Roth vs Traditional IRA: The 2026 Numbers Side by Side
A traditional IRA gives you a tax deduction now and taxes the money when you take it out. A Roth IRA gives you no deduction now, but lets you take the money out tax-free later. In 2026, both share one yearly limit: $7,500, or $8,600 if you're 50 or older.
That's the whole difference. Everything else comes down to one question: is your tax rate higher this year, or will it be higher when you retire?
If your income changes from year to year, that question has a different answer in different years. That's actually an advantage employees don't have. Here are the 2026 figures and how to use them.
An IRA is personal, whatever the business is doing. Example data.
The short version
The 2026 limit is $7,500 across both types combined, or $8,600 from age 50.
Traditional: deduct now, pay tax when you withdraw.
Roth: no deduction now, no tax on qualified withdrawals.
In a high-income year, the traditional deduction is worth more. In a low-income year, the Roth costs you less.
You can have both, and choose each year.
Side by side
Feature | Traditional IRA | Roth IRA |
|---|---|---|
2026 limit | $7,500, shared with Roth | $7,500, shared with traditional |
From age 50 | $8,600 | $8,600 |
Tax when you put money in | Deductible, within income limits if you have a workplace plan | No deduction |
Tax on growth | None while it stays in | None |
Tax when you take money out | Taxed as income | None on qualified withdrawals |
Income limit to contribute | None | Yes |
Required withdrawals | From age 73 | None for the original owner |
Taking out your own contributions early | Taxed, and usually penalized | Allowed without tax or penalty |
The 2026 income limits
A Roth IRA limits who can contribute based on income. The amount you're allowed to put in shrinks across a range and reaches zero at the top.
Filing status | Full contribution below | No contribution above |
|---|---|---|
Single or head of household | $153,000 | $168,000 |
Married filing jointly | $242,000 | $252,000 |
A traditional IRA has no income limit for contributing. The limit is on the deduction, and it only applies if you're covered by a retirement plan at work. In 2026 the deduction phases out between $81,000 and $91,000 for a single filer who's covered, and between $129,000 and $149,000 for a couple filing jointly when the contributing spouse is covered.
What the deduction is worth to you
The value of a traditional contribution depends on the tax rate you'd otherwise pay on that income.
Your top rate this year | Tax saved now on $7,500, traditional | Tax saved now, Roth |
|---|---|---|
12% | $900 | $0 |
22% | $1,650 | $0 |
24% | $1,800 | $0 |
The Roth column is all zeros, and that's the trade. You give up the tax saving today so that the whole balance, growth included, comes out tax-free later.
A simple rule of thumb
Your rate this year, compared with retirement | Usually favors |
|---|---|
Higher now | Traditional |
Lower now | Roth |
You can't tell | Some of each |
Nobody knows their future tax rate, so nobody gets this exactly right. Splitting between the two is a perfectly reasonable choice, not a failure to decide.
Why uneven income works in your favor here
An employee's tax rate is roughly the same every year. Yours probably isn't. A year when a big client left, you took three months off, or you invested heavily in the business is a year when your taxable income is low.
Year | Taxable income | Top rate, single | The better choice that year |
|---|---|---|---|
A strong year | $72,000 | 22% | Traditional: the deduction saves $1,650 |
A slow year | $34,000 | 12% | Roth: skipping the deduction costs only $900 |
In the slow year, choosing the Roth costs her a $900 deduction. In return, that $7,500 and everything it grows into is never taxed again. A slow year is disappointing for the business, but it's a good year for a Roth.
And you don't have to decide in January. You can generally make IRA contributions for a year up until the tax filing deadline the following April, once you know how the year turned out.
Two accounts, two lines, taxed differently later. Example data.
If you also have a SEP IRA or solo 401(k)
The IRA limit is separate from the limits on plans your business funds. You can contribute to a SEP IRA through the business and to a Roth or traditional IRA as an individual in the same year, as long as you meet the income rules above. Our list of 2026 retirement limits for the self-employed has every figure.
Keep them as two lines, not one
In the free Net Worth Tracker, keep your traditional and Roth balances as separate lines. They look the same today, but they won't be worth the same later.
Line | Balance | After tax, at an assumed 15% in retirement |
|---|---|---|
Traditional accounts | $120,000 | $102,000 |
Roth accounts | $40,000 | $40,000 |
Total | $160,000 | $142,000 |
The 15% is an assumption to show the idea, not a prediction. The point is that $160,000 split across the two isn't $160,000 you can spend. Seeing them separately is the first step to planning around that.
Four things to do before April
Estimate this year's taxable income once the year closes.
Find your top rate in the 2026 brackets.
Compare it with a typical year. Lower than usual leans Roth. Higher than usual leans traditional.
Ask your preparer before you contribute, especially if you're near the income limits above.
See both lines, free
La Soglia, the free membership of the Money Mastery System, includes the Net Worth Tracker: every account, your home, your business and your debts in one place, with no bank connection and no card. You'll find the 2026 brackets in our post on 2026 tax numbers for the self-employed.
Bring it to the Collective
Which did you choose, and why? Compare notes in the Money Mastery Collective. The discussion feed is open on the free membership.
Questions we hear
What is the difference between a Roth and a traditional IRA?
A traditional IRA is deducted now and taxed when you withdraw. A Roth IRA isn't deducted now, and qualified withdrawals are tax-free.
What is the IRA contribution limit for 2026?
$7,500 across traditional and Roth combined, or $8,600 if you're 50 or older.
What is the Roth IRA income limit for 2026?
Contributions phase out from $153,000 to $168,000 for single filers, and from $242,000 to $252,000 for couples filing jointly.
Can I have both a Roth and a traditional IRA?
Yes. The yearly limit applies to the two combined, and you can split it however you like.
References
The 2026 limits and income ranges are from the IRS news release 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 (IR-2025-111). The 2026 tax rates are from IR-2025-103. How each account is taxed, required withdrawals and early withdrawals are covered in IRS Publication 590-A and Publication 590-B. The savings tables are our own worked examples.
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A note on what this is
This article is educational. The Money Mastery System is an educational tool, not financial software, and nothing here is legal, tax, investment or financial advice. Which account suits you depends on your income, age, other plans and future tax rates, none of which a general article can know. For guidance on your own circumstances, please speak with a qualified professional who knows them.
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