Find out which account wins based on your current tax rate vs. your expected tax rate in retirement.
Both accounts grow your investment tax-free — the only difference is when you pay taxes. With a Roth IRA, you contribute after-tax dollars now and withdraw completely tax-free in retirement. With a Traditional IRA, you get a tax deduction now, but withdrawals in retirement are taxed as ordinary income.
The math comes down to a simple comparison: is your tax rate higher now or will it be higher in retirement? If your current rate is higher, Traditional usually wins. If your retirement rate will be higher (or equal), Roth usually wins — and Roth has the added benefit of certainty, since future tax rates are unknowable.
The hidden Roth advantage: If both rates are exactly equal, the after-tax value is mathematically identical between Roth and Traditional. But Roth IRAs have no required minimum distributions (RMDs), can be withdrawn tax-free by heirs, and let you contribute more in real terms (since $7,000 in a Roth is fully after-tax, while $7,000 in Traditional still owes future tax).
Early in your career when your income (and tax rate) is lower, Roth contributions are usually favored. As your income grows into peak earning years, Traditional contributions often make more sense — many people use both strategically across their career.