Is the Roth IRA Income Limit Based on AGI?
Roth IRA contribution eligibility is based on a specific IRS income figure. Understand how this figure is calculated and what it means for your savings.
The Roth Individual Retirement Arrangement (IRA) is a retirement savings account offering tax-free growth and tax-free withdrawals in retirement. However, direct contributions are not available to everyone due to income limitations established by the Internal Revenue Service (IRS). These rules are indexed for inflation and can change annually, so savers should verify their eligibility each year.
The Role of Modified Adjusted Gross Income (MAGI)
When determining eligibility for a Roth IRA, the income figure used is not your Adjusted Gross Income (AGI), but rather your Modified Adjusted Gross Income (MAGI). AGI is a figure on your federal income tax return calculated by taking your gross income and subtracting certain “above-the-line” deductions. You can find your AGI on line 11 of your Form 1040. These deductions can include educator expenses, student loan interest, and contributions to a traditional IRA.
MAGI, for Roth IRA purposes, starts with your AGI and then adds back several specific deductions. This calculation creates a more standardized income measure that isn’t artificially lowered by certain tax benefits. To calculate your MAGI for a Roth IRA, you begin with your AGI and add back deductions you took for contributions to a traditional IRA and student loan interest. Other common items that must be added back include the foreign earned income exclusion and the foreign housing exclusion or deduction. The result is the MAGI figure the IRS uses to enforce its contribution limits.
Roth IRA Income and Contribution Limits
The IRS sets two limits for Roth IRAs each year: how much you can contribute and the income you can have before your contribution amount is reduced or eliminated. For 2025, the maximum amount an individual can contribute to all of their IRAs is $7,000, or $8,000 if they are age 50 or older by the end of the year. This “catch-up” provision allows those nearer to retirement to save more.
For the 2025 tax year, single filers, heads of household, and those married filing separately who did not live with their spouse can contribute the full amount if their MAGI is less than $150,000. Their ability to contribute is phased out for MAGI between $150,000 and $165,000, and they cannot contribute directly if their MAGI is $165,000 or more.
For those who are married and file a joint tax return, the income limits are higher. In 2025, joint filers can make a full contribution if their MAGI is less than $236,000. The phase-out range for joint filers is between $236,000 and $246,000, with eligibility eliminated at a MAGI of $246,000 or more. The rules are much stricter for those who are married filing separately and lived with their spouse at any point during the year; their phase-out range is a MAGI between $0 and $10,000.
Calculating Your Allowable Contribution
If your MAGI falls within the phase-out range for your filing status, you can make a reduced contribution. The IRS provides a formula to determine the precise amount. For example, a single filer under age 50 with a MAGI of $153,000 in 2025 is $3,000 into the $150,000 to $165,000 phase-out range. To calculate the reduction, you divide the amount you are into the range ($3,000) by the total size of the range ($15,000), which equals 0.20. Multiplying 0.20 by the $7,000 maximum contribution gives a reduction of $1,400. Therefore, their maximum allowable contribution would be $5,600 ($7,000 – $1,400).
Options if Your Income Exceeds the Limit
Discovering that your MAGI is too high to contribute directly to a Roth IRA does not mean you are without options. Attempting to contribute anyway results in an excess contribution, which is subject to a 6% excise tax for each year the excess amount remains in the account. A common strategy to legally bypass these income limits is known as the “backdoor” Roth IRA.
This process involves two main steps. First, you make a non-deductible contribution to a traditional IRA, which has no income limits for contributions. Immediately after, you convert the funds from the traditional IRA into a Roth IRA. This conversion is a reportable tax event, and you must file IRS Form 8606 to document the after-tax contribution.
A consideration in this process is the pro-rata rule. This IRS rule states that a conversion is considered to come proportionally from all of your traditional IRA assets, including SEP and SIMPLE IRAs. If you have existing pre-tax funds in any traditional IRAs, a portion of your conversion will be taxable. For example, if 90% of your total traditional IRA assets are pre-tax, then 90% of the amount you convert will be treated as taxable income in the year of the conversion.