Posted: 2-24-25 | Connor McDevitt, CRPS®, CPFA®
For 2025, taxpayers will be able to increase the contributions they make to their 401(k), 403(b) plans, most 457 plans, and the U.S. Thrift Savings Plan. The new contribution limit is $23,500. The IRS has also announced specific cost-of-living adjustments that may affect people’s pension plans and retirement savings for 2025.
Traditional and Roth IRA Contribution Limits:
- The contribution limit for Traditional and Roth IRAs is $7,000 for people under 50 years of age.
- For those over 50, the contribution limit is $8,000.
Certain circumstances allow taxpayers to deduct contributions to a traditional IRA. For example, if neither the taxpayer nor their spouse has a workplace retirement plan, their entire contribution to a traditional IRA is deductible. If either spouse is covered by a work retirement plan, the deduction may be reduced or phased out.
Below are the income phase-out ranges for traditional IRA contributions in 2025:
- $79,000 to $89,000 – Single taxpayers covered by a workplace retirement plan
- $126,000 to $146,000 – Married couples filing jointly, when the spouse making the IRA contribution is covered by a workplace retirement plan.
- $236,000 to $246,000 – A taxpayer not covered by a workplace retirement plan married to someone who’s covered.
- $0 to $10,000 – Married filing a separate return (this applies to taxpayers covered by a workplace retirement plan)
For Roth IRA contributions, the income phase-out ranges are:
- $150,000 to $165,000 – Single taxpayers and heads of household
- $236,000 to $246,000 – Married, filing jointly
- $0 to $10,000 – Married, filing separately
Saver’s Credit Income Phase-Out Ranges:
- $79,000 – Married, filing jointly
- $59,250 – Head of household
- $39,500 – Singles and married individuals filing separately
SIMPLE Retirement Account Contributions:
The contribution limit for SIMPLE retirement accounts in 2025 increases to $16,000.
Other Retirement Plan Limits for 2025:
- Catch-Up Contribution Limit for 401(k), 403(b), and 457 Plans: $7,500
- Maximum Compensation Limit for Qualified Retirement Plans: $350,000
- Annual Additions Limit for Defined Contribution Plans: $70,000
- Annual Benefit Limit for Defined Benefit Plans: $280,000
- Annual Compensation for Classification of Highly Compensated Employees: $151,164
- Annual Compensation for Classification of a Key Employee: $230,000
2025 HSA Contribution Limits:
The annual contribution limits for Health Savings Accounts (HSAs) have also been adjusted for 2025. For self-only HDHP coverage, the new limit is $4,300, and for family HDHP coverage, the limit is $8,550. The HSA catch-up contribution limit for individuals aged 55 and over remains the same at $1,000. Additionally, the maximum HDHP out-of-pocket expense limit increases:
- $8,300 for self-only HDHP
- $16,600 for family HDHP coverage
If you are planning for your retirement savings and looking to optimize your tax strategy in 2025, our team at Innovia Wealth is here to help.
Schedule a call to build a plan that minimizes your tax burden and maximizes the effectiveness of your retirement savings and charitable contributions.