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Are IRA contributions tax-deductible?
Your IRA contribution may be tax-deductible depending on a few things: the type of IRA you have, whether you're covered by a workplace retirement plan, your filing status, and your income amount.
If you want to make a tax-deductible IRA contribution — that is, you want to claim a deduction and lower your taxable income when you file your taxes — consider the traditional IRA, as contributions to a Roth IRA are not tax deductible.
Here’s how to figure out if you qualify to deduct your traditional IRA contributions.
If you don't have a work retirement plan
If you, and your spouse if you’re married, don’t have a retirement plan at work, and you want to open a traditional IRA, you can do so. You may also qualify to claim an IRA tax deduction for the contributions you make.
You can contribute to your IRA for 2023 through the tax filing deadline on April 15. Keep in mind that you must have income from work to contribute to an IRA. (Spouses who don’t have their own income may be eligible for a spousal IRA.)
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If you do have a work retirement plan
If you do have a retirement plan at work, or if your spouse does, then your ability to deduct contributions depends on whether your income is above the traditional IRA income limits. (Note: These income limits usually change each year, due to IRS inflation adjustments.)
If your is under the limits, you’re eligible to claim a tax deduction for your contributions to a traditional IRA.
If you’re in the income phase-out range, you can deduct a portion of your contributions.
If your income is higher than the maximum income limit ($83,000 in tax year 2023 if you are single, and $136,000 if you are married filing jointly), then you can’t deduct your IRA contributions.
» More information on the IRA income limits
Even if you can’t deduct your IRA contributions, you can still make contributions to that account. With a nondeductible IRA, you don’t get to claim an immediate tax deduction, but your money grows tax-deferred. When it comes time to withdraw your money in retirement, you’ll owe taxes on the investment earnings in a nondeductible IRA, but not on the money you contributed, assuming you follow the IRA withdrawal rules.
The annual maximum contribution applies to your traditional and Roth IRAs, combined if you have both. The contribution max is $7,000 in 2024 ($8,000 if age 50 or older).
» See our complete roundup and find the best IRA account for you
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