How to Calculate the Taxable Amount of an IRA Withdrawal

By Motley Fool Staff – Updated Apr 29, 2025 at 11:51 PM

Key Points

Traditional IRA withdrawals are taxable if initial contributions were deductible.
Roth IRA withdrawals are tax-free if conditions like age and holding period are met.
Nonqualified Roth withdrawals tax investment gains, not original contributions.

Depending on the type of individual retirement account (IRA) you own, when you made your withdrawal, and whether your contributions were deductible, the taxable amount of an IRA withdrawal can vary significantly. Here's what you need to know to calculate the taxable amount of any withdrawal from a traditional or Roth IRA.

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An infographic explaining how to calculate the taxable amount of a withdrawal from different types of IRAs. — Image source: The Motley Fool

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For example, let's say that you've contributed $25,000 to your Roth IRA, have never made a withdrawal, and your balance is now $35,000, including investment profits. If you withdraw $30,000 prematurely, $25,000 of that amount is tax-free since it represents your original contributions. The remaining $5,000 of the withdrawal will be considered taxable income.

If you have any other questions about IRAs that we haven't covered here, take a look at our IRA Center. We can help you make the decisions that work best for your situation.

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