Roth IRA Tax Calculator

Estimate the long-term tax benefits of a Roth IRA. This calculator projects your Roth IRA's growth and compares it to a standard taxable investment account, showing you the potential lifetime tax savings, your projected tax-free balance at retirement, and the age at which the Roth IRA's tax advantages "break even" against the upfront tax cost.

This tool is for anyone deciding between retirement accounts, such as a Roth vs. Traditional IRA, or for those considering a Roth conversion. It helps quantify the powerful benefit of tax-free growth and withdrawals, a key feature that distinguishes the Roth IRA from other retirement savings vehicles like a 401(k).

The results provide a clear Tax Efficiency Score, a year-by-year growth chart comparing your Roth IRA to a taxable account, and key metrics like your projected balance, total tax savings, and potential for tax-free annual income in retirement.

Begin by entering your contribution details. The Annual Contribution is the amount you plan to save each year, while Current Balance is the starting value of your Roth IRA. Enter your Expected Annual Return as a long-term average you anticipate for your investments.

Next, input your timeline in the Age & Timeline section. Your Current Age and planned Retirement Age determine the number of years your money has to grow tax-free. A longer time horizon typically results in greater tax savings due to the power of compounding.

Then, provide your tax assumptions. The Current Tax Bracket is your marginal federal income tax rate today, which determines the upfront "cost" of contributing after-tax money. The Expected Retirement Tax Bracket is your best estimate of your tax rate after you stop working. This comparison is central to understanding the Roth IRA's value.

For more advanced planning, you can model a Roth conversion. Toggle the advanced settings to enter a Planned Conversion Amount from a Traditional IRA or 401(k) and the Conversion Tax Bracket you expect to pay on that amount. This helps you see the long-term impact of paying taxes now to secure tax-free growth later. Use the dedicated Roth conversion calculator for a more detailed analysis.

Annual Contribution

This is the total amount you add to your Roth IRA each year. For 2026, the maximum contribution is $7,000 for individuals under age 50. If you are age 50 or older, you can make an additional "catch-up" contribution of $1,000, for a total of $8,000. These contributions are made with after-tax dollars.

Current Balance

Enter the total amount you currently have saved in your Roth IRA. This is the principal amount that will begin compounding based on your expected return. If you are just starting, you can enter $0.

Expected Annual Return

This is your estimated average annual investment growth rate. It is a long-term assumption, not a guarantee. A common long-term average for a diversified stock portfolio is between 7% and 10%, but you should choose a number that reflects your personal investment strategy and risk tolerance.

Current Age & Retirement Age

These inputs define your investment timeline. The longer the time between your current age and retirement age, the more years your contributions have to compound tax-free. The power of a Roth IRA is most significant over long periods.

Current & Retirement Tax Brackets

The relationship between these two numbers is the core of the Roth IRA decision. You contribute to a Roth IRA with money you've already paid taxes on at your current tax bracket. In exchange, qualified withdrawals in retirement are tax-free. If you expect your retirement tax bracket to be the same or higher than your current one, a Roth IRA is often more advantageous. If you expect it to be much lower, a Traditional IRA, which offers an upfront tax deduction, might be better. Learn more about the Roth IRA vs. Traditional IRA trade-off.

Planned Conversion Amount

This is an optional input for those considering a Roth conversion. A conversion involves moving funds from a pre-tax retirement account (like a Traditional IRA or 401(k)) into a post-tax Roth IRA. You must pay ordinary income tax on the amount you convert. Use this field to see how a lump-sum conversion impacts your long-term tax-free growth. For a more detailed look at this strategy, see the Roth conversion ladder guide.

The calculator runs a year-by-year projection to model the growth of your Roth IRA and compares it against a hypothetical taxable brokerage account, assuming the same contributions and pre-tax returns.

For the Roth IRA, the calculator starts with your current balance, adds your annual contribution, and then applies the full expected rate of return. This process repeats each year until retirement. Because all growth and qualified withdrawals are tax-free, there are no deductions for taxes along the way.

For the taxable account comparison, the calculator assumes the same contributions are made. However, it applies a "tax drag" to the investment returns each year, simulating the effect of annual taxes on dividends and capital gains. The calculator uses a simplified 15% capital gains tax rate on growth for this purpose. When money is withdrawn in retirement, it assumes taxes are paid on the investment gains at your specified retirement tax bracket.

Lifetime Tax Savings is calculated by comparing the net, after-tax value you could withdraw from the Roth IRA versus the taxable account in retirement. The break-even age is the point where the cumulative tax benefits of the Roth IRA surpass the initial cost of making after-tax contributions. The Tax Efficiency Score is a summary metric based on your time horizon, the amount of projected tax-free growth, and the difference between your current and future tax brackets.

The calculator performs a year-by-year loop rather than using a single formula. Below are the core calculations for each year in the projection.

Annual Roth IRA Growth

For each year until retirement, the Roth IRA balance is calculated as follows:

ending_roth_balance = (starting_roth_balance + annual_contribution) * (1 + expected_return_rate)

Annual Taxable Account Growth

For the comparison taxable account, the return is reduced by an assumed capital gains tax rate to simulate tax drag.

capital_gains_tax_rate = 0.15 (15%)

taxable_return_rate = expected_return_rate * (1 - capital_gains_tax_rate)

ending_taxable_balance = (starting_taxable_balance + annual_contribution) * (1 + taxable_return_rate)

Conversion Tax Cost

If a conversion amount is entered, the immediate tax cost is calculated. This is an upfront cost paid from outside the retirement account.

conversion_tax_cost = conversion_amount * (conversion_tax_bracket / 100)

Lifetime Tax Savings

This is a simplified representation of the final comparison. It accounts for the tax saved on growth and the difference in final balances.

roth_growth = final_roth_balance - total_contributions

tax_saved_on_growth = roth_growth * (retirement_tax_bracket / 100)

balance_advantage = final_roth_balance - final_taxable_balance

lifetime_tax_savings = tax_saved_on_growth + balance_advantage

The choice between a Roth and a Traditional IRA depends almost entirely on your current income and your expected income (and tax rate) in retirement.

