An IRA contribution does not reduce your tax dollar for dollar. A deductible contribution made to a Traditional IRA reduces your tax by the amount of the contribution times your marginal tax rate. For example, if you are in the 25% marginal tax rate bracket, a $1,000 deductible contribution to a Traditional IRA would reduce your tax by $1,000 X .25 = $250.
A contribution to a ROTH IRA or a non-deductible contribution to a Traditional IRA is not deductible and would not reduce your tax.
