IRA Calculator Guide
The tax-savings figure this calculator shows for a Traditional IRA assumes your contribution is fully deductible. That assumption holds for a lot of people — but not everyone, and the exception trips up more savers than you'd expect: if you or a spouse is covered by a retirement plan at work, the deduction can shrink or disappear entirely, even though the IRS still lets you contribute the money.
"Covered" Is a Narrower Word Than You Think
You're generally treated as covered by a workplace plan if your employer offers a 401(k), 403(b), SIMPLE IRA, or pension and you're eligible to participate — it doesn't matter whether you actually contributed anything that year, or whether you're vested. A single dollar of employer match landing in your account, or simply being an active participant on paper, is usually enough to trigger coverage status. Check box 13 ("Retirement plan") on your W-2; if it's marked, the IRS considers you covered for that tax year, full stop.
How the Phase-Out Actually Works
Once you're covered, the deduction doesn't vanish immediately — it phases out gradually over a modified adjusted gross income (MAGI) range that the IRS adjusts most years for inflation. Below the bottom of the range, you deduct the full contribution. Inside the range, you get a partial deduction calculated on a sliding scale. Above the top, none of it is deductible, though you can still contribute the money as a nondeductible contribution and get tax-deferred growth. There's also a separate, more generous range that applies specifically when you're not covered but your spouse is — a detail married couples with one working spouse often miss. Because these thresholds move periodically, don't rely on last year's numbers; look up the current tax year's limits before you assume either outcome.
This matters directly for how you should read this calculator's results. The "Upfront Tax Savings on Contributions" line multiplies your contribution by your marginal rate — accurate only if the contribution is actually deductible. If you're in the phase-out range, run the numbers again using just the deductible portion of your contribution, and treat the rest as if it were funding a Roth-style after-tax bucket instead. If you're fully phased out, the honest comparison isn't Traditional-deductible versus Roth — it's nondeductible Traditional versus Roth, and Roth usually wins that matchup since you avoid taxing the same dollars twice down the road.
When a Backdoor Move Enters the Conversation
Higher earners who are phased out of both a direct Roth contribution and a Traditional deduction sometimes contribute nondeductible dollars to a Traditional IRA and then convert them to Roth shortly after — commonly called a backdoor Roth. It can work well, but it gets complicated fast if you already hold other pre-tax IRA money, because the IRS requires converted amounts to be prorated across all your Traditional IRA balances, not cherry-picked from the nondeductible slice. That's a scenario worth a real conversation with a tax professional rather than a rule of thumb, since getting the pro-rata calculation wrong can create an unexpected tax bill.
Before assuming either direction, it's worth comparing full scenarios side by side. Run this calculator once with your actual marginal rate applied only to the deductible portion of your contribution, then compare it against the Roth IRA calculator using the same contribution amount — that comparison is explored in more depth in our Roth vs. Traditional guide. And if you're weighing whether to prioritize the IRA over your workplace plan in the first place, especially past the point of capturing any employer match, the 401(k) calculator and retirement calculator can help you see which account gets you closer to your number faster.