Traditional vs Roth calculator
Which retirement account leaves more after tax — deduct now and pay later, or pay now and withdraw tax free.
Roth ends ahead by
Estimate$15,559
24% now against 22% in retirement
- Roth after tax
- $474,368
- Traditional after tax
- $458,809
- Value of the tax saving invested
- $113,848
| Annual contribution | $7,500.00 |
|---|---|
| Traditional balance before tax | $474,368 |
| Tax at 22% on withdrawal | -$104,361 |
| Roth balance, tax free | $474,368 |
| Roth ahead by | $15,559 |
- If your rate now and in retirement are identical, the two are mathematically equal — everything turns on the rate difference.
- Assumes the traditional tax saving is actually invested rather than spent, which is where the real-world advantage usually leaks.
At 24% now against 22% later the two are within a few percent of each other. The rate difference decides the answer, not the account type.
Side by side
How this is calculated
Same rate, same result
Taxing $7,500 before or after compounding gives an identical outcome when the rate does not move. Only a difference between your rate now and your rate in retirement creates a winner.
after-tax value = contribution × growth × (1 − tax rate)Count the deduction you get today
A $7,500 deductible contribution at a 24% rate frees $1,800 now. A comparison that ignores that money makes the tax-free account look better than it is, so it is invested alongside here.
A fixed cap favours after-tax accounts
When both accounts share the same $7,500 ceiling, after-tax money packs more real value into the limit. Anyone contributing the maximum gets more effective shelter from the after-tax account.
Worked example: $7,500 a year for 25 years at 7%, 24% now and 22% later
| Contribution | $7,500 a year |
|---|---|
| Rate now | 24% |
| Rate later | 22% |
| Tax-free account | Nothing due on withdrawal |
|---|---|
| Deductible account | Taxed at 22% |
| Gap | A few percent |
Account names and rules differ by country. Pick a country above for the contribution limits and withdrawal rules that apply to you.
What this assumes
- A constant return and constant tax rates.
- The tax saving from the deductible account is invested.
- Withdrawals after the qualifying age.
- No regional tax differences over time.
Where this commonly goes wrong
- The tax saving from a deductible contribution is often spent rather than invested, which changes the real-world answer.
- Deductible balances frequently carry mandatory withdrawals from a set age, creating taxable income you did not choose.
- Retirement income is taxed progressively, so the effective rate on a withdrawal is usually lower than the marginal rate assumed.
Questions
Which account type is better?
The tax-free one if your rate in retirement will be higher than today, the deductible one if lower. At 24% now against 22% later the two are within a few percent, which makes flexibility the deciding factor.
Does it matter how old I am?
Yes. Early-career earners usually sit in lower brackets than they will later, which favours paying tax now and withdrawing tax free. The case weakens as your current rate rises.
Why do published comparisons disagree?
Most ignore the tax saving the deductible contribution creates. On $7,500 at 24% that is $1,800 a year, and over 25 years at 7% it compounds into a balance that materially changes the answer.
Related tools
Sources
Estimate only, based on published IRS figures for the current period. Not tax or legal advice. Confirm your position with the IRS, a CPA, or an enrolled agent.
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