How the comparison works
The fair test is to start from the same slice of pay. Put $7,000 of salary into a traditional account and all $7,000 is invested. Put it into a Roth and tax comes out first, so less goes in. Both grow at the same rate. At the end, the traditional balance is taxed and the Roth is not:
Traditional = pay × growth × (1 − tax rate later)Roth = pay × (1 − tax rate now) × growth
Growth is the same in both, so the winner is simply the account whose tax rate is lower. Same rate, same result.
Worked example
You are in the 22% federal bracket with 5% state tax, and expect the 12% bracket in retirement in the same state. $7,000 of pay, 30 years at 7%: the Roth ends with $38,899 to spend and the traditional account with $44,227. Traditional wins by about $5,329, because you skip 27% tax now and pay 17% later.
Which tax rate should I use?
Use your marginal rate, the bracket your last dollars of income fall in. In 2026 the federal brackets are 10%, 12%, 22%, 24%, 32%, 35% and 37%. For retirement, think about what your income will be: withdrawals, Social Security and any pension. Many people drop a bracket or two in retirement, which favours traditional. Early-career savers in the 10% or 12% bracket often do better with Roth.
What this leaves out
If you already contribute the maximum, a Roth lets more money grow tax-free, since $7,000 in a Roth is worth more than $7,000 pre-tax. Required minimum distributions, Roth conversion strategies, IRA income limits and future tax-law changes are not modelled. Many people split contributions between both to hedge. This is not tax advice.
Contributing through work? Make sure you get the full employer match with the 401(k) match calculator.