Traditional Accounts: Deduct Now
Contributions to a traditional 401(k) or traditional IRA (within income limits for the IRA deduction) reduce your taxable income for the year, lowering your current tax bill — taxes are paid later when you withdraw in retirement.
Roth Accounts: Pay Now, Tax-Free Later
Roth contributions don't reduce this year's taxable income, but qualified withdrawals in retirement — including all investment growth — are entirely tax-free.
The Saver's Credit
Lower-and-moderate-income filers who contribute to a retirement account may also qualify for the Saver's Credit, a non-refundable credit worth up to a percentage of your contribution on top of the traditional deduction.
Employer Match Doesn't Count as Your Contribution
Only your own contributions count toward the deduction and any applicable credit — employer matching contributions grow tax-deferred but don't add to your personal deduction.
This page is for educational purposes and isn't personalized financial or tax advice. Figures, rates, and program details change frequently — confirm current terms directly with lenders, tax professionals, or the IRS before acting.