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If you were wondering, “Will IRA contribution limits increase in 2025?”, the IRS just gave you your answer.
In their latest update, the IRS announced slight increases in 401(k) contribution limits for 2025, while most traditional and Roth IRA holders will see no changes from 2024.
Here's a quick summary of the updates:
Table of Contents:
- Traditional and Roth IRA Contribution Limits
- 401(k) Contribution Limits
- SIMPLE IRA Contribution Limits
- HSA Contribution Limits
- Catch-Up Contribution Limits
- Income Ranges and Deductible Contributions
- Take Advantage of the 2025 Contribution Limits at Entrust
2025 IRA Contribution Limits Hold Steady
The regular contribution limits for traditional and Roth IRAs remain unchanged from 2024 at $7,000. Note that this is a combined limit across all IRAs you may hold. So, if you allocate $4,000 to a traditional IRA and $3,000 to a Roth IRA, that hits your yearly maximum.
Slight Increase in 401(k) Contribution Limits
The contribution limit for employees who participate in 401(k) plans, 403(b) plans, most 457 plans, and the federal government's Thrift Savings Plan is increasing. In 2025, the new limit is set at $23,500, up from $23,000 in 2024.
2025 SIMPLE IRA Contribution Limits Receive a Boost
The SIMPLE plan (Savings Incentive Match Plan for Employees) is a retirement account type tailored for small-business employees and self-employed individuals.
In 2025, contributors to SIMPLE IRAs will have the opportunity to invest up to $16,500, marking an increase from the previous limit of $16,000. Due to changes from the SECURE Act 2.0, plan participants at small employers (25 or fewer employees) can contribute up to $17,600 to their SIMPLE plans in 2025.
2025 Health Savings Account (HSA) Contribution Limits Rise Slightly
If you don’t have a Health Savings Account (HSA), you may want to consider funding one in 2025. These specialized accounts offer flexibility in saving for medical expenses while potentially reducing your taxable income for the year.
In 2025, HSA contribution limits stand at $4,300 for individuals with self-only health coverage, while those with family coverage can contribute up to $8,550. For individuals aged 55 and above, there's an opportunity for an extra boost in savings, as they can make a catch-up contribution of an additional $1,000.
The minimum annual deductible for high-deductible health plans (HDHP) increased to $1,650 (self-only) and $3,300 (family coverage). Meanwhile, the maximum out-of-pocket limits for HDHPs are now $8,300 (self-only) and $16,600 (family coverage). These limits include deductibles, copayments, and other qualified expenses, though not premiums.
Not sure if you’re eligible to contribute to an HSA? Download our Account Guide to find out if you qualify.
Still Waiting on Limits for ESAs and SEP IRAs
The IRS has not yet released the 2025 contribution limits for Simplified Employee Pension (SEP) IRAs or Education Savings Accounts (ESAs). In 2024, the SEP IRA contribution limit was the lesser of $69,000 or 25% of compensation, while the ESA limit stood at $2,000.
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2025 Catch-Up Contribution Limits Increase in Certain Cases
Catch-up contribution limits, which provide individuals aged 50+ with an extra opportunity to boost their retirement savings, saw only minor adjustments for 2025.
- Traditional and Roth IRAs: The catch-up contribution limit remains at $1,000, allowing those 50 and older to contribute up to $8,000 in total across their traditional and Roth IRAs for the year.
- 401(k), 403(b), 457 Plans, and Thrift Savings Plan: The catch-up contribution limit for most participants aged 50+ remains at $7,500 in 2025. This brings the total contribution limit to $31,000 for eligible participants. However, due the SECURE Act 2.0, those aged 60-63 have an increased catch-up limit of $11,250, allowing for even greater contributions.
- SIMPLE Plans: The catch-up contribution limit for most plan participants aged 50+ remains at $3,500 in 2025.
- However, if you have a SIMPLE IRA with an employer with 25 or fewer employees, you automatically gain a 10% increase in your catch-up contribution limits, bringing your new catch-up contribution limits to $3,850.
- For those aged 60-63 at any size employer, the limit rises to $5,250, providing more savings opportunities for those nearing retirement.
Income Ranges and Deductible Contributions
Income is one of the most important determining factors for contributing to certain types of IRAs.
For example, your ability to contribute to a Roth IRA, claim the Saver’s Credit, or enjoy tax deductions on your traditional IRA contributions, are all dictated by your earned income for the year.
Here are the significant changes to income limits:
Find out which account type is right for you
2025 Traditional IRA Tax Deduction Income Range
The phase-out range for single taxpayers covered by a workplace retirement plan will increase to between $79,000 and $89,000, up from $77,000 and $87,000.
This means a single taxpayer is only able to enjoy the full benefit of tax-deductibility of a traditional IRA contribution if they earn less than $79,000. Meanwhile, a single taxpayer earning over $79,000 but less than $89,000 may still deduct a portion of their IRA contribution from their taxes.
For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range will increase to between $126,000 and $146,000, up from $123,000 and $143,000 in 2024.
For those not covered by a workplace retirement plan and married to someone who is, the phase-out range will be $236,000 and $246,000, up from $230,000 and $240,000. The phase-out range for a married individual filing a separate return and covered by a workplace retirement plan remains between $0 and $10,000.
2025 Roth IRA Income Limits
To contribute to a Roth IRA, the income phase-out range for singles and heads of household is increased to between $150,000 and $165,000, up from $146,000 and $161,000.
So, if you earn more than $150,000 as a single taxpayer in 2025, you will only be able to make a partial contribution to a Roth IRA.
For married couples filing jointly, the phase-out range is now between $236,000 and $246,000, up from $230,000 and $240,000. The phase-out range for a married individual filing a separate return and contributing to a Roth IRA remains between $0 and $10,000.
2025 Saver's Credit Income Limits
The income limit for the Saver's Credit, which supports low- and moderate-income workers, is now $79,000 for married couples filing jointly, up from $76,500. For heads of household, it's $59,250, up from $57,375, and for singles and married individuals filing separately, it's $39,500, up from $38,250.
Take Advantage of the 2025 Contribution Limits at Entrust
These updated contribution limits aim to encourage more Americans to save for retirement and enjoy the tax advantages available through various retirement plans.
With a self-directed IRA (SDIRA), you can combine these expanded tax-preferred opportunities with expanded investment options.
Once you open your SDIRA, you’ll be able to invest your retirement funds in a wide range of alternative assets like real estate, private equity, precious metals, and more. By increasing asset diversification, you may be able to increase the resiliency and overall returns of your holdings.
For more detailed information on these changes and retirement-related cost-of-living adjustments for 2025, you can refer to IRS Notice 2024-80.
If you find yourself torn between a traditional or Roth IRA, download our Tax-Free vs Tax-Deferred Guide. This resource delves into the advantages of both account types and offers valuable insights on selecting the right one for your unique situation and financial goals.
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