out-of-pocket contribution amount, using the 2026 IRA limit ($7,500, or $8,600 at 50+) and marginal rates you supply. It is a teaching model, not a full Monte Carlo life plan.

2026 IRA limits in context

• Combined traditional + Roth IRA limit: $7,500 ($8,600 at 50+ with catch-up)
• 401(k) employee deferral limit: $24,500—separate bucket from IRA
• Standard deduction: $16,100 single, $32,200 joint—reduces taxable income regardless of IRA choice
• HSA limits: $4,400 self-only, $8,750 family—another above-the-line lever

IRA deductibility for traditional contributions phases out when you or a spouse have workplace plan coverage and MAGI exceeds IRS thresholds in Rev. Proc. 2025-32. Nondeductible traditional contributions still grow tax-deferred but compare differently to Roth—Form 8606 basis matters at withdrawal.

Traditional path mechanics

Deductible traditional contribution reduces current taxable income at your marginal federal rate. Investments grow tax-deferred. Withdrawals in retirement are ordinary income. Required minimum distributions apply later. If you spend the tax refund from a traditional contribution instead of investing it, you secretly shrink the traditional advantage—this calculator assumes you invest tax savings or adjusts equivalently.

Roth path mechanics

Roth contributions come from after-tax dollars—no upfront deduction. Growth and qualified withdrawals can be tax-free. No RMDs for Roth IRAs during owner’s lifetime (beneficiary rules differ). Roth fits when you expect higher future rates or want tax diversification.

How to use the form

Step 1 — Enter contribution amount up to 2026 limits

Default thinking is $7,500 max, or $8,600 if 50+. Splitting between traditional and Roth is allowed but combined cap is one pool.

Step 2 — Set current marginal rate

Use your federal bracket on the next dollar of ordinary income—not effective rate on all income. The federal income tax calculator helps locate marginal bands after the standard deduction.

Step 3 — Set assumed retirement marginal rate

Guess future ordinary rate at withdrawal time. Uncertainty is normal—run multiple scenarios.

Step 4 — Compare ending after-tax balances

The output shows illustrative future values net of tax on the traditional side vs tax-free Roth withdrawals under your assumptions.

Worked example (single, 32% bracket now, 22% later)

$7,500 contribution, 32% now, 22% at withdrawal, equal investment growth assumptions:

• Traditional saves $2,400 tax today if fully deductible
• Future tax on traditional withdrawals depends on compounded balance × 22% in the model
• Roth locks in 32% “cost” today but avoids tax on growth if qualified

When retirement rate is lower, traditional often wins on math alone. When retirement rate is equal or higher, Roth often wins. Equal rates plus invested tax savings tie if assumptions align.

Workplace plans vs IRA

If you have a 401(k), employer match usually dominates first—contribute enough for match before IRA debates. Roth 401(k) vs traditional 401(k) follows similar logic at higher $24,500 limits. The 401(k) calculator models deferrals; this IRA tool handles the separate IRA bucket.

Backdoor Roth and income limits

High earners above Roth MAGI phaseouts cannot contribute directly to Roth IRAs. Backdoor Roth (nondeductible traditional contribution followed by conversion) is common but triggers pro-rata rules if you hold other traditional IRA balances. This calculator does not model pro-rata or step transaction risk—consult a CPA for backdoor workflows.

Interaction with standard vs itemized

IRA deductibility reduces AGI whether you itemize or take the 2026 standard deduction ($16,100 single). Itemized filers still benefit from traditional IRA deductions above the line. See the standard vs itemized calculator for Schedule A paths.

Common mistakes

• Comparing Roth to traditional without equalizing out-of-pocket cost
• Using effective average rate instead of marginal rate for the decision
• Ignoring nondeductible traditional rules when covered by a workplace plan
• Forgetting state tax on traditional withdrawals in high-tax states
• Assuming Roth beats traditional in every low-income year regardless of future income

Related tools

Stack limits with the contribution limits maximizer. Model paycheck deferrals in the paycheck calculator. Explore conversions in the Roth conversion calculator. Compare job offers with retirement match in the job offer comparison.

Educational disclaimer

Future tax law, RMD rules, and your actual retirement income are uncertain. This page supports informed conversations—not binding advice. Confirm deductibility and Roth eligibility on IRS worksheets before contributing.

Spousal IRAs and non-working spouses

A working spouse can fund an IRA for a non-working spouse up to the same $7,500 limit ($8,600 at 50+) when filing jointly, subject to deductibility and Roth phaseouts based on combined MAGI. That doubles household IRA savings without requiring earned income in both names—useful when one partner stays home or between jobs.

Tax diversification in retirement

Many planners split contributions between traditional and Roth over a career so future retirees can draw from taxable, tax-deferred, and tax-free buckets strategically. This calculator compares one-year contribution choice at two rates; real diversification spans decades. Pair results with the Roth conversion calculator when you consider converting existing traditional balances in low-income years before Social Security and RMDs stack income.

Social Security taxation and Medicare IRMAA surcharges depend on combined income in retirement—another reason Roth withdrawals can help high savers even when current marginal rates look favorable for traditional contributions today.

State tax on traditional IRA withdrawals

This tool focuses on federal marginal rates. If you live in a high-income-tax state today but plan to retire in Florida or Texas, traditional contributions may look better federally while state tax tilts toward Roth. If you deduct traditional contributions now in a no-tax state and retire in California, the reverse can hurt. Layer state assumptions manually or discuss with a planner—federal-only models miss that swing.

Sources and methodology

IRA contribution limits and deductibility phaseouts reference IRS Rev. Proc. 2025-32. Growth projections use constant after-tax return assumptions you enter; real markets vary. Comparisons net traditional withdrawal tax at the future marginal rate you specify. Results are educational models with visible assumptions—not personalized financial planning.