2025 IRA Contribution Limits: What Changed from 2024?

New contribution limits for 2025 are out— and there are some differences from the 2024 limits. Want the lowdown on these updates? Here’s how much you can save for retirement in summary:

Traditional IRA & Roth IRA Contributions

The contribution limit for 2025 remained the same as 2024, $7,000 for Traditional and Roth IRAs. Catch-up contributions will remain $1,000 as well. So, if you are over 50 you can contribute up to $8,000 for 2024 and 2025.

Traditional IRAs may allow for tax deductions upfront with deferred taxes— meaning you don’t pay taxes until the money comes out of the account. But the IRS wants those taxes eventually, so you’ll pay these when you take distributions at retirement.

Roth IRAs are post-tax, meaning you’ve already paid taxes on the money before you contributed to your IRA. Since you’ve already paid taxes on these funds, you may not owe taxes when distributing funds if you satisfy certain requirements and aren’t required to take RMDs. Your investment gains are in a post-tax environment. See eligibility details. 

SEP IRA Contribution Limits

SEP contributions are limited to 25% of compensation or the maximum cap for the year (the lesser of the two amounts). The contribution limit for 2025 went up to $70,000 from $69,000 in 2024. This is an additional $1,000 you can save annually.

SEP IRAs are plans for small business owners including ones who are self-employed. They have different deadlines and higher contribution limits compared to Traditional and Roth IRAs. This makes them especially attractive for self-directed investors (especially real estate agents) since you can start investing tax-deferred at a faster rate. Contributions are made by the employer as a profit-sharing contribution. The employer must contribute the same percentage amount for all employees, including yourself— but the benefits can be huge due to the higher contribution limits.

SIMPLE IRA Contribution Limits

SIMPLE IRA contributions for 2025 increased to $16,500 from $16,000 in 2024. However, the catch-up contribution for 2025 remains at $3,500 ($3,850 if the employer has fewer than 25 employees), the same as in 2024. However, Secure Act 2.0 allows for a higher catch-up for individuals age 60,61,62,63 of $5,250 for SIMPLE IRAs. 

SIMPLE IRAs are for employers with 100 or fewer employees, but unlike the SEP IRA, they allow for employee contributions to the plan. It’s a low-hassle, low-cost plan to establish and maintain, and with a self-directed SIMPLE IRA, employees can invest their retirement their way.

Self-Directed IRA Contribution Limits 2025 Updates

Other Changes to Retirement Plans

There were other recent changes to retirement plans. These changes may impact your investment strategy, so you may want to discuss with a financial advisor if you have detailed questions.

Retirement Age

Previously you were required to take a Distribution at the age of 70 ½ . The new age for Required Minimum Distributions (RMD) is 73. It is still 70 ½ if you reach 70 ½ before January 1, 2020.

IRA Contribution Deadline: Tax Relief in Disaster Situations

Get information for your state. This page also includes prior tax relief provided by the IRS in disaster situations based on FEMA's declarations.

Modified Adjusted Gross Income (MAGI) 

Modified adjusted gross income (MAGI) is an important number. It determines whether you can contribute to a Roth IRA and if you can deduct contributions to a Traditional IRA. We recommend that you consult with a tax advisor to determine if you qualify for a partial deduction or full deduction. These income ranges all increased for 2025.

MAGI Changes for 2025

Traditional IRAs

• For single taxpayers covered by a workplace retirement plan, the phase-out range is $79,000 to $89,000, up from $77,000 to $87,000.
• For married couples filing joint tax returns, where the spouse making the IRA contribution is covered by a retirement plan at work, the phase-out range is $126,000 to $146,000, up from $123,000 to $143,000.
• For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple's income is between $236,000-$246,000, up from $230,000 and $240,000.
• For married filing separately, who are covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

Roth IRAs

• The income phase-out range for taxpayers making contributions to a Roth IRA is $150,000 to $165,000 for singles and heads of household, which is up from$146,000 to $161,000.
• For married couples filing jointly, the income phase-out range is $236,000 to $246,000, up from $230,000 to $240,000.
• The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

In a Nutshell

Bigger contributions mean there’s more opportunity to invest and grow your retirement wealth— Especially for self-directed IRA investors. The industry has been clamoring for a change, something to encourage greater retirement savings for a world that requires so much more than it used to in your golden years— and maybe this is a step in the right direction. If you have questions about the tax implications of these changes by the IRS, please consult a tax advisor.