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Strategies to Preserve Your Retirement Savings from Inflation
Inflation can erode purchasing power in retirement, but the right strategies may help protect your savings. Learn about investment, income, and tax...
Learn the updated contribution limits and income thresholds for IRAs in 2025. EP Wealth retirement planners help you plan for your short and long-term financial goals. Find an advisor near you.
How Much Can I Contribute to an IRA in 2025?
Each year, the IRS adjusts contribution limits and income thresholds for retirement accounts in response to inflation and changing economic conditions. Below, we cover the 2025 contribution and income limits for traditional and Roth IRAs.
If you’re considering adjustments to your retirement plan, a financial planner at EP Wealth can provide guidance on how to best align with these 2025 limits and manage your tax options.
2025 IRA Contribution Limits
In 2025, the contribution limit for traditional and Roth IRAs remains at $7,000. Individuals aged 50 and older can take advantage of an additional “catch-up” contribution of $1,000, allowing for a total annual contribution of $8,000.
What Has Changed for 2025? Income Limits and Phase-Out Ranges
For 2025, the income ranges used to determine eligibility to make deductible contributions to traditional IRAs and Roth IRAs have increased.
To understand these changes, it’s helpful to understand the concept of phase-outs. A phase-out refers to a gradual reduction of a tax credit a taxpayer qualifies for as their income approaches the higher limit of eligibility for that credit.
So, a taxpayer with income at the lower end of a phase-out range may qualify for the maximum tax credit amount, and a taxpayer at the higher end of the income scale will be eligible for less. If the taxpayer’s income exceeds the upper limit for the phase-out, they may be ineligible to utilize the tax advantage altogether.
Here is an overview of the new phase-out ranges and income changes for 2025.
2025 Traditional IRA Phase-Out Ranges
Although traditional IRA contributions are not limited by income, the amount you can deduct depends on your modified adjustable gross income (MAGI), tax filing status, and whether you’re covered by a workplace retirement plan. Here are the 2025 phase-out ranges:
- Single filers covered by a workplace retirement plan: The deduction phase-out range increases in 2025 to between $79,000 and $89,000.
- Married couples filing jointly, with the contributing spouse covered by a workplace retirement plan: The deduction phase-out range is from $126,000 to $146,000.
- Married couples filing jointly, where the contributor is not covered by a workplace plan but their spouse is: The phase-out range is between $236,000 and $246,000.
- Married individual filing separately and covered by a workplace plan: The phase-out remains between $0 and $10,000, as it is not affected by cost-of-living adjustments.
If your income places you above these phase-out ranges, your eligibility to deduct contributions may be phased out completely. Higher-income earners may need to explore alternative savings options if deductions are unavailable.
2025 Roth IRA Income Phase-Out Ranges
For Roth IRAs, 2025 income thresholds fully determine whether you can contribute directly, partially, or not at all:
- Single filers and heads of household: The Roth IRA income phase-out range increases in 2025 to between $150,000 and $165,000.
- Married couples filing jointly: The income phase-out range is $236,000 to $246,000.
- Married couples filing separately: The range remains between $0 and $10,000.
For individuals whose income exceeds these limits, direct Roth IRA contributions aren’t allowed, but there may be alternatives like a “backdoor” Roth IRA strategy. Discussing these options with a financial planner can help manage your retirement savings despite income restrictions.
If you earn too much to contribute directly to a Roth IRA, retirement planning professionals at EP Wealth work with you to explore other solutions to help you achieve your savings goals and sustain income for a lifetime. Contact an advisor to get started.
DISCLOSURES:
- EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice.
- Hiring a qualified advisor and/or financial planner does not guarantee investment success and does not ensure that client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct t or implied results of projections being represented here will be met or sustained.
- Information presented is general in nature and should be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the reding of personalized investment advice or is intended to supplement professions individualized advice.
- The content of this report is believed to be accurate as of the date of publication and cannot and does not accurately forecast future economic, market, or financial conditions; including changes to retirement benefits, social security, and/or Medicare. For this reason, any subsequent changes, and/or that occur after the publication of this presentation may cause the analysis encompassed herein to become inaccurate. Any references to future market or economic forecasts are based on hypothetical assumptions that may never come to pass.
- Please consult with a CPA, tax professional, and/or attorney regarding your specific situation before implementing any of the strategies referenced directly or indirectly herein.
- The free financial health assessment referenced here is limited to, and can only be provided to, individuals with $500,000 or more in investable assets. The health assessment is limited to an initial call or meeting with an Investment Adviser Representative (IAR) of EP Wealth to discuss and assess your current financial situation and a subsequent follow-up meeting or call to share our thoughts. No additional services will be provided. EP Wealth Advisors’ obligation is limited to extending an offer to provide these services. It is the responsibility of the individual requesting the free health assessment to accept the service offered. No guarantee or warranty can be made that any of the information discussed or relayed in these meetings will be suitable or relevant. The free financial health assessment is limited in nature and is not intended to be regarded as an attempt to provide comprehensive financial advice.
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- All investment strategies have the potential for profit or loss. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that any specific investment strategy will be suitable or profitable for a client’s portfolio. The risk of loss can never be eliminated even if working with a professional.
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- Laws vary by state. The information presented herein is intended to be general in nature and may not apply to your state of domicile. Please consult local legal counsel to determine the best practices for your state.
