IRA AGI Limits for Contributions and Deductions

An Individual Retirement Arrangement, or IRA, is a personal savings plan that offers tax advantages, making it a common tool for building a nest egg. The ability to make tax-deductible contributions to a Traditional IRA or to contribute at all to a Roth IRA depends on your income. The Internal Revenue Service (IRS) establishes annual limits based on income that determine who can participate and to what extent.

Calculating Your Modified Adjusted Gross Income (MAGI)

The income figure used to determine your eligibility for IRA contributions and deductions is your Modified Adjusted Gross Income (MAGI). This calculation begins with your Adjusted Gross Income (AGI), a line item found on your annual Form 1040 tax return. AGI is your gross income minus a list of specific “above-the-line” deductions, such as educator expenses or health savings account deductions.

To determine your MAGI for IRA purposes, you must add back certain deductions to your AGI. The most common items added back include any deduction taken for a Traditional IRA contribution and student loan interest. Other less common add-backs are foreign earned income exclusions, foreign housing exclusions or deductions, and interest from qualified U.S. savings bonds used for higher education expenses.

For example, if your AGI is $80,000 and you paid $2,500 in student loan interest that you deducted, your MAGI for IRA purposes would be $82,500. This is the number you must compare against the IRS thresholds to see if you can deduct a Traditional IRA contribution or contribute to a Roth IRA.

AGI Limits for Traditional IRA Deductions

The deductibility of contributions to a Traditional IRA is contingent upon your income and whether you are covered by a retirement plan at your workplace. This coverage is indicated by a check in the “Retirement plan” box in Box 13 of your Form W-2. If you have this coverage, your ability to deduct contributions is subject to income phase-out ranges.

For the 2025 tax year, a single filer covered by a workplace plan can take a full deduction if their MAGI is $77,000 or less. A partial deduction is allowed for a MAGI between $77,000 and $87,000, and no deduction is permitted once MAGI exceeds $87,000. For those who are married and filing jointly, where the spouse making the contribution is covered by a plan, the phase-out range is $123,000 to $143,000.

A different rule applies if you are not covered by a retirement plan at work. In this case, you can deduct your full contribution regardless of your income level. The one exception to this rule involves your marital status, as your deduction may be limited if your spouse is covered by a workplace plan.

When your income surpasses these limits, you can still contribute to a Traditional IRA, but the contribution is considered “non-deductible.” You are required to track these non-deductible contributions on IRS Form 8606. This tracking establishes a cost basis in your IRA, ensuring that you do not pay taxes on that same money again when you take distributions in retirement.

AGI Limits for Roth IRA Contributions

Unlike a Traditional IRA, contributions to a Roth IRA are never tax-deductible. Instead, the primary limitation is on whether you can contribute at all, based on your MAGI. The ability to make a direct contribution to a Roth IRA is subject to income phase-out ranges that are updated periodically by the IRS for inflation.

For the 2025 tax year, a single individual or head of household can make a full contribution if their MAGI is $146,000 or less. The ability to contribute is phased out for MAGI between $146,000 and $161,000. For married couples filing a joint tax return, the phase-out range is $218,000 to $238,000.

If your MAGI falls within a phase-out range, you can only make a reduced contribution. For example, if a single filer has a MAGI of $149,000, they are 20% into the $15,000 phase-out range. They would then reduce their maximum contribution limit by that percentage.

For those whose income is too high to contribute directly, a strategy known as the “backdoor” Roth IRA may be available. This process involves making a non-deductible contribution to a Traditional IRA, for which there are no income limits. Shortly after, those funds are converted into a Roth IRA.

Special Considerations for Spouses

The rules governing IRAs have specific provisions for married couples to accommodate different employment and retirement plan situations. One such provision is the spousal IRA, which allows a working spouse to make contributions on behalf of a non-working or low-earning spouse. To be eligible, the couple must file a joint tax return and have enough earned income to cover the contributions for both spouses.

A separate rule applies when one spouse is covered by a workplace retirement plan and the other is not. In this scenario, the deductibility of the non-covered spouse’s Traditional IRA contribution is subject to its own special MAGI phase-out range. This acknowledges that the non-covered spouse lacks access to a workplace plan, granting them more leeway to make deductible contributions.

For the 2025 tax year, if an individual is not covered by a workplace plan but their spouse is, they can take a full deduction for their Traditional IRA contribution if the couple’s joint MAGI is $218,000 or less. The deduction is phased out for a MAGI between $218,000 and $238,000. No deduction is allowed for the non-covered spouse’s contribution once the couple’s MAGI exceeds $238,000.