Taxpayers are always looking for whatever tax breaks they can find to pay less to the IRS. Yet out of roughly 150 million tax returns filed each year, fewer than 2% will take advantage of a tax break that nearly anyone can get.

One of the smartest moves that you can make with your finances is to save for retirement, and a traditional IRA can be a great choice for setting money aside for your future in a tax-smart way. The typical taxpayer contributing to a traditional IRA was able to get a deduction of more than $5,000 -- but only a small handful of those eligible ever bother doing so. Below, we'll take a closer look at how a traditional IRA could help you with your long-term savings and also let you grab a valuable tax break right now.

1040 return forms and a pencil on top of money spread out on a flat surface.

Image source: Getty Images.

The basics of traditional IRAs

Traditional IRA contributions are one of the few tax breaks available to taxpayers after the end of the tax year in question. Contributions for each given year are allowed up until the mid-April filing deadline the following year, giving taxpayers an extra few months to figure out how much they can save. Contribution limits are relatively generous, set at $6,000 for 2019. You can add an extra $1,000 to that amount if you're 50 or older.

Traditional IRA contributions aren't always deductible, but they usually are. If you (and your spouse, if you're married) don't have access to a 401(k) or other retirement plan at work, then you can always deduct what you put into a traditional IRA. Even if you or your spouse does have a workplace retirement plan available, you can still deduct your IRA contribution for the 2019 tax year if your income is below the limits in the following table:

For this filing status:

Deductions are reduced if income is above this amount

Deductions are not available if income exceeds this amount

Single, head of household, or married filing separately IF you didn't live with your spouse during the year



Married filing jointly or qualifying widow or widower



Married filing separately IF you lived with your spouse at any point during the year



Data source: IRS.

If you're not covered but your spouse is, then higher limits apply. Joint filers contributing to an IRA for the 2019 tax year can get a full deduction with income up to $193,000, and that deduction phases out between $193,000 and $203,000.

Why don't more people use this tax break?

The average person using deductible IRA contributions to cut their taxes was able to claim a $5,020 deduction in the most recent year for which tax data's available from the IRS. With tax brackets ranging from 10% to 37%, that deduction produced tax savings of anywhere from just over $500 to more than $1,850.

What's surprising is how few people actually use deductible IRA contributions. Fewer than 2.67 million returns claimed the tax break, with contributions amounting to just $13.4 billion. Those numbers haven't moved appreciably over the past several years, indicating that there's plenty of room for more people to jump into traditional IRAs to claim the valuable deduction.

It's true that people have a lot of competing demands on their money. Even when it comes to retirement savings, you have other options:

  • Contributing to a 401(k) at work is easy, with many employers automatically enrolling their employees to their programs.
  • Contributions to Roth IRAs aren't tax deductible and therefore don't show up in IRS data, but they offer a different set of tax benefits that for some are even more valuable.

Grab this tax break while you can

Nevertheless, the big advantage that traditional IRAs have is that even procrastinators can use them to get a last-minute tax break for their prior-year return. It's worth looking to see if making a contribution to a traditional IRA could help you cut your tax bill.