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Choosing between a Roth and a traditional 401(k) is really a bet on tax rates: pay tax now (Roth) or later (traditional). The decision is simpler than it looks once you compare your tax rate today with the rate you expect in retirement. Figures here use 2026 brackets and our Roth vs traditional calculator.
Short answer
Pick Roth if your tax rate now is lower than you expect it to be in retirement, and traditional if it's higher now. If the two rates are the same, both give you the same after-tax retirement money for the same pre-tax budget. In practice, Roth tends to suit the 10% and 12% brackets and traditional the 32% bracket and above; in the 22% and 24% brackets it depends on your plans, and splitting is reasonable.
The core rule: tax rate now vs in retirement
- Traditional 401(k): contributions are taken before income tax, grow tax-deferred, and withdrawals are taxed as income in retirement.
- Roth 401(k): contributions are taken after tax, and qualified withdrawals, including all the growth, are tax-free.
With the same pre-tax budget and the same investment return, the only thing that separates the two is whether tax is taken at today's rate or the retirement rate. Paying tax at the lower of the two rates wins.
2026 federal brackets
Single filer, 2026:
| Federal bracket | Taxable income | Roughly a salary of (standard deduction only) |
|---|---|---|
| 10% | up to $12,400 | up to $28,500 |
| 12% | $12,400 to $50,400 | up to $66,500 |
| 22% | $50,400 to $105,700 | up to $121,800 |
| 24% | $105,700 to $201,775 | up to $217,875 |
| 32% | $201,775 to $256,225 | up to $272,325 |
| 35% | $256,225 to $640,600 | up to $656,700 |
| 37% | over $640,600 | over $656,700 |
The salary column adds the $16,100 standard deduction for a single filer. Your contribution is taxed (or saved) at your top bracket, plus your state's rate.
Comparison by bracket
Same pre-tax budget of $6,000 a year for 25 years, earning 7% a year. Traditional puts the full $6,000 in and pays tax on withdrawal; Roth pays tax first and puts in what's left.
| Tax rate now | Tax rate in retirement | Traditional (after tax) | Roth | Better choice |
|---|---|---|---|---|
| 12% | 22% | $316,726 | $357,332 | Roth, by $40,606 |
| 12% | 12% | $357,332 | $357,332 | Same |
| 22% | 22% | $316,726 | $316,726 | Same |
| 22% | 12% | $357,332 | $316,726 | Traditional, by $40,606 |
| 24% | 12% | $357,332 | $308,605 | Traditional, by $48,727 |
| 32% | 22% | $316,726 | $276,120 | Traditional, by $40,606 |
The money grows by the same factor either way, so the result depends only on the two tax rates.
How to estimate your retirement tax rate
You won't know it exactly, but you can reason about it:
- Your retirement income. Social Security, pensions, traditional 401(k) and IRA withdrawals and other income will all be taxed. A large traditional balance means large taxable withdrawals.
- Where you'll live. Moving from a high-tax state to one with no income tax favours traditional now; the reverse favours Roth.
- Career stage. Early-career workers often earn less now than they will later, which favours Roth. Peak earners are often in their highest bracket now, which favours traditional.
- Future tax law. Rates can change. If you're unsure, that's an argument for having some of each.
When splitting makes sense
Most plans let you split contributions between Roth and traditional, sharing the $24,500 employee limit for 2026. Splitting gives you tax diversification: in retirement you can choose which account to withdraw from each year to manage your tax bracket. It's a sensible default in the 22% and 24% brackets, where the answer is close.
Effect on your paycheck today
A traditional contribution lowers your take-home pay by less than its size, because it saves income tax now; a Roth contribution lowers it by the full amount. For a single filer on $85,000 in Texas, each $1 of traditional contribution costs 78 cents of take-home pay. See how much a 401(k) reduces your paycheck and try the 401(k) paycheck calculator.
Sources
Frequently asked questions
Is Roth or traditional 401(k) better?
If your tax rate is lower now than it will be in retirement, Roth comes out ahead; if it's higher now, traditional does. If the rates are the same, both end up with the same after-tax money for the same pre-tax budget.
Which tax bracket should use a Roth 401(k)?
Roth is usually most attractive in the 10% and 12% federal brackets, where the tax you pay now is low. In the 32% bracket and above, traditional usually wins unless you expect an equally high rate in retirement.
Can I contribute to both Roth and traditional 401(k)?
Yes, if your plan offers both. The $24,500 employee limit for 2026 is shared between them, so you can split contributions in any proportion.
Do I have to use Roth for catch-up contributions?
From 2026, if your wages from the employer were over $150,000 in the previous year, catch-up contributions (age 50 and over) must be Roth. Regular contributions up to $24,500 can still be traditional.
The CountYourTax team
We build free tax and salary calculators and check the rates against official government sources. See how we check our numbers.
General information, not tax advice. Please consult a qualified tax professional before filing or making financial decisions. Report an error in this article