Roth vs Traditional IRA: How the Tax Treatment Differs
Published November 4, 2026
A traditional IRA and a Roth IRA are both retirement accounts. The main difference is when tax is paid. With a traditional IRA, a contribution may lower your tax now, and withdrawals are generally taxed later. With a Roth IRA, you do not deduct contributions, and qualified withdrawals can be tax-free. IRS: Roth IRAs
One limit for both
Your Roth and traditional contributions share one annual limit. For tax year 2026, the IRA contribution limit is $7,500. If you are age 50 or older, the limit is $8,600, which includes a $1,100 catch-up amount. You also cannot contribute more than your taxable compensation for the year. IRS: 2026 limits notice · IRS: Pub. 590-A
How a traditional IRA is taxed
A traditional IRA contribution may be deductible. If it is, the deduction lowers your taxable income for the year you contribute. The deduction can be reduced or lost. This can happen when you or your spouse has a workplace plan and your income is high. For the deduction rules, read Traditional IRA Contributions: How the Tax Deduction Works.
Withdrawals are generally taxable. Money that was already taxed, such as nondeductible contributions, is not taxed again. Withdrawals before age 59½ may also face a 10% additional tax unless an exception applies. IRS: Pub. 590-B
How a Roth IRA is taxed
- You cannot deduct Roth IRA contributions.
- A qualified distribution is tax-free.
- A distribution is generally qualified in two cases. First, the 5-year period that starts with your first Roth contribution year has passed. Second, a condition applies, such as being age 59½ or older.
Earnings are the part to watch. A Roth withdrawal that is not qualified can include taxable earnings and may face the 10% additional tax. IRS: Pub. 590-B
Required distributions
A traditional IRA generally requires you to start withdrawals, called required minimum distributions (RMDs), at age 73 or 75, depending on your birth year. A Roth IRA owner is not required to take withdrawals while alive. Beneficiaries of Roth IRAs may have RMD rules. IRS: Retirement topics, RMDs
2026 income limits for Roth contributions
Your income can reduce or eliminate your Roth contribution limit. For 2026:
- Single, head of household, or married filing separately without living with your spouse: the reduction starts at $153,000 of modified AGI and you cannot contribute at $168,000 or more.
- Married filing jointly: the reduction starts at $242,000, and you cannot contribute at $252,000 or more.
Other filing statuses have different rules. IRS: Pub. 590-A
Illustration only: A single filer has modified AGI of $160,000. That is inside the 2026 reduction range, so the Roth limit is less than $7,500. A single filer with $100,000 is below the range.
Example: two accounts, two timelines
Illustration only: A 35-year-old contributes $5,000 to a traditional IRA and deducts all of it. If that deduction would save $500 of tax that year, the savings happen now. The withdrawal later is taxable. The same person could contribute $5,000 to a Roth IRA instead. No deduction now, and qualified withdrawals later are tax-free.
Timing
Timing matters. A traditional deduction reduces tax in the year you contribute. A qualified Roth withdrawal does not add taxable income later. The right timing depends on your own numbers. The rules are the same for everyone.
Common mistakes
- Treating the Roth and traditional limits as separate. The limit applies to all of your IRAs combined.
- Assuming a Roth has no income limit. It has one, shown above.
- Assuming a traditional deduction is always allowed. Workplace plan coverage and income can reduce it.
- Taking an early withdrawal without checking the 10% additional tax rules.
Checklist
- Check whether you or your spouse has a workplace retirement plan.
- Check your 2026 modified AGI against the limits above.
- Remember that the $7,500 or $8,600 limit covers all of your IRAs combined.
- Keep records of each contribution and its tax year.
- Plan for when you may need to withdraw, and the 59½ rule.
General information, not advice for your return.
For the deduction side of this comparison, see Traditional IRA Contributions: How the Tax Deduction Works.
Sources: IRS: Roth IRAs (https://www.irs.gov/retirement-plans/roth-iras); IRS: 2026 limits notice IR-2025-111 (https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500); IRS: Pub. 590-A (https://www.irs.gov/publications/p590a); IRS: Pub. 590-B (https://www.irs.gov/publications/p590b); IRS: Retirement topics, RMDs (https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds) This is general information, not advice about your specific return.
