Taxes Tax Credits & Deductions Are You Eligible for the IRA Deduction? It Depends By Dana Anspach Dana Anspach Twitter Dana Anspach is a Certified Financial Planner and an expert on investing and retirement planning. She is the founder and CEO of Sensible Money, a fee-only financial planning and investment firm. learn about our editorial policies Updated on February 11, 2023 Reviewed by Lea D. Uradu Fact checked by Ariana Chávez In This Article View All In This Article What IRAs Are Eligible? The Basics of IRA Deductions Annual Contribution Caps for IRAs Spousal IRA Contributions Employer-Sponsored Retirement Plans Your Spouse Has an Employer Plan How To Claim the Deduction Non-Deductible IRA Contributions Frequently Asked Questions (FAQs) Photo: baona / Getty Images Many retirement savers can take a tax deduction for the money they contribute to a traditional IRA each year. It depends on meeting some qualifying rules like if you have a workplace retirement account and how much you contribute to the IRA. You must have earned income, and certain types of IRAs aren't eligible. The Internal Revenue Service (IRS) sets a cap on the total amount of contributions that are tax deductible each year. Key Takeaways Contributions made to traditional IRAs are tax deductible up to a certain limit, but Roth IRA contributions don’t share this tax perk because they offer other advantages. The limit for deductible contributions is $6,000 for tax year 2022 for most taxpayers, and $7,000 if you’re age 50 or older.The deductible contribution limit increases to $6,500 for tax year 2023, or $7,500 if you're age 50 or older.Special rules apply if you also have an employer-sponsored retirement plan.You have until April 18, 2023, to make contributions that are deductible on your 2022 tax return, the return you'll file in 2023. What IRAs Are Eligible? You can claim a deduction for traditional IRA contributions, but not for Roth IRA contributions. Roth accounts are treated differently for tax purposes. Withdrawals from Roths are tax free in retirement because you don't get a tax break on the money at the time you contribute it. SEP, SIMPLE, and SARSEP IRA contributions are deductible, but these plans can be subject to slightly different rules. The guidelines cited here apply only to traditional IRAs. Note Traditional IRA distributions are taxed when they're withdrawn, unlike distributions from Roth accounts. The Basics of IRA Deductions You must have earned income from employment or self-employment to make IRA contributions. Interest, dividend income, and earnings from property, such as rental income, don't count. You and your spouse can take an IRA deduction regardless of how much you earn. There are no caps on income, but your IRA deduction is subject to income limitations if you or your spouse are also participants in an employer-sponsored retirement plan. The deadline for making deductible contributions is Tax Day of the year following the tax year in which you're claiming them. This is usually April 15, but it's April 18 in 2023, because April 15 falls on a Saturday and April 17 is a holiday in Washington, D.C. Annual Contribution Caps for IRAs You can take an IRA deduction for up to $6,000 in contributions for tax year 2022 if you're age 49 or under. This increases to $7,000 if you're age 50 or older. The limit is $6,500 for the 2023 tax year, and $7,500 for those older than 50. Note These limits can increase annually, although they don't always do so. They were $5,500 and $6,500 for tax years 2015 through 2018. You can't contribute more than your annual earnings. These limits apply to all IRA accounts that you hold. They're not $6,500 or $7,500 for each IRA. They're $6,500 or $7,500 for all of your accounts collectively. Spousal IRA Contributions You can make a contribution for your non-working spouse if you have enough earned income to cover these contributions in addition to your own. And yes, you can claim an IRA deduction for doing so. You'd be entitled to $7,500 in deductible contributions for each of you for a total of $15,000 if you and your unemployed spouse are age 50 and older for 2023. If You Have an Employer-Sponsored Retirement Plan Your IRA deduction can be limited if you also contribute to a company-sponsored retirement plan. It depends on the amount and the type of income you report. A taxpayer is considered to be a participant in a company-sponsored retirement plan if their account balance receives any contributions at all in a given year, even if all the contributions are made by the employer. Your ability to deduct your IRA contribution breaks down like this in this case: The IRA deduction is phased out if you have between $73,000 and $83,000 in modified adjusted gross income (MAGI) in 2023 if you're single or filing as head of household. You're entitled to less of a deduction if you earn $73,000 or more, and you're not allowed a deduction at all if your MAGI is over $83,000 in 2023. The IRA deduction is phased out between $116,000 and $136,000 in 2023 if you're married and filing jointly, or if you're a qualifying widow(er). Those with MAGIs over $136,000 aren't allowed a deduction. Note These limits plunge significantly for married taxpayers who file separate returns. They're limited to a partial deduction in 2023 for MAGIs up to $10,000. There's no deduction over this income threshold. You can calculate your MAGI for purposes of claiming the IRA deduction by adding certain other deductions you might have claimed back to your adjusted gross income (AGI), including the student loan interest deduction, the domestic production activities deduction, and the tuition and fees deduction. You must also add back certain income exclusions when you're calculating your MAGI, including foreign earned income and housing, employer adoption benefits, and savings bond interest. If Your Spouse Has a Company Retirement Plan The IRS allows a full deduction up to the contribution limits in 2022 and 2023 if you're not a participant in an employer-sponsored plan but your spouse is, and if your household income falls below certain ranges. The deduction is phased out between $218,000 and $228,000 of adjusted gross income in 2023 for taxpayers who are married and filing jointly when one spouse is a company retirement plan participant. A modified AGI over $228,000 allows for no deduction. These thresholds are up from $204,000 and $214,000 in 2022. How To Claim the Deduction The IRA deduction is an "above the line" adjustment to income. This means that you don't have to itemize your tax deductions to claim it. You can take this deduction and itemize, too, or you can take it and claim the standard deduction. Enter the amount on line 20 of Schedule 1 of the 2022 Form 1040, the return you'll file in 2023. Submit the schedule with your tax return. Schedule 1 covers numerous adjustments to income. You'll transfer the total of all of them to line 10 of Form 1040. Important These lines and forms apply to the 2022 tax return, the one you'll file in 2023. The IRS redesigns the 1040 tax return periodically, so this information won't necessarily appear in the same place in future years. Non-Deductible IRA Contributions You can still make contributions even if you're not eligible for the IRA deduction. This is called a "non-deductible IRA contribution." The funds inside the account will grow tax deferred until a distribution occurs. Frequently Asked Questions (FAQs) What is the minimum IRA contribution that's tax deductible? You don't have to maximize your contributions to enjoy tax benefits. The only requirement is for those whose earned income falls below the contribution limit. You can't deduct more than you earn in a year if this is the case. How do you report an excess IRA contribution? You don't have to report it to the government if you accidentally exceed your IRA contribution limit, and if you catch your error before you file your tax return for that tax year. You can simply contact the financial institution that holds your IRA and ask them to withdraw the excess amount. But you'll have to claim the income on your 1099 if your contributions were invested and gained value while they were in your IRA. This could come with a 10% penalty tax if you're younger than age 59½. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. IRS. "IRA Deduction Limits." IRS. "Topic No. 451 Individual Retirement Arrangements (IRAs)." IRS. "IRA Year-End Reminders." IRS. "Retirement Topics - IRA Contribution Limits." IRS. "2023 IRA Deduction Limits—Effect of Modified AGI on Deduction If You Are Covered by a Retirement Plan at Work." IRS. "2023 IRA Deduction Limits—Effect of Modified AGI If You Are NOT Covered by a Retirement Plan at Work." IRS. "IRS Announces Changes to Retirement Plans for 2022." IRS. "What If I Withdraw Money From My IRA?"