Choose a Roth IRA if:

• You expect to be in a higher tax bracket in retirement. Paying taxes now at a lower rate is better than paying them later at a higher rate.
• You are early in your career and your income is relatively low.
• You want tax diversification in retirement and already have significant pre-tax savings (like a 401(k)).
• You want to avoid Required Minimum Distributions (RMDs). Roth IRAs have no RMDs for the original owner.
• You want to leave tax-free money to your heirs.

Choose a Traditional IRA if:

• You expect to be in a lower tax bracket in retirement. The upfront tax deduction is more valuable if your current tax rate is high.
• You are in your peak earning years and need to lower your taxable income today.
• You are not eligible to contribute to a Roth IRA due to income limits and do not want to use the backdoor method.

For a side-by-side comparison, read the in-depth guide on Roth IRA vs. Traditional IRA. You can also use the IRA withdrawal calculator to model how taxes will affect your income from a Traditional IRA.

To contribute to a Roth IRA, you must have earned income, and your Modified Adjusted Gross Income (MAGI) must be below certain thresholds.

Contribution Limits for 2026:

• Under Age 50: $7,000
• Age 50 and Over: $8,000 ($7,000 regular contribution + $1,000 catch-up)

Income Limits (MAGI) for 2026 (Projected): These are the income phase-out ranges. If your MAGI is within the range, your contribution limit is reduced. If it's above the range, you cannot contribute directly.

• Single, Head of Household, or Married Filing Separately (and didn't live with spouse): $150,000 – $165,000
• Married Filing Jointly or Qualifying Widow(er): $236,000 – $246,000
• Married Filing Separately (and lived with spouse at any time): $0 – $10,000

If your income exceeds these limits, you may still be able to contribute through a strategy called the Backdoor Roth IRA.

A Backdoor Roth IRA is not an official account type but a strategy used by high-income earners to fund a Roth IRA. Since they are over the income limit to contribute directly, they follow a two-step process:

1. Contribute to a Traditional IRA: They make a non-deductible contribution to a Traditional IRA. There are no income limits for this type of contribution.
2. Convert to a Roth IRA: Shortly after, they convert the Traditional IRA funds into a Roth IRA.

Because the initial contribution was non-deductible (made with after-tax money), the conversion itself is typically a tax-free event, unless the funds earned interest before being converted. However, this strategy can be complicated by the pro-rata rule if you have other existing pre-tax IRA funds. For a detailed guide, use the Backdoor Roth calculator.

• Tax Efficiency Score: This score, from 0 to 100, summarizes how beneficial a Roth IRA is for your specific situation. A high score (70+) suggests the Roth is highly advantageous, usually due to a long time horizon or a favorable tax bracket situation.
• Projected Balance: This is the estimated value of your Roth IRA at your planned retirement age. This entire amount can be withdrawn tax-free in retirement, provided you meet the qualifications.
• Lifetime Tax Savings: This is the core output, representing the estimated total dollar amount you save in taxes over your lifetime by using a Roth IRA instead of a comparable taxable account.
• Tax-Free Withdrawals: This shows how much you could potentially withdraw from your Roth IRA each year in retirement, completely tax-free. The calculation assumes a 25-year retirement period.
• Break-Even Age: This is the estimated age when the tax savings from your Roth IRA's tax-free growth and withdrawals surpass the upfront tax cost of making after-tax contributions. A lower break-even age is generally better.
• Growth Chart: This visual tool shows the power of tax-free compounding. The green line (Roth IRA) typically separates from and grows faster than the orange line (taxable account) over time because it isn't slowed down by annual tax drag.

If you want to maximize the tax-saving potential of your Roth IRA, consider these strategies:

1. Contribute the Maximum Amount: Consistently contributing the maximum allowed each year is the most direct way to build a larger tax-free nest egg.
2. Start Early: The longer your money has to grow, the more you benefit from tax-free compounding. Time is the most powerful factor in a Roth IRA's success.
3. Use a Backdoor Roth IRA if Necessary: If your income is too high to contribute directly, don't give up. Learn about and use the Backdoor Roth IRA strategy to continue funding your account.
4. Consider Roth Conversions: If you anticipate a low-income year (e.g., due to a job change or sabbatical), it could be an ideal time to execute a Roth conversion at a lower tax rate.
5. Prioritize Roth for High-Growth Assets: Since all growth is tax-free, it can be strategic to hold your investments with the highest growth potential within your Roth IRA.

1. Ignoring the Income Limits: Contributing to a Roth IRA when your income is too high can result in penalties. Always check your MAGI against the current year's limits.
2. Forgetting the 5-Year Rule: To withdraw earnings tax-free, your first Roth IRA contribution must have been made at least five years prior. There are separate 5-year rules for earnings and conversions.
3. Triggering the Pro-Rata Rule: When performing a Backdoor Roth IRA, having existing pre-tax funds in any Traditional, SEP, or SIMPLE IRA can make a portion of your conversion taxable.
4. Withdrawing Earnings Early: Taking out investment earnings before age 59.5 can result in a 10% penalty and income tax, with some exceptions. Contributions can always be withdrawn tax- and penalty-free.
5. Choosing a Roth When a Traditional is Better: If you're in a very high tax bracket now and expect to be in a much lower one in retirement, the upfront tax deduction from a Traditional IRA may be more valuable.