There’s plenty of upside to being a high earner, and at least one downside: At higher incomes, the IRS shuts you out of some of the biggest tax benefits of individual retirement accounts.
Specifically, if you earn too much to contribute to a Roth IRA, there's a good chance you're also ineligible to deduct contributions to a traditional IRA. Enter the nondeductible IRA, which has more advantages than the name implies.
What is a nondeductible IRA?
A nondeductible IRA is a traditional IRA for which you don’t get a tax deduction for your contributions. While there’s no tax benefit for these contributions, investment returns grow tax-deferred until you're ready to withdraw in retirement.
At that time, you'll pay taxes on investment gains, but not on the money you contributed as part of the nondeductible IRA. That's because you didn’t take a deduction when you first put it in.
» See our top picks for the best IRA accounts
Why consider a nondeductible IRA?
A traditional IRA doesn’t technically have income limits for eligibility like the Roth IRA. But if you’re covered by a retirement plan at work and you earn too much to contribute to a Roth IRA, you also earn too much to deduct your contributions to a traditional IRA.
If you are a single filer and you are covered by a retirement plan at work, you're can't deduct contributions to a traditional IRA if your income exceeds certain limits. If you're a joint filer and you have a retirement plan at work, the income limit is different. If you don't have a retirement plan but your spouse does, you can deduct IRA contributions if your limit is below a certain amount.
2025 traditional IRA tax deduction limits
| Filing status | 2025 traditional IRA income limit | Deduction limit |
|---|---|---|
| Single or head of household (and covered by retirement plan at work) | $79,000 or less. | Full deduction. |
| More than $79,000, but less than $89,000. | Partial deduction. | |
| $89,000 or more. | No deduction. | |
| Married filing jointly (and covered by retirement plan at work) | $126,000 or less. | Full deduction. |
| More than $126,000, but less than $146,000. | Partial deduction. | |
| $146,000 or more. | No deduction. | |
| Married filing jointly (spouse covered by retirement plan at work) | $236,000 or less. | Full deduction. |
| More than $236,000, but less than $246,000. | Partial deduction. | |
| $246,000 or more. | No deduction. | |
| Married filing separately (you or spouse covered by retirement plan at work) | Less than $10,000. | Partial deduction. |
| $10,000 or more. | No deduction. |
2026 traditional IRA tax deduction limits
| Filing status | 2026 traditional IRA income limit | Deduction limit |
|---|---|---|
| Single or head of household (and covered by retirement plan at work) | $81,000 or less. | Full deduction. |
| More than $81,000, but less than $91,000. | Partial deduction. | |
| $91,000 or more. | No deduction. | |
| Married filing jointly (and covered by retirement plan at work) | $129,000 or less. | Full deduction. |
| More than $129,000, but less than $149,000. | Partial deduction. | |
| $149,000 or more. | No deduction. | |
| Married filing jointly (spouse covered by retirement plan at work) | $242,000 or less. | Full deduction. |
| More than $242,000, but less than $252,000. | Partial deduction. | |
| $252,000 or more. | No deduction. | |
| Married filing separately (you or spouse covered by retirement plan at work) | Less than $10,000. | Partial deduction. |
| $10,000 or more. | No deduction. |
If you're not eligible to deduct traditional IRA contributions, you can still contribute to that workplace plan — especially if your employer offers matching dollars — and the nondeductible IRA.
» Learn more: See the full list of traditional IRA income limits
The real benefit of a nondeductible IRA
The tax-deferral of investment earnings you get from a nondeductible IRA is a perk, sure. But making those earnings tax-free is better, and by jumping through a few hoops, you can achieve that.
How? By converting the money in a nondeductible IRA to a Roth IRA through a backdoor Roth IRA. Despite the name, it’s not nearly as sinister as it sounds. In fact, it’s IRS-approved and something financial advisors frequently recommend for people with higher incomes.
When you make contributions to a Roth, you do so with after-tax dollars. When you convert nondeductible IRA contributions to a Roth, you’re converting after-tax dollars, too. Once that conversion is complete, any investment growth within the account can be pulled out as a qualified distribution tax-free.
Converting a nondeductible IRA into a Roth IRA
Before you convert the money in a nondeductible IRA into a Roth IRA, you'll need to pay taxes on any untaxed money before it lands in the Roth account. Even if you don't have other IRAs, if you allow the contributions you make to your traditional IRA to earn an investment return, you may have to pay taxes on that growth when you do the conversion.
That’s not a huge issue, but it does simplify things to make your entire year’s contribution at once and then convert that amount. The IRA contribution limit is $7,500 for 2026 ($8,600 if aged 50 and older).
Most brokerages will help you with the conversion and report to you any tax you owe. But you should still keep track of any gains and contributions on your own and consult with a financial advisor to ensure you’ve reported nondeductible contributions and completed the conversion correctly.
Finally, know that this is a move you can’t take back — tax reform laws eliminated the ability to reverse a conversion.
» Take it one step further: Read our guide to mega backdoor Roths
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- 1. IRS.gov. Retirement plans FAQs regarding IRAs. Accessed Nov 14, 2025.
