Roth IRA vs. Traditional IRA: 2026 Limits, Taxes and How to Choose

The main difference between a Roth IRA and a traditional IRA is when you pay income tax. With a traditional IRA, you may get a tax deduction now, and withdrawals in retirement are taxed. With a Roth IRA, you get no deduction now, but qualified withdrawals later are tax-free ^[1][2]. For 2026, you can put up to $7,500 in total across all your IRAs, or $8,600 if you are 50 or older, and never more than your taxable pay for the year ^[3]. Roth contributions phase out at higher incomes, and traditional IRA deductions can phase out if you or your spouse have a retirement plan at work ^[4]. This guide walks through each rule with 2026 numbers and shows how to choose.

How each account is taxed

Traditional IRA. If you qualify, you deduct your contributions on your tax return. The money grows without yearly tax. When you take money out, the deductible contributions and all the earnings count as taxable income ^[5][1].

Roth IRA. You put in money you have already paid tax on, so there is nothing to deduct ^[2]. The money grows without yearly tax, and a qualified distribution comes out with no tax at all ^[6]. The account must be labeled as a Roth IRA when you open it ^[6].

2026 contribution limits

One limit covers all your IRAs together. For 2026, your total traditional and Roth contributions cannot be more than the smaller of $7,500 ($8,600 if you are 50 or older) or your taxable compensation for the year ^[3]. The extra amount for people 50 and over, called a catch-up contribution, is $1,100 for 2026; a 2022 law (SECURE 2.0) made it rise with inflation ^[4].

A few more rules:

• No age limit. Since 2020, you can make regular contributions to either type of IRA at any age, as long as you have taxable compensation ^[3].
• Spousal IRA. If you file jointly and only one spouse works, each spouse can still contribute, as long as the couple's combined contributions do not exceed the taxable compensation on the joint return ^[3].
• Deadline. You can contribute for a year until your tax filing deadline, not counting extensions ^[1]. That means 2026 contributions can generally be made until mid-April 2027.
• Too much in? Extra contributions face a 6% tax for every year they stay in the account. You can avoid it by taking out the excess and its earnings by your return's due date, including extensions ^[3].

2026 Roth IRA income limits

Your ability to put money in a Roth depends on your modified adjusted gross income (MAGI). MAGI is your adjusted gross income with a few items added back; the IRS worksheet in Publication 590-A shows the exact steps ^[8]. For 2026, the phase-out ranges are ^[8]:

Inside the range, you get a reduced amount. The IRS worksheet works like this ^[8]:

1. Subtract the start of your range from your MAGI.
2. Divide by the width of the range ($15,000 for single filers, $10,000 for joint filers).
3. Multiply by your normal limit and subtract the result from that limit.
4. Round up to the next $10. If the answer is under $200, you can still put in $200.

Example. Priya is 35, single, and expects 2026 MAGI of $159,000. She is $6,000 into the $15,000 range, which is 0.4 of the way through. 0.4 × $7,500 = $3,000. Her Roth limit is $7,500 − $3,000 = $4,500 ^[8].

When a traditional IRA contribution is deductible

Anyone with taxable compensation can contribute to a traditional IRA. The question is whether you can deduct it.

If neither you nor your spouse is covered by a retirement plan at work, your deduction is allowed in full, at any income ^[5]. Your Form W-2 shows coverage: the "Retirement plan" box should be checked if you were covered ^[8].

If you are covered, or your spouse is, the deduction shrinks and then disappears across these 2026 MAGI ranges ^[4]:

Example. Luis is single, has a 401(k) at work, and expects 2026 MAGI of $86,000. That is halfway through the $81,000–$91,000 range, so using the same proportional method as the IRS worksheet, he could deduct roughly half of a $7,500 contribution, about $3,750 ^[4][8]. He can still contribute the other half; it just goes in as a nondeductible contribution ^[8].

Nondeductible contributions. When your deduction is reduced or eliminated, you can still contribute up to the general limit. The part you cannot deduct is a nondeductible contribution ^[8]. Keep track of it, because that money has already been taxed. Many people in this spot compare a nondeductible traditional contribution with a Roth contribution, which, if they are eligible, gives tax-free growth instead of tax-deferred growth.

Withdrawals, the 10% tax and the 5-year rules

Traditional IRA withdrawals

Withdrawals of deductible contributions and earnings are taxable. If you are under 59½, you may also owe an additional 10% tax unless an exception applies ^[1]. You generally must begin required minimum distributions (RMDs) at age 73 ^[7].

