In a Traditional IRA, contributions are made with pre-tax dollars, providing potential tax deductions. However, withdrawals in retirement are taxed as current income. On the other hand, Roth IRAs are funded with after-tax dollars, offering no immediate tax benefits. However, withdrawals in retirement are tax-free. It's important to consider your current and future tax picture when deciding between the two types of IRAs and consult with a tax professional for personalized guidance.