IRA Calculator

Choosing between a Traditional IRA and a Roth IRA comes down to more than deciding which account has better tax benefits. The important question is when you want to pay tax on your retirement savings—and what your tax rate may be when that time comes.

A Traditional IRA may let you deduct eligible contributions from your taxable income today. The money remains invested, and you generally pay income tax on deductible contributions and their investment earnings when you withdraw them. A Roth IRA works in the opposite way: contributions are made with after-tax money, but qualified withdrawals can be taken without federal income tax.

This difference can have a meaningful effect on how much of your retirement savings you ultimately keep.

The IRA Calculator compares your current marginal tax bracket with the rate you expect to pay in retirement. It uses those figures, along with your planned annual contribution and years until retirement, to estimate which account may be more favorable under its calculation assumptions.

Here is what to look for in the results:

• Recommended Account Choice: The account favored by the calculator’s tax comparison. Treat this as a starting point, not a guarantee that the account will be best for your individual circumstances.

• Projected Roth IRA Balance: The estimated future account value. The investment growth in a Roth IRA is not automatically tax-free in every withdrawal situation; qualified distributions must meet the applicable requirements.

• Projected Traditional IRA Net: The estimated amount remaining after the model applies its assumed retirement tax rate to the projected balance.

• Annual Upfront Tax Deduction: The estimated deduction associated with an eligible Traditional IRA contribution. A deduction reduces taxable income; it is not the same as receiving that amount back in cash.

The last distinction matters. Someone who sees a $1,540 annual tax deduction should not assume they have received $1,540 in cash savings. The actual tax reduction depends on the amount deductible and the tax rates that apply to the person’s income.

The comparison is most useful when you understand what each figure represents and which real-life circumstances the calculator does not include.

When a Roth IRA Can Come Out Ahead—and When a Traditional IRA Can

The most useful starting point is to compare the tax rates that apply when money goes into an account with the rates that may apply when it comes out.

A Roth IRA generally becomes more attractive when paying tax today is less costly than paying tax on the corresponding Traditional IRA withdrawal in retirement. A deductible Traditional IRA may be more attractive when the current tax rate is higher than the rate expected on future withdrawals.

The following examples isolate that tax difference. They use the same hypothetical $5,000 amount before tax, exclude investment growth, and assume the Traditional IRA contribution is fully deductible. They are illustrations of the tax trade-off, not projections of the calculator’s account balances.

When Your Retirement Tax Rate May Be Higher

Suppose your current marginal federal income tax rate is 22%, and you expect your retirement tax rate to be 24%.

If you have $5,000 available before tax, the simplified comparison looks like this:

With these assumptions, the Roth approach leaves $100 more after tax for each equivalent $5,000 amount.

The reason is straightforward: the Roth contribution is taxed at the lower 22% rate, while the Traditional IRA withdrawal is taxed at the higher 24% rate. Paying the tax earlier can be advantageous when the rate is lower.

This is why a Roth IRA may deserve closer consideration if you are early in your career, expect substantial future income growth, or believe your taxable retirement income will place you in a higher bracket.

Those circumstances do not automatically make Roth contributions the right choice. Your actual retirement income, eligibility, contribution options, and treatment of Traditional IRA tax savings can change the result.

When Your Retirement Tax Rate May Be Lower

Now reverse the assumptions. Your current marginal tax rate is 24%, but you expect a 12% rate in retirement.

Using the same $5,000 before-tax amount:

Under these assumptions, the Traditional IRA leaves $600 more after tax.

The potential advantage comes from deducting the eligible contribution while your current tax rate is relatively high and paying tax on the corresponding withdrawal at a lower rate later.

This situation may appeal to someone who is in a high-earning stage of their career but expects substantially lower taxable income after retiring. However, retirement income does not always fall as much as people anticipate. Pensions, investment income, Social Security benefits, required withdrawals, and changes in tax law can all affect the eventual picture.

Use the calculator to test a lower expected retirement bracket, but base that estimate on a realistic view of your future income rather than assuming retirement automatically means a lower tax rate.

What If Your Current and Future Tax Rates Are the Same?

If your current and retirement tax rates are both 22%, the tax-rate difference alone does not give either account an advantage.

For an equivalent $5,000 before-tax amount, the Roth comparison leaves $3,900 after tax. The Traditional comparison also leaves $3,900 after a 22% tax on withdrawal.

Under equivalent investment assumptions, the two approaches can produce the same after-tax result when the tax rates are equal and the Traditional IRA’s tax savings are accounted for consistently.

That final condition is important. If you deduct a Traditional IRA contribution and then spend the tax savings, you have not made the same overall investment as someone who invests the equivalent after-tax amount in a Roth IRA. If you invest the tax savings too, the comparison becomes more balanced.

The takeaway: A Roth-versus-Traditional decision is not simply about which account grows to the larger number. It is about comparing the money invested, the tax paid along the way, and the amount available to you after the relevant taxes.

