Both baking powder and baking soda are chemical leavening agents that cause batters to rise when baked. The
leavener enlarges the bubbles which are already present in the batter produced through creaming of ingredients. When a recipe contains baking powder and baking soda, the baking powder does most of the leavening. The baking soda is added to neutralize the acids in the recipe plus to add tenderness and some leavening.
When using baking powder or baking soda in a recipe, make sure to sift or whisk with the other dry ingredients before adding to the batter to ensure uniformity. Otherwise the baked good can have large holes.
Baking Soda
Baking soda is pure sodium bicarbonate. When baking soda is combined with moisture and an acidic ingredient (e.g., yogurt, chocolate, buttermilk, honey), the resulting chemical reaction produces bubbles of carbon dioxide that expand under oven temperatures, causing baked goods to rise. The reaction begins immediately upon mixing the ingredients, so you need to bake recipes which call for baking soda immediately, or else they will fall flat!
Baking soda, also known as sodium bicarbonate or bicarbonate of soda (alkali) is about four times as strong as baking powder. It is used in recipes that contain an acidic ingredient (e.g. vinegar, citrus juice, sour cream, yogurt, buttermilk, chocolate, cocoa (not Dutch-processed), honey, molasses (also brown sugar), fruits and maple syrup). Baking soda starts to react and release carbon dioxide gas as soon as it is added to the batter and moistened. Make sure to bake the batter immediately.
Baking soda has an indefinite shelf life if stored in a sealed container in a cool dry place. Too much baking soda will result in a soapy taste with a coarse, open crumb. Baking soda causes reddening of cocoa powder when baked, hence the name Devil's Food Cake.
Baking PowderBaking powder contains sodium bicarbonate, but it includes the acidifying agent already (cream of tartar), and also a drying agent (usually starch). Baking powder is available as single-acting baking powder and as double-acting baking powder. Single-acting powders are activated by moisture, so you must bake recipes which include this product immediately after mixing. Double-acting powders react in two phases and can stand for a while before baking. With double-acting powder, some gas is released at room temperature when the powder is added to dough, but the majority of the gas is released after the temperature of the dough increases in the oven.
Too much baking powder can cause the batter to be bitter tasting. It can also cause the batter to rise rapidly and then collapse. (i.e. The air bubbles in the batter grow too large and break causing the batter to fall.) Cakes will have a coarse, fragile crumb with a fallen center. Too little baking powder results in a tough cake that has poor volume and a compact crumb.
(info from About.com, Joy of Baking.com)