IRA Calculator

Publication 590-A Worksheet 1-2 starts from the top of your range. For a single filer aged 40 who is covered at work, with a modified AGI of $85,000:

1. Top of the range minus modified AGI: $91,000 minus $85,000 is $6,000.
2. Multiply by the limit divided by the width of the range: $7,500 divided by $10,000 is 75.0%, giving $4,500.
3. Round up to the next $10 if it is not a multiple of $10, and raise anything under $200 to $200: $4,500 deductible.
4. The rest of the contribution, $3,000, can stay in the IRA as a nondeductible contribution.

The 2025 worksheet prints the percentages for 2025 (35% or 40% from 50 on a joint return when you are covered, and 70% or 80% otherwise). The 2026 worksheet is not out yet, so the calculator divides the 2026 limit by the width of the 2026 range in the same way: 37.5% or 43.0% on a joint return when you are covered, and 75.0% or 86.0% otherwise. That is the proportional cut set in 26 U.S.C. 219(g)(2). If both spouses contribute, each works out their own deduction.

A traditional IRA gives you a deduction now and taxes the withdrawals; a Roth IRA gives no deduction but qualified withdrawals are tax-free. To compare them fairly, the calculator spends the same take-home pay on each every year: the traditional IRA gets your contribution, and the Roth IRA gets the same amount minus the tax the deduction would have saved you.

That makes the answer pure arithmetic on the two tax rates you enter. Putting $7,500 a year into a fully deductible traditional IRA for 30 years at 6%:

• Rate falls from 22% to 12%: the traditional IRA ends up $62,851 ahead ($553,091 against $490,240 after tax).
• Rate rises from 12% to 24%: the Roth IRA ends up $75,422 ahead ($553,091 against $477,670).
• Nothing deductible, 22% both times: the Roth IRA is $88,773 ahead, because the traditional IRA's growth is still taxed.

It leaves out state tax changes, the 10% additional tax, required minimum distributions and future changes to the limits. A direct Roth contribution also has its own income limits; the Roth IRA calculator shows yours.

You can contribute up to the limit even when none of it is deductible. The nondeductible part must be reported on Form 8606, even in a year you do not otherwise file a return. It becomes your basis: the total of your nondeductible contributions, less any you have already taken out.

Basis comes back tax-free, but not first. Each withdrawal or conversion is partly basis and partly taxable. The tax-free share is your basis divided by the December 31 value of all your traditional, SEP and SIMPLE IRAs plus the year's withdrawals and conversions; Form 8606 does the split. If you never file Form 8606, the IRS treats all your contributions as deductible and taxes them when they come out, unless you can show otherwise. Not filing a required Form 8606 costs $50 and overstating nondeductible contributions costs $100, unless there was a reasonable cause.

Traditional IRAs have required minimum distributions: from 73 if you were born from 1951 to 1958, and from 75 if you were born in 1960 or later. For people born in 1959 the final regulations leave the age open, and the 2024 proposed regulations would set it at 73. The first is due by April 1 of the next year. The RMD calculator works out the amount. Roth IRAs have none while you are alive.

Before 59½, the taxable part of a withdrawal owes income tax plus a 10% additional tax unless an exception applies. IRAs have some exceptions workplace plans do not, such as a first home (up to $10,000) and higher education costs, and they lack the one for leaving a job in or after the year you turn 55. The early withdrawal calculator shows the cost, and the 72(t) calculator the penalty-free payment schedule.