Why Your Tax Savings Today Matter to the Final Comparison

One of the main attractions of a Traditional IRA is the possibility of reducing your taxable income in the year you contribute. For someone who qualifies for the full deduction, that can make retirement saving feel less expensive today.

Consider a person who contributes $5,000 to a deductible Traditional IRA and is in the 22% federal marginal tax bracket. If the entire deduction reduces income taxed at that rate, the estimated federal income tax reduction is:

$5,000 × 22% = $1,100

The contribution is still $5,000. The $1,100 represents the estimated reduction in federal income tax under these assumptions, not an automatic refund or a separate payment from the government. The actual result can differ depending on the person’s tax return and circumstances.

The value of that deduction also changes with the tax bracket. A fully deductible $5,000 contribution could reduce federal income tax by approximately $1,200 at a 24% marginal rate, compared with $1,100 at 22%, assuming the entire deduction offsets income taxed at the stated rate.

But an upfront deduction does not mean the Traditional IRA is permanently tax-free. Generally, amounts representing deductible contributions and their earnings are taxed when withdrawn.

What happens to the tax savings is therefore part of the decision.

Imagine two people who can each set aside the same amount of money before tax. One makes a Roth IRA contribution. The other makes a deductible Traditional IRA contribution and receives a tax benefit. If the second person spends that tax saving, they have less money working toward retirement outside the IRA. If they invest it in a separate account, that investment may grow too, although its own tax treatment can differ from that of an IRA.

A comparison that ignores the use of the Traditional IRA tax savings may therefore favor one account without accounting for the entire financial picture.

There is another important qualification: not every Traditional IRA contribution is deductible. Deductibility depends on factors such as income, filing status, and whether you or your spouse are covered by a workplace retirement plan. A nondeductible contribution does not provide the same immediate tax benefit as a fully deductible one.

Before relying on an estimated deduction, confirm that you qualify for it. The IRS guidance on Traditional IRAs explains how contribution deductibility works.

How Your Years Until Retirement Affect the Comparison

The number of years until retirement determines how long your money has to remain invested. It can substantially affect the projected account balance, but it does not, by itself, establish whether a Roth IRA or a Traditional IRA is the better choice.

Consider someone who plans to contribute regularly for another 25 years. They could test the same tax assumptions using a 15-year, 25-year, and 30-year horizon to see how a longer or shorter period changes the projected values.

That comparison is useful for understanding the role of time, but the results need to be interpreted carefully.

A longer horizon gives investments more time to grow if returns are positive. It also gives the investor more time to make contributions. The actual outcome depends on the return assumption, contribution timing, fees, and market performance—not just the number of years entered.

The tax comparison is a separate question. If the expected retirement tax rate is higher than the current rate, the Roth approach may remain attractive under the same simplified tax assumptions. If the expected retirement rate is lower, the Traditional approach may remain attractive. A longer horizon does not automatically reverse either result.

For a more useful comparison, change one assumption at a time:

1. Keep your contribution and tax rates the same, then test different retirement dates.

2. Keep your time horizon the same, then test a lower and a higher expected retirement tax rate.

3. Compare the results and identify which assumption causes the recommendation or projected difference to change.

This makes it easier to distinguish the effect of investment time from the effect of taxes.

One limitation to keep in mind: the calculator’s visible inputs do not include an expected annual investment return. Its projected balances therefore depend on a return assumption or calculation rule that should be made clear on the page. Until that assumption is disclosed, treat the balances as estimates from the calculator rather than a personalized forecast.

IRA Rules That Can Change Your Decision

A favorable tax comparison does not automatically mean you can contribute the amount you want or claim the deduction shown. Traditional and Roth IRAs have different eligibility and tax rules, and those rules should be checked separately from the calculator’s recommendation.

Traditional IRA Contributions Are Not Always Deductible

You may be able to contribute to a Traditional IRA without qualifying for a full tax deduction.

For example, a worker who participates in a workplace retirement plan may face income-based limits on deducting Traditional IRA contributions. Different limits can apply when a spouse is covered by a workplace plan but the person making the IRA contribution is not.

This matters because the calculator’s tax comparison can overstate the Traditional IRA’s immediate advantage if it assumes every contribution is deductible.

If you cannot deduct all or part of a contribution, your tax treatment may differ from the simplified comparison. Nondeductible contributions also require appropriate tax records so that the same money is not taxed again when distributed.

See the IRS IRA contribution and deduction rules before assuming the full contribution is deductible.

Roth IRA Contributions Have Income-Based Limits

Roth IRA eligibility depends in part on modified adjusted gross income and filing status. At higher incomes, the amount you can contribute directly may be reduced or eliminated.

For the 2026 tax year, the combined annual contribution limit for Traditional and Roth IRAs is generally $7,500, or $8,600 for someone age 50 or older. Your total contributions cannot exceed the applicable limit or your eligible taxable compensation, if that amount is lower. These limits apply across both types of IRA combined, rather than providing a separate full limit for each account.

