Will You Be Able to Deduct Your IRA Contributions Next Year? For Some, the Answer Is No.

Core Insights - The article discusses the eligibility criteria for deductible IRA contributions in 2026, emphasizing the impact of income and marital status on these deductions [2][4][6] Group 1: Deductible IRA Contributions - High earners who are active participants in employer-sponsored retirement plans, such as 401(k)s, face limitations on deductible IRA contributions based on their income and marital status [4][6] - For single active participants, the income threshold for full deductibility is $81,000 or less, with a reduced amount applicable for incomes between $81,000 and $91,000, and no deduction for incomes above $91,000 [6] - For married couples filing jointly, the thresholds are $129,000 for full deductibility, $129,000 to $149,000 for a reduced amount, and no deduction for incomes exceeding $149,000 [6] Group 2: Contribution Limits and Non-Deductible Contributions - The annual limit for IRA contributions will increase to $7,500 for adults under 50 and $8,600 for those aged 50 or older by the end of 2026 [6] - Individuals who cannot deduct their contributions can still make non-deductible IRA contributions, which do not provide an initial tax break but allow for tax-deferred growth on earnings [7][10] - Non-deductible contributions may lead to a higher tax bill in the year they are made, but withdrawals of these contributions will not incur taxes [9][10] Group 3: Tax Implications and Alternatives - Withdrawals from traditional IRAs containing both deductible and non-deductible contributions are taxed proportionally, meaning a portion of the withdrawal may be tax-free [11] - Individuals may consider contributing to a Roth IRA instead, which allows for tax-free growth and withdrawals under certain conditions, or increasing contributions to employer-sponsored plans like 401(k)s, which may offer higher deductible limits [12][13]