In November, the Internal Revenue Service (IRS) published its updated 2025 rules for individual retirement accounts (IRAs). Importantly, the annual contribution limits will remain the same: $7,000 for taxpayers under 50, and $8,000 for taxpayers 50 and older.
However, the IRS did announce two important changes that are coming next year. The income limits for traditional IRA and Roth IRA contributions will be revised upward to account for changes in the cost of living.
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1. Deductible contribution limits for traditional IRAs in 2025
Contributions made to traditional IRAs can be deducted from workers' taxable income in certain situations, depending on their tax filing status and modified adjusted gross income (MAGI).
Importantly, single individuals and married couples filing jointly can deduct the full $7,000 (or $8,000 if the person making the contribution is 50 or older) from their taxable income if they are not covered by a workplace retirement plan. Individuals covered by a workplace plan may still be able to take a full or partial deduction.
|
Tax Filing Status |
2024 MAGI |
2025 MAGI |
Traditional IRA Deduction |
|---|---|---|---|
|
Single individuals covered by a workplace retirement plan |
$77,000 or less |
$79,000 or less |
Full |
|
$77,000 to $87,000 |
$79,000 to $89,000 |
Partial | |
|
$87,000 or more |
$89,000 or more |
None | |
|
Married couples filing jointly, if the contributor is covered by a workplace retirement plan |
$123,000 or less |
$126,000 or less |
Full |
|
$123,000 to $143,000 |
$126,000 to $146,000 |
Partial | |
|
$143,000 or more |
$146,000 or more |
None | |
|
Married couples filing jointly, if the contributor's spouse is covered by a workplace retirement plan |
$230,000 or less |
$236,000 or less |
Full |
|
$230,000 to $240,000 |
$236,000 to $246,000 |
Partial | |
|
$240,000 or more |
$246,000 or more |
None |
Data source: Internal Revenue Service.
Importantly, married individuals who file separately cannot deduct any contributions made to traditional IRAs if their modified adjusted gross income exceeds $10,000. Anyone eligible for a partial deduction will need to do some math to determine the precise amount.
Here is an example: Jane is 49, married, files her taxes jointly with her spouse, and is covered by a workplace retirement plan. She and her spouse have a combined MAGI of $130,000. So, Jane can deduct up to $5,600 from her taxable income. The math is shown below:
- The couple's MAGI ($130,000) minus the lower limit ($126,000) equals $4,000.
- That amount ($4,000) divided by the size of the phaseout range ($20,000) equals 0.2.
- That number (0.2) multiplied by the maximum contribution ($7,000) equals $1,400.
- The maximum contribution ($7,000) minus that amount ($1,400) equals $5,600.
2. Contribution limits for Roth IRAs in 2025
Contributions made to Roth IRAs cannot be deducted from your taxable income in the year they are made, but qualified distributions from those accounts are tax-free. Roth IRAs are similar to traditional IRAs in that money generally cannot be withdrawn from them without incurring a penalty until you turn 59 1/2. But Roth IRAs also differ from traditional IRAs in that they have no required minimum distributions.
|
Tax Filing Status |
2024 MAGI |
2025 MAGI |
Roth IRA Contribution |
|---|---|---|---|
|
Single individuals |
$146,000 or less |
$150,000 or less |
Full |
|
$146,000 to $161,000 |
$150,000 to $165,000 |
Partial | |
|
$161,000 or more |
$165,000 or more |
None | |
|
Married couples filing jointly |
$230,000 or less |
$236,000 or less |
Full |
|
$230,000 to $240,000 |
$236,000 to $246,000 |
Partial | |
|
$240,000 or more |
$246,000 or more |
None |
Data source: Internal Revenue Service.
Married individuals who file taxes separately cannot contribute to a Roth IRA if their modified adjusted gross income exceeds $10,000. Additionally, anyone eligible for a partial contribution will need to do some math to determine the precise limit.
Here is an example: John is 45, married, and files taxes jointly with his spouse. They have a combined MAGI of $240,000. So, John can contribute $4,200 to a Roth IRA. That math is shown below:
- The couple's MAGI ($240,000) minus the lower limit ($236,000) equals $4,000
- That amount ($4,000) divided by the size of the phaseout range ($10,000) equals 0.4
- That number (0.4) multiplied by the maximum contribution ($7,000) equals $2,800
- The maximum contribution ($7,000) minus that amount ($2,800) equals $4,200
Importantly, John has not reached his annual contribution limit of $7,000, so he could add the remaining $2,800 to a traditional IRA.
