The comparison in one sentence
A Traditional IRA deducts today and taxes withdrawals later. A Roth gives no deduction but withdraws tax-free. Everything else follows from a single question: is your tax rate higher now, or will it be higher when you withdraw?
The step most comparisons skip
Contributing $7,500 to a Traditional IRA in the 22% bracket generates a $1,650 tax saving. If you genuinely invest that $1,650, Traditional looks far stronger than if you spend it. Most people spend it, which is the single biggest practical reason Roth tends to win in the real world, and why the toggle above matters more than the return assumption.
Even when you do invest it, that money cannot go into the IRA: the annual limit is already used. It lands in a taxable brokerage account, where growth is taxed at capital gains rates along the way. The calculator models it that way rather than pretending it enjoys the same shelter.
Why Roth wins at equal tax rates
You will often read that the two are mathematically identical when your rate is the same now and later. That is true only if you compare $7,500 of Roth against $9,615 of Traditional: the pre-tax equivalent. At the same nominal contribution, $7,500 into a Roth is post-tax money and therefore a bigger real contribution.
Practically: if you can afford to max out either account, Roth shelters more. If $7,500 is genuinely all you can put aside, Traditional lets you contribute the same nominal amount while keeping the deduction.
When Traditional is the better call
- You're in a high bracket now and expect a lower one later. A 32%-bracket earner who retires into the 12% bracket is buying a deduction at 32 cents and repaying at 12.
- You're near a cliff. Lowering AGI can restore a phased-out credit, cut ACA premium costs, or preserve the QBI deduction: benefits a Roth contribution cannot deliver.
- You'll retire to a state with no income tax. Deduct against a state rate now, withdraw where there is none.
When Roth is the better call
- You're early-career. A low bracket now is the cheapest tax you will ever pay.
- You expect higher rates later: from your own income growth or from future law.
- You want flexibility. Roth contributions (not earnings) can be withdrawn at any time, penalty-free. That makes a Roth a far more forgiving place for money you might need.
- You care about RMDs. Roth IRAs have no required minimum distributions, so the balance can keep compounding and pass to heirs intact.
Deductibility can settle it for you
If you're covered by a workplace retirement plan, the Traditional deduction phases out by income: $81,000–$91,000 single, $129,000–$149,000 joint for 2026. Above that range a Traditional contribution is non-deductible, which removes its only advantage. Check yours with the IRA deduction calculator before deciding.