What a traditional IRA is
A traditional IRA is a personal retirement account, opened by you rather than an employer, where a contribution you're eligible to deduct lowers your taxable income for the year you make it, the money then grows without being taxed year to year, and the whole withdrawal, contributions and every bit of growth, is taxed as ordinary income once it comes out in retirement. It's the mirror image of a Roth account: tax relief now instead of tax-free withdrawals later, and which one suits you better depends on whether your income tax rate turns out higher today or after you stop working.
The growth formula behind the balance
Once money is inside the account it grows at the assumed rate you enter, compounded monthly, with your annual contribution added in equal monthly instalments alongside it:
A running total of everything paid in, your starting balance plus every contribution since, is kept alongside the balance the whole way through, so growth at any point is simply the balance minus that running total, never a separate assumption of its own. The donut chart and the year-by-year table below both read off this same split.
The deduction lens: what the contribution actually costs you
A $7,000 contribution doesn't cost $7,000 out of pocket if it's deductible; it costs $7,000 minus whatever tax you'd otherwise have paid on that slice of income. Type your marginal tax rate, the rate on your last dollar of income rather than your average rate across all of it, and the calculator turns your contribution into two figures: the tax it saves you this year, and the net amount it actually costs you after that saving. At a 22% marginal rate, a $7,000 contribution saves $1,540 in tax and costs $5,460 out of pocket; the government is effectively lending you the rest of the contribution for as long as the money stays in the account.
That saving repeats every year you contribute at the same rate and amount, so the calculator also totals it up across every year between now and retirement. Over 35 years of $7,000 contributions at 22%, that's $53,900 of tax relief claimed along the way, money that would otherwise have gone straight to income tax instead of into your own account.
Deferred, not cancelled: the tax bill still comes
None of that saving is free. A deductible traditional IRA defers tax, it doesn't cancel it: every dollar that eventually comes out, the contributions you deducted and every bit of growth stacked on top, is taxed as ordinary income in the year you withdraw it. The calculator estimates this too, applying your entered tax rate to the whole projected balance as a rough illustration of the bill waiting on the other side. Whether the deduction still comes out ahead depends on whether your tax rate in retirement ends up lower, the same, or higher than it is today; nobody can promise you which of those it will be, and this isn't a recommendation either way.
Deduction phase-outs when you're covered by a workplace plan
If neither you nor a spouse is covered by a workplace retirement plan, a traditional IRA contribution is fully deductible at any income. Covered by one changes that: the deduction phases out over a band of household income (modified adjusted gross income, MAGI), full below the band, gone above it, and partial in between. For 2026, per IRS Notice 2025-67, the band for a single filer covered by a workplace plan runs from $81,000 to $91,000 of MAGI; for a married couple filing jointly where the contributing spouse is covered, it runs from $129,000 to $149,000. This calculator shows the band you fall into as a warning rather than attempting the exact reduced deduction, since the real IRS formula rounds to the nearest $10 and carries its own floor; treat it as a heads-up that your actual deduction may be smaller than the figures above assume, not as the precise dollar amount.
A spouse's workplace coverage can also narrow your own deduction on a joint return even when you personally aren't covered, at a separate, much higher band; that specific case isn't modelled here; check IRS Publication 590-A or a tax professional if it might apply to you.
2026 contribution limits and catch-up
The IRS caps how much can go into a traditional and Roth IRA combined each year. For 2026, per IRS Notice 2025-67, the limit is $7,500. Savers aged 50 and over get a further $1,100 catch-up, the first year that catch-up figure has been adjusted for inflation rather than held flat, for $8,600 in total. This calculator checks your annual contribution against whichever figure applies to the age you entered and flags it as a non-blocking heads-up; real IRA custodians reject or automatically correct excess contributions rather than letting them sit in the account.
Early withdrawals and required distributions
Take money out of a traditional IRA before age 59½ and it's generally taxed as income plus hit with an additional 10% penalty, though the IRS carves out a genuinely long list of exceptions, including a first home (up to a $10,000 lifetime limit), qualifying higher education costs, unreimbursed medical expenses above 7.5% of your income, and a run of birth, adoption, disability and hardship-related cases added by SECURE 2.0. Once you reach a required minimum distribution age, currently 73 and rising to 75 for anyone born in 1960 or later under SECURE 2.0, the account forces minimum annual withdrawals whether you need the income or not; this calculator projects growth up to your chosen retirement age only and doesn't model either the penalty or RMDs beyond that point.
Choosing your inputs and reading the results
Current balance is your latest statement; contribution should match what you actually plan to put in each year, and the calculator holds it flat across every year projected rather than guessing at future rises. Marginal tax rate is the rate on your next dollar of income, not the average rate on all of it once your standard deduction and lower brackets are counted; a paycheque calculator or last year's tax software will usually show you which bracket you landed in. Household income only matters for the phase-out check, and only once you've marked yourself as covered by a workplace plan.
The line chart's two bands read bottom to top: everything paid in, then growth stacked on top of it. The gap between the two lines at any year is growth alone, nothing else. The year-by-year table underneath carries the same two running totals a row at a time, ending on the year you chose to retire. This tool is US-specific throughout: figures are US dollars, and every rule described here is a US federal tax rule with no equivalent applied for other countries.
Questions people ask
Is my traditional IRA contribution always tax-deductible?
Only if neither you nor a spouse is covered by a workplace retirement plan, or your household income sits below the relevant phase-out band if one of you is. This calculator flags when you're in or above that band rather than computing the exact reduced deduction, since the real formula has its own rounding rules.
What's the difference between my marginal rate and my average tax rate?
Your marginal rate is what you pay on your next dollar of income, the bracket you're currently sitting in; your average rate is your total tax divided by your total income, which is always lower once your standard deduction and every lower bracket underneath are counted. The deduction from an IRA contribution is worth your marginal rate, since it comes off the top of your income.
Does the deduction mean the money is never taxed?
No. A deductible traditional IRA defers the tax rather than cancelling it: contributions and growth alike are taxed as ordinary income when you eventually withdraw them. Whether that trade still works out in your favour depends on your tax rate in retirement compared with today, which nobody can know in advance.
What if I go over the 2026 contribution limit?
Real IRA custodians reject or correct excess contributions rather than letting them compound in the account; an excess left uncorrected is also subject to its own separate 6% excise tax each year it remains. This calculator still flags an over-limit contribution as a heads-up, since the projection past that point is illustrative rather than something a real account would actually hold.
Can I take money out before retirement?
Yes, but withdrawals before age 59½ are generally taxed as income plus an extra 10% penalty, unless an IRS exception applies, such as a first home, qualifying education costs, or large unreimbursed medical bills. This calculator doesn't model the penalty; it projects growth to your chosen retirement age only.
Do I have to start withdrawing at a certain age?
Yes. Required minimum distributions currently begin at 73, rising to 75 for anyone born in 1960 or later under SECURE 2.0, forcing minimum annual withdrawals whether or not you need the income. This calculator's projection stops at your chosen retirement age and doesn't model RMDs.
Does this work outside the United States?
No. Every rule here, the contribution limit, the catch-up, the phase-out bands and the withdrawal rules, is specific to US federal tax law and IRAs held in the United States. Figures are shown in US dollars only.
This calculator projects growth at a constant assumed rate for illustration and is not financial or tax advice. It does not model income changes, investment fees, spousal phase-out bands, early withdrawal penalties or required minimum distributions beyond your chosen retirement age. Contribution limits and phase-out ranges shown are for 2026 per IRS Notice 2025-67 and change most years; check current IRS figures, your account provider and a qualified tax adviser before making retirement decisions.