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Roth vs traditional: tax now or tax later.

Read the 60-second version first. Then drag the two tax sliders and watch the answer flip.

Roth

Pay tax now. Take it out tax-free.

You put in money that's already been taxed. It grows. Qualified withdrawals in retirement aren't taxed again.

Traditional

Skip tax now. Pay it later.

Your contribution may lower your taxable income today. It grows. Withdrawals are taxed as income when you take them.

The whole ideaBoth are containers for retirement money. The question is which tax rate you'd rather pay: today's or your future one. Lower now, Roth looks better. Higher now, traditional does.

12%

Your rate on the last dollars you earn this year.

22%

A guess. Nobody knows future tax law or their future income.

$3,000

2026 limits under 50: $7,500 for IRAs, $24,500 for 401(k) employee contributions. This slider compares pre-tax pay.

40
7%

Spendable money after tax

  • Roth$527,037

    Tax paid first. $2,640 goes in each year. This example assumes qualified, tax-free Roth withdrawals.

  • Traditional$467,146

    All $3,000 goes in each year. Grows to $598,905, then $131,759 goes to tax.

With a lower rate now (12%) than later (22%), Roth comes out $59,891 ahead in this example.

Compare 1 slice of pre-tax pay, with deposits at each year's end and a steady return. Traditional contributions are fully deductible here. Roth withdrawals qualify for tax-free treatment. Each side uses 1 flat tax rate. Employer matches, state taxes, contribution limits, income limits and required withdrawals are excluded. This is an estimate, not your tax bill.

Try this

  1. Set both tax sliders to the same number. The bars tie. Every time.
  2. Drop the tax rate today below the retirement rate. Roth pulls ahead.
  3. Flip them. Traditional pulls ahead.

That's the lesson. The account doesn't create the difference. The gap between your two tax rates does.

Things the math leaves out

  • Roth IRA contributions (not earnings) can come out at any time without tax or penalty.
  • Roth IRAs have income limits. Traditional IRA deductions can be limited too if you have a plan at work.
  • An employer match is a separate question. It doesn't depend on which type you pick.
  • Having some of each spreads out the guess about future tax rates.

More on the account itself in What a Roth IRA actually is. Limits come from the IRS 2026 announcement.

FAQ

Roth vs traditional, quick answers

What is the difference between Roth and traditional?

It's when you pay income tax. Traditional: your contribution may lower your taxable income today, and withdrawals are taxed later. Roth: you contribute money that's already been taxed, and qualified withdrawals are tax-free.

Which is better, Roth or traditional?

Neither is better across the board. Lower tax rate now than at withdrawal: Roth wins. Higher now: traditional wins. Equal rates: they tie. The catch is that nobody knows their future rate for sure.

What are the 2026 contribution limits?

For 2026 the IRS limit is $7,500 for IRAs and $24,500 for 401(k) plans if you're under 50. Roth IRA contributions phase out at higher incomes: $153,000 to $168,000 for single filers and $242,000 to $252,000 for married couples filing jointly.

Can I have both a Roth and a traditional account?

Yes. Plenty of people hold both: a traditional 401(k) at work and a Roth IRA on their own. The IRA limit is shared across all your IRAs.

Is this calculator tax advice?

No. It uses one flat rate on each side to show the idea. Real taxes have brackets, deductions and rules that depend on your situation. A tax professional can look at your actual numbers.

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