Roth vs. Traditional IRA Limits: New 2025 Guide
The **Internal Revenue Service (IRS)** sets separate rules for retirement accounts each year. For 2025, the maximum contribution limit for both Roth and Traditional Individual Retirement Arrangements (IRAs) remains the same, but the income restrictions on eligibility and deductibility differ significantly.
Understanding these **Modified Adjusted Gross Income (MAGI)** phase-out ranges is crucial for effective tax planning.
2025 Maximum IRA Contribution Limits
The following limits apply to the **combined total** contribution across all Traditional and Roth IRA accounts:
| Category | Annual Contribution Limit (Under Age 50) | Catch-Up Contribution (Age 50+) | Total Maximum Contribution (Age 50+) |
|---|---|---|---|
| All IRAs (Roth & Traditional) | $\text{\$7,000}$ | $\text{\$1,000}$ | $\text{\$8,000}$ |
- Key Rule: You can only contribute up to your total earned taxable compensation for the year.
- Deadline: Contributions for the 2025 tax year can be made up until the tax filing deadline in April 2026.
Roth IRA: Income Eligibility Caps (The MAGI Barrier)
The Roth IRA offers tax-free growth and tax-free withdrawals in retirement, but its benefit is limited to taxpayers whose income falls below specific thresholds. If your **Modified Adjusted Gross Income (MAGI)** exceeds the phase-out range, you cannot make a direct contribution.
| Filing Status | MAGI Phase-out Range | Contribution Zeroed Out At or Above |
|---|---|---|
| Single / Head of Household | $\text{\$150,000}$ to $\text{\$165,000}$ | $\text{\$165,000}$ |
| Married Filing Jointly (MFJ) | $\text{\$236,000}$ to $\text{\$246,000}$ | $\text{\$246,000}$ |
| Married Filing Separately (MFS) | $\text{\$0}$ to $\text{\$10,000}$ | $\text{\$10,000}$ |
💡 High-Income Strategy: The Backdoor Roth
If your MAGI is above the maximum Roth contribution limit, you can still access Roth savings via the **Backdoor Roth IRA** process. This involves making a non-deductible contribution to a Traditional IRA and immediately converting it to a Roth IRA. This process bypasses the MAGI limit.
(Consult a tax advisor, especially regarding the Pro-Rata Rule if you hold other pre-tax Traditional IRAs.)
Traditional IRA: Tax Deduction Limits (The Workplace Plan Test)
Anyone with earned income can contribute to a Traditional IRA, regardless of income. However, the ability to **deduct** that contribution from your taxable income depends on two factors: income and coverage by a workplace plan (like a 401(k) or 403(b)).
Scenario A: You ARE Covered by a Workplace Plan
If you or your spouse has access to a retirement plan at work, your MAGI determines your deduction eligibility:
| Filing Status | MAGI Phase-out Range for Full Deduction |
|---|---|
| Single / Head of Household | $\text{\$79,000}$ to $\text{\$89,000}$ |
| Married Filing Jointly (MFJ) | $\text{\$126,000}$ to $\text{\$146,000}$ |
If your MAGI exceeds the upper limit, your Traditional IRA contribution is **not deductible** (it becomes a non-deductible contribution, often used for the Backdoor Roth strategy).
Scenario B: You Are NOT Covered by a Workplace Plan
If neither you nor your spouse is covered by an employer-sponsored retirement plan, you can **deduct the full Traditional IRA contribution** regardless of your income level.
Access our comprehensive tax guide comparing Roth vs. Traditional strategies for every income bracket.
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