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The IRS just released the 2025 contribution and income limits for retirement accounts, including Roth IRAs. While it might be a bummer that Roth IRA contribution limits aren’t increasing, the good news is that income limits are moving up. This change means you might have a better chance of qualifying to make direct contributions to a Roth IRA in 2025.
A quick primer on the Roth IRA
The Roth IRA is one of the hottest retirement accounts around, and being able to contribute to it each year is a big deal for many. Its main appeal? The tax-free growth and income you get to enjoy in retirement.
Imagine building a $1 million nest egg in your Roth IRA. You could withdraw that money during retirement without taxes chipping away at your portfolio. You’ll just need to wait until you’re 59 1/2 and meet the five-year rule to access those earnings tax-free.
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If you’re new to the Roth IRA and its benefits, here are a few key things to keep in mind:
- Contributions: You fund your Roth IRA with after-tax dollars, so you pay taxes on the money now. This can work in your favor if you’re in a lower tax bracket now than you expect to be in retirement. In 2025, you can contribute up to $7,000, provided you’ve earned at least that much income. And if you’re 50 or older, you get a $1,000 catch-up contribution, allowing you to set aside up to $8,000.
- Tax-free growth: The Roth IRA offers flexibility to invest in a variety of assets, including real estate investment trusts (REITs) and exchange-traded funds (ETFs). The best part? Dividends, interest, and any gains on your investments grow completely tax-free.
- No required minimum distributions: Unlike some other retirement accounts, the Roth IRA doesn’t force you to withdraw funds at a certain age. Your money can keep growing as long as you want. And if you don’t need it during your lifetime, you can pass it on to your heirs.
Sound appealing? The Roth IRA is packed with benefits that can pave the way for a comfortable retirement. But one thing could stand in the way — your income.
Roth IRA income limits are increasing in 2025
Let’s jump into the 2025 income limits. If you’re single or head of household, you can contribute the full amount to a Roth IRA if your income is under $150,000. That’s up from $146,000 in 2024.
Once your income goes above that, you’ll enter the phase-out range. In this range, your contribution limit starts to drop. And if you hit more than $165,000 worth of income, you can’t make direct contributions to a Roth IRA.
The key income number to watch is your modified adjusted gross income (MAGI). Think of it as your adjusted gross income with a few tweaks. Once you know your MAGI, you’ll know if you can take advantage of Roth IRA contributions.
Check out the Roth IRA income limits for 2024 and 2025 to see if you qualify for these tax-free benefits.
|
2024 Tax-Filing Status |
Income Limit for a Full Roth IRA Contribution |
Roth Contribution Phases Out Entirely for Income Above |
|---|---|---|
|
Single and head of household |
$146,000 |
$161,000 |
|
Married filing jointly |
$230,000 |
$240,000 |
Data source: IRS. Chart by author.
|
2025 Tax-Filing Status |
Income Limit for a Full Roth IRA Contribution |
Roth Contribution Phases Out Entirely for Income Above |
|---|---|---|
|
Single and head of household |
$150,000 |
$165,000 |
|
Married filing jointly |
$236,000 |
$246,000 |
Data source: IRS. Chart by author.
A limited-time offer
If you expect your income to rise in the future, now’s the time to stash as much as you can in a Roth IRA while you’re still eligible. Once your income crosses the threshold, direct contributions will be off the table.
However, before jumping into a Roth IRA, make sure it’s the right account for you and that your finances are in order. For instance, if you don’t have at least three months’ worth of bills tucked away in an emergency fund, you might want to focus on building that up first.
The good news? You still have time to map out your Roth IRA strategy before 2025 kicks off. So do your research, keep tabs on your finances, and get ready to crush your Roth IRA goals next year before your window closes.
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