Roth IRA withdrawals

Roth money comes out in a fixed order ^[6]:

1. Your regular contributions
2. Money from conversions and rollovers, oldest first
3. Earnings

Because contributions come out first, and those were already taxed, you can generally withdraw what you put in without tax. Earnings are where the rules bite.

The 5-year rule for qualified distributions. A Roth distribution is fully tax-free only if both of these are true ^[6]:

• At least five years have passed since the start of the first tax year for which you contributed to any Roth IRA, and
• You are 59½ or older, disabled, using up to $10,000 (lifetime) for a first home, or the money goes to your beneficiary after your death.

The clock starts on January 1 of the year your first contribution counts for. A 2025 contribution made in April 2026 still starts the clock on January 1, 2025 ^[6].

A separate 5-year rule for conversions. If you convert traditional IRA money to a Roth, each conversion has its own five-year period. Taking that converted amount out within five years can trigger the 10% additional tax on the portion that was taxable when you converted, unless an exception applies ^[6].

Example. Sam opens his first Roth IRA with a contribution for 2026 at age 40. He has added $20,000 by 2030, and the account is worth $26,000. If he withdraws $20,000 in 2030, it is a return of contributions and is not taxed. If he withdraws the full $26,000, the $6,000 of earnings may be taxed and may face the 10% additional tax, because he is under 59½ and the five-year period has not ended ^[6].

Exceptions to the 10% additional tax

Several situations avoid the 10% additional tax on early IRA distributions, though regular income tax may still apply. They include ^[9]:

• Total and permanent disability
• Up to $10,000 for a qualified first-time home purchase
• Qualified higher education expenses
• Up to $5,000 per child for birth or adoption costs
• One emergency personal expense distribution per year, up to $1,000
• Unreimbursed medical expenses above 7.5% of AGI

How to choose, with examples

The core question is simple: is your tax rate likely to be higher now or in retirement?

• Lean Roth if you are early in your career, in a low tax bracket now, and expect to earn more later. You pay tax at today's lower rate and take the growth out tax-free.
• Lean traditional if you are in a high bracket now and expect a lower one in retirement, and you qualify for the deduction.
• Split it if you are unsure. The single $7,500 limit can be divided between the two account types in any proportion ^[3].

Example A: The new graduate. Ana is 24, single, and earns $48,000. She has no plan at work. A traditional IRA deduction would save her tax at her current rate, which is low. A Roth lets her pay that low tax now and keep all future growth tax-free. Her income is far below the 2026 Roth phase-out ^[8], and contributions can come back out without tax if she faces an emergency ^[6]. Roth fits her.

Example B: The high earner near retirement. Mark and Jen are 58 and file jointly with MAGI of $260,000. That is above the $252,000 point where Roth contributions stop for joint filers ^[8]. Mark has a 401(k) at work, and their MAGI is above both the $149,000 limit for deducting his traditional IRA and the $252,000 limit for deducting Jen's ^[4]. A direct Roth is out. They could still make nondeductible traditional contributions ^[8], or put more into their workplace plans. This is a case for a tax professional.

Example C: The middle earner without a work plan. Tom is 45, earns $95,000, and his employer offers no retirement plan. His spouse does not work. Because neither is covered at work, his traditional IRA contributions are fully deductible ^[5]. He and his spouse can each contribute $7,500 ^[3]. If he expects his tax rate to fall when he stops working, traditional fits; if not, Roth or a split works.

Common mistakes

• Going over the combined limit by putting $7,500 in a Roth and more in a traditional IRA in the same year. The limit is shared ^[3].
• Using salary instead of MAGI to check the Roth limit. The worksheet adds back certain items ^[8].
• Assuming all Roth withdrawals are tax-free. Earnings need the five-year period and a qualifying reason ^[6].
• Ignoring the "Retirement plan" box on your W-2, which decides whether the deduction limits apply ^[8].
• Forgetting the 6% tax on excess contributions left in the account ^[3].

When to get professional help

Get advice before converting a large traditional balance to a Roth, when your income is near a phase-out edge, when you have nondeductible contributions already in a traditional IRA, or when you plan to withdraw before 59½. The rules on basis, conversions and rollovers are detailed in IRS Publications 590-A and 590-B ^[8][6].

Your next step: pull your 2025 tax return, find your adjusted gross income, and estimate your 2026 MAGI. Compare it with the Roth and deduction tables above, then pick the account, or the split, before your next contribution.