Roth IRA Contribution Capitals for 2023 and 2024 Depiction
Roth IRA Contribution Capitals for 2023 and 2024 Depiction
In 2024, individuals under 50 can contribute up to $7,000 to their Roth IRA, while those 50 and above can contribute $8,000. This limit remains the same in 2025. However, various factors can impact your ability to contribute the full amount.
Let's explore these factors and learn how to determine your 2024 and 2025 contribution limit.
Factors determining your contribution limit
- Annual limit set by the IRS: The Internal Revenue Service (IRS) sets an annual contribution limit that specifies the maximum amount individuals can contribute to a Roth IRA each year.
- Age: If you're 50 or older, you're eligible to make "catch-up contributions". The IRS also sets limits on the additional amount you can contribute each year.
- Modified adjusted gross income (MAGI): Your MAGI is calculated by deducting certain expenses from your adjusted gross income (AGI) and then adding back certain tax deductions. Individuals with MAGIs above specific thresholds may not be eligible to contribute the full annual amount to a Roth IRA or make a direct contribution at all.
- Tax filing status: The government assesses your MAGI based on your tax filing status, as shown in the table below.
- Contributions to traditional IRAs: The IRS limit applies to all of your IRA contributions during the year, so if you've already contributed to a traditional IRA, you may need to subtract that contribution from the annual limit to determine your remaining Roth IRA contribution limit.
Contribution limits
The following table illustrates the Roth IRA contribution limits for 2024 and 2025 based on your tax filing status and MAGI.
Single, head of household, or married filing separately if you didn't live with your spouse at all during the year
| Tax Filing Status | Contribute up to the IRS limit if your MAGI is less than: | Contribute a reduced amount if your MAGI is: | Contribute nothing if your MAGI is more than: || --- | --- | --- | --- || Single, head of household, or married filing separately if you didn't live with your spouse at all during the year | $146,000 (2024) or $150,000 (2025) | $146,000-$161,000 (2024) or $150,000-$165,000 (2025) | $161,000 (2024) or $165,000 (2025) || Married filing jointly or qualifying widow(er) | $230,000 (2024) or $236,000 (2025) | $230,000-$240,000 (2024) or $236,000-$246,000 (2025) | $240,000 (2024) or $246,000 (2025) || Married filing separately if you lived with your spouse at any point during the year | N/A | $0-$10,000 | $10,000 |
$146,000 (2024) or $150,000 (2025)
Single individuals with an MAGI under $146,000 (2024) or $150,000 (2025) are eligible to contribute up to the annual limit of $7,000 or $8,000 if they're 50 or older. Married couples with a MAGI below $230,000 (2024) or $236,000 (2025) can also contribute up to the annual limit.
$146,000-$161,000 (2024) or $150,000-$165,000 (2025)
For tax years 2025, single filers with an MAGI of less than $150,000 will be eligible to contribute the full amount: $7,000 or $8,000 for those who are 50 or older. Married couples with a MAGI of less than $236,000 will also be eligible to contribute the full amount.
$161,000 (2024) or $165,000 (2025)
Individuals with an MAGI above $161,000 (2024) for single filers or $240,000 (2024) for married couples filing jointly will be ineligible to contribute directly to a Roth IRA in 2024. For tax year 2025, these limits increase to $165,000 for single filers and $246,000 for married couples.
Modified Adjusted Gross Income (MAGI)
Married filing jointly or qualifying widow(er)
Modified adjusted gross income (MAGI) is an important metric used to determine eligibility for certain tax deductions, credits, and additional taxes. Married couples filing separately who lived together and have a MAGI exceeding $10,000 may not contribute directly to a Roth IRA in 2024 or 2025.
$230,000 (2024) or $236,000 (2025)
However, if your income is above the specified limits, you can still contribute to a Roth IRA through a "backdoor Roth IRA" strategy. This involves contributing to a traditional IRA and then converting it into a Roth IRA within the same tax year. While it involves additional steps, this method can allow you to make a Roth IRA contribution despite having a high MAGI.
$230,000-$240,000 (2024) or $236,000-$246,000 (2025)
If your MAGI falls between the two thresholds for your tax filing status, follow the steps below to calculate your legal Roth IRA contribution limit for the current tax year.
$240,000 (2024) or $246,000 (2025)
The outcome you're seeking is your AGI. You can locate this figure in your previous year's tax return, which might give you a rough estimate for this year if your income and living expenditures haven't drastically altered.
To calculate your MAGI, you need to employ these deductions and include them in your AGI:
Married filing separately if you lived with your spouse at any point during the year
- Interest from student loans
- Tuition fees and expenses
- Contributions to your IRA
- Half of your self-employment tax payments
- Losses from rental properties
- Passive income or losses
- Employer-covered adoption expenses
- Foreign income or housing exclusions
- Losses from partnerships in publicly traded businesses
- Taxable Social Security payments (excluding SSI)
N/A
In some instances, your MAGI might equal your AGI, although this isn't always the case. Once you've figured out this value, you can calculate your capped Roth IRA contribution limit for the year using the following formula:
$0-$10,000
- Determine your MAGI using the steps mentioned above.
- Select the appropriate next step based upon your tax filing status:
- Single, head of household, or married filing separately if you didn't live with your spouse all year: Deduct $146,000 from your MAGI for 2024 or $150,000 for 2025.
- Married filing jointly or qualifying widow(er): Deduct $230,000 for 2024 or $236,000 for 2025.
- Married filing separately if you lived with your spouse at any point during the year: Proceed straight to the next phase with your MAGI.
- Divide your result from step 2 by:
- $15,000 if you filed single, head of household, or married filing separately if you didn't live with your spouse all year
- $10,000 if you filed married filing jointly, qualifying widow(er), or married filing separately if you lived with your spouse at any point during the year
- Multiply your result from step 3 by the applicable annual contribution limit: $7,000, or $8,000 if you're 50 or older.
- Subtract your result from step 4 from the annual contribution limit.
$10,000
To illustrate this process, think of a single, unmarried adult under 50 who earns a MAGI of $150,000 in 2024. They would deduct $146,000 from their MAGI, resulting in $4,000. After that, they'd divide the $4,000 by $15,000, which leaves 0.267. They'd then multiply the 0.267 by the $7,000 annual Roth IRA contribution limit for individuals under 50, generating $1,867. Lastly, they'd subtract the $1,867 from the $7,000 limit, setting their limit for reduced contributions at $5,133.
Although it might appear complex, once you have your MAGI, it's not too hard to solve. Remember that the government changes the rules regarding Roth IRA contributions annually, so it's crucial to check up on these changes before making contributions in future years.
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If you're considering contributing to a Roth IRA in 2024 or 2025, it's essential to consider your modified adjusted gross income (MAGI). For individuals under 50, a high MAGI might limit their ability to contribute the full $7,000, while those 50 and above may still be able to contribute up to $8,000 due to catch-up contributions, even with a high MAGI. However, individuals with MAGIs above the allowed thresholds may not be eligible to contribute at all. Understanding your MAGI and its impact on your Roth IRA contribution limit can help you make informed decisions about your retirement savings and finance.