Withdrawals you make from a traditional IRA during retirement (after the age of 59 ½) are taxed as regular income. If you make an early withdrawal, you’ll have to pay a 10% tax penalty, as well as income tax.

Contributions you make to a traditional IRA are made with pretax dollars; in that sense that they are tax-deductible contributions. Plus, traditional IRAs offer tax-deferred growth, which means that you don’t have to pay tax on gains that are still in the account. These tax benefits make contributing to a traditional IRA a smart way to lower your taxable income.

Different kinds of retirement accounts are taxed differently and understanding the ins and outs can be challenging. Have questions or concerns? Your local Tax Pro is ready to help. Book your appointment today.

Sharon Brucker, CPA Senior Tax Research Analyst Published on: August 28, 2025
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*This content is for general informational purposes only. It is not intended to be comprehensive and should not be construed as professional tax or financial advice for any specific individual tax situation. Taxpayers should always consult a qualified professional for individual guidance. This information constitutes a solicitation under the Treasury Department's Circular 230. Most offices are independently owned and operated.