Traditional IRA Deduction Limits for 2025: Can You Write It Off?
Key Takeaways
- The “Active Participant” Rule: If you have a 401(k) at work, your ability to deduct IRA contributions depends on your income.
- The Phase-Out Zone: As your income rises, the tax deduction gradually disappears. Check the 2025 limits carefully.
- Non-Deductible Option: Even if you can’t deduct it, you can still contribute. But consider a Backdoor Roth instead.
Anyone with earned income can contribute to a Traditional IRA, but the ability to deduct those contributions on your tax return depends on your income and whether you are covered by a retirement plan at work. The IRS adjusts these limits annually.
Important: Contributions are always allowed (up to annual limits), but deductibility depends on your MAGI and workplace retirement plan coverage.
2025 Deduction Limits (If Covered by a Workplace Plan)
| Filing Status | MAGI Range | Deduction Status |
|---|---|---|
| Single | $81,000 or less | Full Deduction |
| $81,000 – $91,000 | Partial Deduction | |
| Over $91,000 | No Deduction | |
| Married Filing Jointly | $136,000 or less | Full Deduction |
| $136,000 – $156,000 | Partial Deduction | |
| Over $156,000 | No Deduction |
Phase-Out Visualization
The chart below illustrates how deduction eligibility phases out for Single filers covered by a workplace plan. While income affects deductibility, contributions themselves remain allowed.
Next Steps for Investors
1
Check Your W-2
Look at Box 13 on your W-2. If the “Retirement Plan” box is checked, these income limits apply to you. If not, you can likely deduct the full amount regardless of income.
Look at Box 13 on your W-2. If the “Retirement Plan” box is checked, these income limits apply to you. If not, you can likely deduct the full amount regardless of income.
2
Calculate Your MAGI
Your “Modified Adjusted Gross Income” determines your exact deduction. If you fall in the phase-out range, use an online calculator or tax software.
Your “Modified Adjusted Gross Income” determines your exact deduction. If you fall in the phase-out range, use an online calculator or tax software.
3
Pivot if Needed
Can’t deduct? Don’t just make a non-deductible contribution. Look into a Backdoor Roth IRA strategy to get tax-free growth instead of tax-deferred.
Can’t deduct? Don’t just make a non-deductible contribution. Look into a Backdoor Roth IRA strategy to get tax-free growth instead of tax-deferred.
Frequently Asked Questions
Q. Can I deduct Traditional IRA contributions if I have a 401(k)?
It depends on your Modified Adjusted Gross Income (MAGI). If you or your spouse are covered by a retirement plan at work, the deductibility of a Traditional IRA contribution may be reduced or eliminated once your MAGI exceeds IRS thresholds for 2025.
Q. What happens if my income is too high for a deduction?
You can still contribute to a Traditional IRA, but the contribution will be non-deductible. These after-tax funds grow tax-deferred, and you should track them using IRS Form 8606 to avoid double taxation when you withdraw funds later.
Disclaimer: This material is for informational purposes only. IRS limits and tax laws may change. Please consult a qualified tax advisor to determine eligibility and planning strategies for your situation.