Are IRA Contributions Tax-Deductible? Rules, Income Limits and How To Claim Them

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Individual retirement account (IRA) contributions are generally tax-deductible, but a few factors determine whether you are entitled to a full, partial or no deduction on your taxes.

Find out more about the various factors that influence your ability to reduce taxable income through these retirement savings strategies. 

IRA Contributions: At a Glance

• Contributions to your individual retirement account usually are tax-deductible.
• You can contribute up to $7,000 — $8,000 if you’re 50 or older.
• Your contribution limit might be lower if you and/or your spouse participate in a workplace retirement plan, such as a 401(k).
• April 15, 2026, is the deadline for making IRA contributions for the tax year 2025.

Which IRA Contributions Are Tax-Deductible?

Some, but not all, IRA contributions are tax-deductible.

Traditional IRA Contributions

Traditional IRA contributions are deductible up to the Internal Revenue Service (IRS) annual limits. The money you invest is pre-tax income — that is, you deduct it from your taxable income. The money grows tax-deferred, but you pay tax when you withdraw money in retirement.

Roth IRA Contributions

Roth IRA contributions are not tax-deductible. You make them from after-tax income. However, the money grows tax-free, and your withdrawals are also tax-free.

When Are IRA Contributions Tax-Deductible?

Your contributions might be tax-deductible if you meet the eligibility criteria for the following:

• Contribution limits: The IRS limits how much you can contribute.
• Income limits: If you make too much, you may not qualify for any deduction or only for a partial one if you or your spouse has a workplace retirement plan.
• Modified adjusted gross income (MAGI): The IRS sets MAGI limits that determine deduction eligibility for workplace retirement plan participants. 
• Tax filing status: There are different thresholds for married and single-filing workplace plan participants.

2025 Traditional IRA Deduction Income Limits 

The deduction for traditional IRA contributions starts to phase out once your MAGI reaches a certain level if you or your spouse is covered by a retirement plan at work. Those MAGI levels are listed in the following table for employees covered by a workplace plan and employees whose spouses are covered by one.

How Much Can You Contribute to an IRA in 2025?

The traditional IRA contribution limit for 2025 is:

• $7,000 per year for individuals under age 50
• $8,000 per year for those 50 and older

Roth IRAs have the same contribution limits, but the limit phases out at the following MAGI levels:

• Single filers: $151,000 to $165,000
• Married filing jointly: $237,000 to $246,000
• Married filing separately: $0 to $10,000

The IRS allows you to contribute to both types of IRA. The contribution limit is a combined limit covering all of your IRA accounts.

How Workplace Retirement Plans Affect IRA Deductions

Your participation in an employer-sponsored retirement plan impacts your eligibility to deduct IRA contributions. 

Not Covered by a Workplace Plan

You can deduct the full amount, regardless of income, if you’re not covered by a 401(k) or other workplace retirement plan.

Covered by a Workplace Plan

If your filing status is single or head of household and you’re covered by a plan at work, your deduction starts phasing out at $79,999 MAGI.

If you’re a married joint filer, your deduction starts phasing out at $126,000 MAGI.

Deductions for married people who file separate returns start phasing out at $0 MAGI if they lived with their spouse during the year — otherwise, the phaseout is the same as for single filers.

Spousal IRA Rules

You and your spouse both may contribute to traditional IRAs as long as one of you has taxable income. The contribution limit is $7,000 — $8,000 for those 50 and older — or your combined taxable income, whichever is higher.

How much you can deduct depends on whether your spouse was covered by a workplace retirement plan. The limit is based on your combined salary, but income limits are higher for married couples who file joint returns.

What If Your IRA Contributions Aren’t Deductible?

If you’re not eligible to deduct your IRA contribution, you can make non-deductible contributions. The account is referred to as a non-deductible IRA in that case. Here are some points to know:

• The account itself doesn’t change — you can make deductible contributions in future years if you’re eligible.
• In the meantime, your funds continue to grow tax-deferred.

Another option is the backdoor Roth IRA. This is a conversion strategy, not a type of account.

• This strategy involves making nondeductible contributions to your traditional IRA, then converting that account to a Roth IRA.
• The conversion sidesteps the income limits that typically apply to Roth IRA contributions.
• While you can’t deduct the converted amount, it will grow tax-free and provide tax-free income in retirement.

How To Claim an IRA Deduction on Your Tax Return

If you’re handling your taxes on your own, you want to make sure you’re claiming your deduction correctly. The following steps will guide you.

• Gather the Form 5498, IRA Contribution Information, that you received from your investment brokerage. You’ll need the information to claim your deduction.
• If neither you nor your spouse had a workplace retirement plan, enter your deduction on Form 1040, Schedule 1, Line 20.
• If you or your spouse did have a workplace retirement plan, use the worksheets in IRS Publication 590-A to calculate your MAGI and reduced deduction, if applicable.
• Double-check your contribution entries to make sure they’re accurate and don’t exceed annual limits.
• Keep Form 5498 for your records. 

What Happens If You Exceed IRA Contribution Limits?

If you contribute more than the IRS allows, you will face a penalty of 6% tax on any excess contributions every year that the extra payment remains in your account. 

If you notice an overpayment, you can:

• Remove the excess contribution before the tax deadline
• Recharacterize the contribution by converting it from a traditional IRA contribution to a Roth IRA contribution
• Apply the excess to next year’s limit — keep in mind you will still owe the penalty for one year

Common IRA Deduction Mistakes To Avoid

• Contributing more than the limit
• Forgetting to contribute before the April 15 deadline to have your contributions count for the prior tax year
• Contributing in a year when neither you nor your spouse had taxable income
• Deducting contributions to a Roth IRA

Key Takeaways

Remember these points as you plan your IRA contributions and deductions this year.

• You can contribute and deduct up to $7,000 — $8,000 if you’re 50 or older.
• You might have a reduced limit if you or your spouse has a workplace retirement plan.
• If you can’t deduct your contribution, consider making a non-deductible contribution or converting your IRA to a Roth.

Rudri Patel contributed to the reporting for this article.

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