Key Takeaways
- Roth and Traditional IRAs both have a contribution limit of $7,500 in 2026, up from $7,000 in 2025.
- Roth IRA contributions depend on your income.
- Traditional IRA deductions depend on your income and workplace plan coverage.
- Only earned income qualifies for IRA contributions.
Individual retirement accounts (IRAs) are tax-advantaged accounts that allow individuals to save for retirement. Traditional IRAs allow savers to make pre-tax or tax-deductible contributions, with taxes owed only when they withdraw funds in retirement. In contrast, Roth IRAs use after-tax dollars, but qualified withdrawals in retirement are completely tax-free.
Traditional IRAs may reduce your taxable income today, while Roth IRAs offer tax-free income in the future. Each account also has different income limits, deduction rules, and eligibility requirements—making it essential to understand how the IRS evaluates your income.
IRA Contribution Limits
Contribution limits, set by the Internal Revenue Service (IRS), are the same for Traditional and Roth IRAs in 2026. Each account has a contribution limit of $7,500, with a $1,100 catch-up limit for those age 50 or older. These contribution limits are up from 2025, when the limits were $7,000 and an additional $1,000 for catch-up contributions. These limits apply across all IRAs combined—meaning you can split contributions between a Roth and a Traditional IRA, but you cannot exceed the annual maximum.1
You Can Only Contribute Earned Income
You can only contribute earned income to Traditional and Roth IRAs. Earned income includes money you receive from working, such as wages, salary, tips, commissions, and self-employment income. Income that does not come from active work, like interest, dividends, or rental income, does not qualify. Your IRA contribution can’t exceed your earned income, so if you earn less than the limit, your contribution is limited to that amount.23
What’s Included in and Excluded From Earned Income
| Included | Excluded ▼ |
|---|---|
| Self-Employment Income | Pensions |
| Commissions | Interest Income |
| Stipend Payments | Income from Some Partnerships |
| Wages and Salaries | Earnings and Profits From Property |
| Tips | Dividend Payments |
| Taxable Non-Tuition Fellowships | Deferred Compensation |
| Non-Taxable Combat Pay | Annuity Income |
Income Limits for a Roth IRA
Roth IRAs have income-based eligibility rules. Your ability to contribute begins to phase out once your modified adjusted gross income (MAGI) reaches certain thresholds. If your MAGI exceeds the upper limit, you cannot contribute directly to a Roth at all.1
Internal Revenue Service. “401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500.“
2026 and 2025 Roth IRA Income Limits
| Filing Status ▲ | 2026 Modified AGI | 2025 Modified AGI | Contribution Limit |
|---|---|---|---|
| Married filing jointly or qualifying widow(er) | Less than $242,000 | Less than $236,000 | Full contribution |
| Married filing separately (if you lived with your spouse at any time during the year) | Less than $10,000 | Less than $10,000 | Reduced |
| Single, head of household, or married filing separately (and you didn’t live with your spouse at any time during the year) | Less than $153,000 | Less than $150,000 | Full contribution |
| $10,000 or more | $10,000 or more | Not eligible | |
| $168,000 or more | $165,000 or more | Not eligible | |
| $153,000 to $168,000 | $150,000 to $165,000 | Reduced | |
| $252,000 or more | $246,000 or more | Not eligible | |
| $242,000 to $252,000 | $236,000 to $246,000 | Reduced |
Deduction Limits for a Traditional IRA
You can contribute to a Traditional IRA no matter how much you make. However, your deduction at tax time depends on your MAGI and whether you or your spouse has access to a workplace retirement plan, such as a 401(k). If neither spouse is covered, contributions are fully deductible regardless of income.14
Internal Revenue Service. “IRA Deduction Limits.”
