What it is
Pre-tax dollars go in — straight off the top of your paycheck, lowering this year's taxable income dollar for dollar. Growth compounds untouched. Withdrawals in retirement are taxed as ordinary income.
It's the base tier — taxed later — and the mirror image of the Roth IRA: Roth taxes the seed, traditional taxes the harvest.
The rate comparison lives here
The one rule that decides Roth vs. traditional
Today's rate > retirement rate
Fill this tier before extra Roth. The deduction is worth more now than the tax-free withdrawal later.
Today's rate < retirement rate
Favor Roth — pay the cheaper tax now. Roth IRA guide →
Peak earners in high-tax states usually land here: deducting at 32–37% today to withdraw at ~22% later is a straight arbitrage. Early-career earners in low brackets usually don't — that's Roth territory.
When traditional wins outright
Peak earning years. Your marginal rate is the highest it will ever be — the deduction has maximum value right now.
High-tax state today, low-tax retirement. Deducting against California or New York rates and withdrawing in Florida or Texas doubles the win.
Early-retirement conversion ladders. Retire early, live off taxable accounts in low-income years, and convert traditional balances to Roth at 10–12% rates. Deduct at 32%, convert at 12%.
Watch out for
RMDs. The IRS eventually wants its cut — required minimum distributions begin in your 70s and grow with the balance. Big traditional balances become big forced withdrawals.
Spending the "savings." A $24,500 pre-tax contribution at 24% saves ~$5,880 in tax — only if you invest the savings. A deduction you spend is just deferred tax, not wealth.
What next?
See all four destinations side by side — HSA, Roth, traditional, taxable — with your own assumptions.