IRA Tax Deduction: 2025 and 2026 Limits and Income Phase-Outs

You can deduct traditional IRA contributions of up to $7,500 for 2026 ($8,600 if you are 50 or older), or $7,000 and $8,000 for 2025, as long as you have at least that much taxable compensation. If neither you nor your spouse is covered by a retirement plan at work, the whole contribution is deductible at any income; if one of you is covered, the deduction phases out over an income range set each year by the IRS.

Roth IRA contributions are never deductible. SEP IRA contributions for your own business are deductible under separate, much higher limits. This guide covers all three, with the numbers for both years.

Contribution limits for 2025 and 2026

• 2025: $7,000, plus a $1,000 catch-up if you are 50 or older by year-end.
• 2026: $7,500, plus a $1,100 catch-up at 50 or older (IRS release IR-2025-111).

The limit is the smaller of that dollar figure or your taxable compensation for the year, and it is shared across all your traditional and Roth IRAs. Since 2020 there is no maximum age for traditional IRA contributions. If you file jointly and one spouse has little or no earnings, that spouse can still contribute based on the other's compensation (often called a spousal IRA).

Who gets the full deduction

If neither you nor your spouse was covered by an employer retirement plan for any part of the year, you can deduct your traditional IRA contributions up to the limit regardless of income. "Covered" usually means the Retirement plan box in box 13 of your Form W-2 is checked. Participation in a 401(k), 403(b), pension, SIMPLE IRA or SEP all count.

2026 income phase-outs for the IRA deduction

When coverage applies, the deduction shrinks as modified AGI moves through these ranges (2025 figures in brackets):

• Single or head of household, covered at work: $81,000 to $91,000 [$79,000 to $89,000].
• Married filing jointly, the contributing spouse is covered: $129,000 to $149,000 [$126,000 to $146,000].
• Married filing jointly, you aren't covered but your spouse is: $242,000 to $252,000 [$236,000 to $246,000].
• Married filing separately, either spouse covered: $0 to $10,000, not adjusted for inflation.

Below the bottom of the range, you deduct the full amount. Above the top, you deduct nothing. In between, the deduction falls in proportion to how far into the range you are. Publication 590-A has the worksheet, including its rounding rules.

You can still contribute above the range

Losing the deduction does not stop you from contributing. A nondeductible traditional contribution is reported on Form 8606 so the IRS knows you have basis, which keeps that money from being taxed again when you withdraw it.

Roth IRA: no deduction, separate income limits

Roth contributions are made with after-tax money and can never be deducted; the payoff is tax-free qualified withdrawals later. Eligibility to contribute directly phases out by income:

• Single and head of household: $153,000 to $168,000 for 2026 [$150,000 to $165,000 for 2025].
• Married filing jointly: $242,000 to $252,000 for 2026 [$236,000 to $246,000 for 2025].
• Married filing separately: $0 to $10,000.

Lower-income savers may also qualify for the Saver's Credit on either kind of IRA contribution. For 2026 it is available up to AGI of $80,500 joint, $60,375 head of household and $40,250 for other filers.

SEP IRA deduction for the self-employed

A SEP IRA is an employer plan, which makes it different from your personal IRA in three ways:

• Higher limits. Contributions can be up to 25% of an employee's compensation, capped at $72,000 for 2026 ($70,000 for 2025). For your own account as a sole proprietor or partner, the effective rate is 20% of net self-employment earnings after you subtract half of your self-employment tax, per Publication 560.
• Later deadline. You can set up and fund a SEP for a year up to the due date of your return, including extensions.
• Different line. Your own SEP contribution goes on Schedule 1, line 16. Contributions for employees are a business expense.

The catch: a SEP makes you "covered by an employer retirement plan" for that year. The IRS's SEP guide (Publication 4333) says your traditional IRA deduction may be reduced or eliminated because, as a SEP participant, you are covered. A self-employed person who funds a SEP and also wants a deductible personal IRA needs to check the phase-out table above.

Deadlines

Traditional and Roth IRA contributions for a tax year can be made up to the original due date of the return, not including extensions. For most people, 2025 contributions were due by April 15, 2026, and 2026 contributions can be made until the April 2027 filing deadline. Tell the custodian which year a January-to-April contribution is for.

Worked example: a Raleigh photographer with a day job, tax year 2026

Dev is single. He works for a school district that enrolls him in its 403(b), so the Retirement plan box on his W-2 is checked. On weekends he runs a wedding photography business as a sole proprietor. His 2026 modified AGI is $85,000, and he plans to contribute $7,500 to a traditional IRA.

1. Find his range. Single and covered: $81,000 to $91,000, a $10,000 band.
2. How far through it is he? $85,000 is $4,000 into the band, or 40%.
3. Deductible share. 100% minus 40% = 60%. 60% of $7,500 = $4,500 deductible.
4. The rest. The remaining $3,000 is a nondeductible contribution, tracked on Form 8606. He could instead put $4,500 in the traditional IRA and $3,000 in a Roth, since he is under the Roth range.

Compare his neighbors Sam and Ana, who file jointly with modified AGI of $200,000. Ana has a 401(k) at work; Sam is a freelance illustrator with no plan. Sam's range is $242,000 to $252,000, so he deducts his full $7,500. Ana is covered, and her range ends at $149,000, so her own traditional IRA contribution is not deductible.

If Sam opened a SEP for his illustration business in 2026, he would become covered himself, his range would drop to $129,000 to $149,000, and his personal IRA deduction would disappear at their income. The SEP's own deduction would likely be larger, but it is a trade-off worth modeling before you open the account.

Common mistakes

• Contributing more than you earned. Investment income, pensions and Social Security aren't compensation. Self-employment earnings count only after subtracting half of SE tax and your own retirement plan contributions.
• Forgetting the spouse rule. One spouse's workplace plan can limit the other's deduction, using the higher joint range.
• Skipping Form 8606. Without it, nondeductible contributions can end up taxed twice.
• Funding a personal IRA after the April deadline. Unlike a SEP, a filing extension doesn't extend it.
• Excess contributions. Amounts above the limit face a 6% excise tax each year they stay in the account; withdrawing the excess and its earnings by your return's due date, including extensions, avoids it.

hellobooks< / a > -helps-self-employed-savers">How HelloBooks helps self-employed savers

The IRA and SEP limits for the self-employed both start from your net business profit, so the quality of your books decides how much you can safely put away. HelloBooks keeps a running P&L from bank feeds and AI-categorized transactions that you approve, and its period-end close tools help you settle accruals before you calculate a contribution. Record SEP and IRA transfers to an owner's draw or equity account rather than an expense, so your profit isn't understated, and export the year's ledger for your tax preparer. The decision about how much to contribute stays with you and your adviser; the software gives you the profit figure to base it on.

General information as of November 2026, not tax or investment advice. Contribution limits and phase-out ranges change each year; confirm them in Publication 590-A and Publication 560 on irs.gov, or with a CPA.