2026 and 2025 Roth IRA Income Limits
| Filing Status ▲ | 2026 Modified AGI | 2025 Modified AGI | Contribution Limit |
|---|---|---|---|
| Married filing jointly or qualifying widow(er) | Less than $242,000 | Less than $236,000 | Full contribution |
| Married filing separately (if you lived with your spouse at any time during the year) | Less than $10,000 | Less than $10,000 | Reduced |
| Single, head of household, or married filing separately (and you didn’t live with your spouse at any time during the year) | Less than $153,000 | Less than $150,000 | Full contribution |
| $10,000 or more | $10,000 or more | Not eligible | |
| $168,000 or more | $165,000 or more | Not eligible | |
| $153,000 to $168,000 | $150,000 to $165,000 | Reduced | |
| $252,000 or more | $246,000 or more | Not eligible | |
| $242,000 to $252,000 | $236,000 to $246,000 | Reduced |
Deduction Limits for a Traditional IRA
You can contribute to a Traditional IRA no matter how much you make. However, your deduction at tax time depends on your MAGI and whether you or your spouse has access to a workplace retirement plan, such as a 401(k). If neither spouse is covered, contributions are fully deductible regardless of income.14
Internal Revenue Service. “IRA Deduction Limits.”
2026 and 2025 Traditional IRA Deduction Limits
| If your filing status is… | And your 2026 Modified AGI is… | And your 2025 Modified AGI is… | Then you can take… |
|---|---|---|---|
| Single, head of household, qualifying widow(er), married filing jointly or separately and neither spouse is covered by a plan at work | Any amount | Any amount | A full deduction up to the amount of your contribution limit |
| Married filing jointly or qualifying widow(er) and you’re covered by a plan at work | $129,000 or less | $126,000 or less | A full deduction up to the amount of your contribution limit |
| Between $129,000 and $149,000 | Between $126,000 and $146,000 | A partial deduction | |
| $149,000 or more | $146,000 or more | No deduction | |
| Married filing jointly and your spouse is covered by a plan at work | $242,000 or less | $236,000 or less | A full deduction up to the amount of your contribution limit |
| Between $242,000 and $252,000 | Between $236,000 and $246,000 | A partial deduction | |
| More than $252,000 | More than $246,000 | No deduction | |
| Single or head of household and you’re covered by a plan at work | $81,000 or less | $79,000 or less | A full deduction up to the amount of your contribution limit |
| Between $81,000 and $91,000 | Between $79,000 and $89,000 | A partial deduction | |
| More than $91,000 | More than $89,000 | No deduction | |
| Married filing separately and either spouse is covered by a plan at work | Less than $10,000 | Less than $10,000 | A partial deduction |
| $10,000 or more | $10,000 or more | No deduction |
Modified Adjusted Gross Income (MAGI)
MAGI is your adjusted gross income (AGI) with certain deductions added back. It’s the IRS’s way of measuring your “true” income for deciding eligibility for tax benefits like Roth IRA contributions and Traditional IRA deductions.
Items added back to AGI to determine MAGI:
- Student loan interest deductions
- Tuition and fees deductions
- Passive loss or passive income adjustments
- Foreign earned income and housing exclusions
- IRA contribution deductions
- Tax-exempt interest income
To find your MAGI, start with your Adjusted Gross Income on Form 1040, Line 11. Then add back certain items the IRS excludes when calculating AGI, such as tax-exempt interest (Line 2a), student loan interest deductions, IRA deductions, and any foreign earned income exclusions. The total is your MAGI.5
Warning
Excess IRA contributions, including contributions above the annual limit or contributions to a Roth IRA when your income is too high, trigger a 6% penalty each year until the error is corrected.2
The Bottom Line
Roth and Traditional IRAs share the same contribution limits, but their income and deduction rules vary widely. Understanding your MAGI, filing status, and workplace retirement coverage helps you know how much you can contribute and if those contributions are deductible. Whether you choose tax savings now through a Traditional IRA or tax-free withdrawals later through a Roth, knowing the rules helps you make the most of these powerful retirement tools.
Compete Risk Free with $100,000 in Virtual Cash
Put your trading skills to the test with our FREE Stock Simulator. Compete with thousands of Investopedia traders and trade your way to the top! Submit trades in a virtual environment before you start risking your own money. Practice trading strategies so that when you’re ready to enter the real market, you’ve had the practice you need. Try our Stock Simulator today >>