For 2026, the Roth IRA contribution phase-out range is $153,000 to $168,000 for single filers and heads of household, and $242,000 to $252,000 for married couples filing jointly. Special rules apply to married people filing separately. The applicable limit can depend on modified adjusted gross income and filing status.

These figures can change over time. Check the IRS’s current IRA contribution limits for the tax year in which you plan to contribute.

A calculator that recommends a Roth IRA based on tax rates is not necessarily checking whether you qualify to contribute directly. Treat tax efficiency and contribution eligibility as two separate questions.

Roth Withdrawals Must Meet the Qualified Distribution Rules

A Roth IRA’s tax treatment is one of its main attractions, but the phrase “tax-free withdrawals” needs context.

Qualified Roth IRA distributions are generally tax-free when the applicable five-tax-year requirement has been met and a qualifying condition is satisfied. Common qualifying conditions include reaching age 59½, disability, or death; special rules also apply to certain first-time homebuyer distributions.

Traditional IRA withdrawals are generally taxable to the extent they represent untaxed contributions and earnings. Withdrawals made before age 59½ may also incur an additional 10% tax unless an exception applies.

These rules mean the tax outcome depends not only on the account type but also on the nature and timing of the withdrawal. A projected Roth balance should not be interpreted as a guarantee that every dollar can be withdrawn tax-free in every circumstance.

The IRS Roth IRA guidance and Publication 590-B provide more detail on distributions and their tax treatment.

What This IRA Calculator Assumes—and What It Leaves Out

An IRA comparison is only as reliable as the assumptions behind it. The calculator is useful for exploring the tax-rate trade-off, but its results should not be mistaken for a complete retirement plan.

Here are the main factors to consider when interpreting the figures.

Your marginal tax rate is not your tax rate on every dollar. Your marginal rate applies to the next dollar of taxable income within the relevant bracket. Your effective tax rate represents your overall tax burden as a proportion of income under a particular calculation. They are not interchangeable, so use the type of rate the calculator requests.

The Traditional IRA deduction depends on eligibility. If you are not entitled to deduct the full contribution, the model’s estimated upfront tax benefit may not reflect your situation. Confirm deductibility before using that figure to compare accounts.

The treatment of tax savings matters. A fair comparison should account for what happens to the money saved through a Traditional IRA deduction. Spending it, saving it in cash, and investing it can lead to different financial outcomes.

Both accounts need comparable investment assumptions. A comparison is easier to interpret when the same contribution timing and investment-return assumptions are used for both accounts. Otherwise, a difference in projected balances may reflect the model’s assumptions rather than the tax treatment alone.

Future tax rates are uncertain. Your income, filing status, tax legislation, and retirement spending needs may change over the years. The retirement bracket you enter is an estimate, not a promise about your future tax bill.

Other retirement income can affect your tax position. A pension, Social Security benefits, taxable investment income, and required minimum distributions from applicable accounts can all influence your taxable income in retirement. The calculator’s recommendation should not be treated as though it models all of these factors unless the calculation explicitly includes them.

Account rules may affect access to the money. Eligibility requirements, distribution rules, and potential additional taxes can influence which account fits your circumstances. A tax-rate comparison alone cannot resolve every question about retirement saving.

For these reasons, use the result as a way to test assumptions and understand the trade-off. If you have substantial retirement assets, nondeductible IRA contributions, complicated income, or questions about Roth conversions, a qualified tax professional can help assess the details the calculator does not model.

Questions to Ask Before Choosing an IRA

Before acting on the calculator’s recommendation, consider whether the assumptions behind the result fit your situation.

• Can I deduct my Traditional IRA contribution? Check your income, filing status, and workplace retirement-plan coverage. The answer affects the value of the upfront tax benefit.

• What will I do with the tax savings? If you choose a deductible Traditional IRA, decide whether the tax reduction will be invested, saved, or spent. That choice can affect the overall comparison.

• What might my taxable income look like in retirement? Consider pensions, other retirement accounts, Social Security benefits, and investment income rather than relying only on your current salary.

• Am I eligible to contribute directly to a Roth IRA? Confirm the applicable income limits and annual contribution rules for your filing status.

• Do I have other retirement savings options? An employer-sponsored plan, matching contributions, or other benefits may affect how you prioritize retirement contributions.

• Will I need access to this money before retirement? Early withdrawals can have tax consequences, and the rules differ depending on the type of account and distribution.

• Would a more detailed tax comparison help? If your income varies significantly from year to year, you expect a Roth conversion, or your retirement income sources are complex, the simplified comparison may not be enough to guide the decision.

The point is not to find a universal winner. It is to understand which account’s tax treatment fits your likely circumstances, confirm that you qualify for its benefits, and make the comparison using assumptions you can reasonably defend.