What Are the Current IRA Deduction Limits?

An Individual Retirement Arrangement, or IRA, is a personal savings plan offering tax advantages for retirement savings. The ability to deduct contributions to a Traditional IRA depends on several factors updated annually by the Internal Revenue Service (IRS). Understanding these rules is important for managing your retirement savings and tax liability.

2024 IRA Contribution Limits

For the 2024 tax year, the maximum amount an individual can contribute across all of their IRAs, both Traditional and Roth, is $7,000. This is not a per-account limit but a cap on the total funds placed into these accounts within a single tax year. The IRS also provides for a “catch-up” contribution for those nearing retirement age.

Individuals who are age 50 or over during the calendar year can contribute an additional $1,000, bringing their total potential contribution for 2024 to $8,000. Contributions for a given tax year can be made up until the unextended federal tax filing deadline, which is typically in April of the following year.

Traditional IRA Deduction Eligibility

Whether a contribution to a Traditional IRA can be deducted from your taxable income hinges on two primary factors: your tax filing status and whether you or your spouse are covered by a retirement plan at work. The IRS considers an individual “covered” if they are an active participant in a plan like a 401(k), 403(b), or other qualified workplace retirement program. This status is typically indicated by a checkmark in the “Retirement Plan” box on the Form W-2.

The second determining factor is your Modified Adjusted Gross Income (MAGI). MAGI is a specific calculation the IRS uses, which starts with your Adjusted Gross Income (AGI) and adds back certain deductions. The complexities arise when at least one spouse is an active participant in an employer’s plan, as the ability to deduct contributions becomes dependent on your MAGI.

2024 Deduction Phase-Out Ranges by Filing Status

The deductibility of Traditional IRA contributions is subject to income-based limitations for individuals active in a workplace retirement plan. These limits, known as phase-out ranges, determine if a contributor is eligible for a full, partial, or no deduction. The specific MAGI ranges are determined by tax filing status.

Covered by a Workplace Retirement Plan

For the 2024 tax year, a single individual or someone filing as Head of Household who is covered by a workplace plan can take a full deduction if their MAGI is $77,000 or less. The deduction is gradually phased out for those with a MAGI between $77,000 and $87,000, and no deduction is allowed if their MAGI is $87,000 or more.

For those who are Married Filing Jointly or a Qualifying Widow(er) where the spouse making the IRA contribution is covered by a workplace plan, the phase-out range is $123,000 to $143,000. A full deduction is available below this range, a partial one within it, and none above it.

The rules are stricter for those who are Married Filing Separately. If an individual lived with their spouse at any time during the year and is covered by a workplace plan, the phase-out range is $0 to $10,000. This narrow range is intended to prevent couples from circumventing the joint income limits by filing separately.

Not Covered, but Spouse Is

A different set of rules applies to an individual who is not an active participant in a workplace retirement plan but is married to someone who is. In this scenario, the deductibility of the non-covered spouse’s IRA contribution is still subject to an income limit, but it is much higher. For 2024, the MAGI phase-out range for the IRA contributor in this situation is $230,000 to $240,000.

Not Covered by a Workplace Plan

If a single individual is not an active participant in a workplace plan, their Traditional IRA contribution is fully deductible, regardless of their income. Similarly, if a married couple files a joint return and neither spouse is covered by a workplace retirement plan, both of their contributions are fully deductible with no MAGI limitation.

Roth IRA Contribution Limits

Contributions to a Roth IRA are fundamentally different from Traditional IRA contributions because they are never tax-deductible. The primary tax advantage of a Roth IRA occurs during retirement, when qualified distributions are tax-free. While deductibility is not a factor, the ability to contribute to a Roth IRA is subject to its own set of MAGI-based limitations.

For 2024, a single individual or Head of Household can make a full contribution to a Roth IRA if their MAGI is less than $146,000. The ability to contribute is phased out for MAGI between $146,000 and $161,000, and individuals with a MAGI of $161,000 or more cannot contribute at all.

For those who are Married Filing Jointly or a Qualifying Widow(er), the income phase-out range is $230,000 to $240,000. Similar to the deduction rules, the limit for those who are Married Filing Separately and lived with their spouse is very restrictive. The phase-out range is $0 to $10,000, making most individuals with this filing status ineligible to contribute directly to a Roth IRA.