Traditional vs Roth calculator
Which account leaves you with more after tax, comparing them honestly by investing the traditional tax deduction rather than pretending it disappears.
Covers 2026 plan year · rates as at 2026-01-01
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% in retirement the two land within a few percent of each other — the rate difference, not the account, decides it.
Side by side
How this is calculated
Identical rates make them mathematically equal
Tax before or after compounding produces the same result when the rate does not change: $7,500 at 24% either way ends in the same place. Everything hinges on whether your marginal rate in retirement is higher or lower than today’s.
Roth wins when the retirement rate exceeds the current rateThe fair comparison invests the deduction
A $7,500 traditional contribution at a 24% rate frees $1,800 of tax. Comparisons that ignore it flatter the Roth. This tool invests that $1,800 in a taxable side account and taxes its withdrawal, which is the only like-for-like version.
traditional total = balance after tax + side account after taxRoth capacity is effectively larger
The $7,500 limit is the same number for both, but $7,500 of after-tax Roth money is worth more than $7,500 of pre-tax traditional money. For anyone contributing at the cap, that alone tilts the answer towards Roth.
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% |
| Years | 25 |
| Roth | Tax free on withdrawal |
|---|---|
| Traditional | Taxed at 22% |
| Gap | A few percent |
Change the retirement rate to 32% and Roth wins decisively; drop it to 12% and traditional does. The result is a bet on future rates, not on account mechanics.
What this assumes
- A constant return and constant tax rates.
- The traditional tax saving is invested, not spent.
- Withdrawals after age 59½ with no penalty.
- No state income tax difference between now and retirement.
Where this commonly goes wrong
- Most people spend the traditional tax refund rather than investing it, which quietly hands the win to Roth in practice regardless of the arithmetic.
- Traditional balances face required minimum distributions from age 73, forcing taxable income you may not want; Roth IRAs have none for the original owner.
- Retirement income is rarely taxed at one rate — the standard deduction and lower brackets fill first, so the effective rate on a traditional withdrawal is usually below the marginal rate you fear.
Questions
Should I choose traditional or Roth?
Roth if you expect a higher marginal rate in retirement than today, traditional if lower. At 24% now against 22% later they land within a few percent, so the decision is close enough that flexibility and the tax-diversification argument dominate.
Is a Roth better for young workers?
Usually, because early-career earners sit in lower brackets than they will later. Paying 12% or 22% now to withdraw tax free at a rate that may be higher is the clearest case for Roth in the whole comparison.
Why do most comparisons favour Roth?
Because they ignore the tax deduction the traditional contribution generates. On $7,500 at 24% that is $1,800 a year — invested over 25 years at 7%, it is a substantial balance that belongs on the traditional side of the ledger.
What are required minimum distributions?
Mandatory withdrawals from traditional accounts starting at age 73, calculated from your balance and life expectancy. They create taxable income whether you need the money or not. Roth IRAs have none for the original owner.
Can I contribute to both?
Yes, and many people should. Splitting contributions hedges the rate bet and gives you both taxable and tax-free withdrawals to draw from, which is what allows careful bracket management in retirement.
What if I contribute the maximum?
Roth gains an edge. The $7,500 cap is nominal, so $7,500 of after-tax money shelters more real value than $7,500 of pre-tax money. Anyone maxing out gets more effective tax shelter from the Roth.
Related tools
Sources
Estimate only, based on published IRS figures for 2026 plan year. Not tax or legal advice. Confirm your position with the IRS, a CPA, or an enrolled agent.
T1