Understanding IRA Contribution Limits
By using our IRA Contribution Calculator above you can learn more about how much you can contribute this year to each retirement account:
Traditional IRAs
A traditional IRA (individual retirement account) is a tax-deferred retirement account that you can open and fund yourself, as long as you have earned income. This account is not through an employer. It’s considered tax-deferred because contributions are typically deductible from your income (see exceptions below), but you will owe income tax on withdrawals.
• The traditional IRA annual contribution limit for tax year 2025 is $7,000, or $8,000 if you’re age 50 or older. You can make 2025 contributions until April 15, 2026.
• The annual contribution limit for tax year 2026 is $7,500, and $8,600 with the added $1,100 catch up provision for those age 50 and up. You can make 2026 contributions until April 15, 2027.
The contributions you make to a traditional IRA may be fully or partially tax deductible, depending on your filing status, income, and whether you or your spouse are covered by a retirement plan at work.
Generally, funds in your traditional IRA are not taxed until you take a distribution (withdrawal) from your IRA after the age of 59 ½. But early withdrawals before 59 ½ are subject to taxes and an additional 10% penalty, with some exceptions.
Learn more: What Is an IRA? Types and Benefits, Explained
Roth IRAs
A Roth IRA is also a retirement account that you open and fund yourself (not through an employer). However, this account is different from a traditional IRA because you contribute after-tax money to a Roth IRA — meaning contributions are not deductible, and qualified withdrawals are tax free.
A Roth IRA can be beneficial from a tax standpoint, as long as you don’t exceed the income cap for these accounts. You can contribute to a Roth IRA at any age, and you don’t have to take required minimum distributions (RMDs). Another advantage of Roth IRAs is that contributions can be withdrawn, penalty free, at any time.
If you meet the requirements, and hold the account for at least five years, your contributions and earnings can be withdrawn tax free after age 59 ½.
• Roth IRA annual contribution limit for tax year 2025 is $7,000 per year, or $8,000 if you’re 50 or older. You can make 2025 contributions until April 15, 2026.
• The annual contribution limit for tax year 2026 is $7,500, and $8,600 with the added $1,100 catch up provision for those age 50 and up. You can make 2026 contributions until April 15, 2027.
Learn more: What Is a Roth IRA and How Does It Work?
SEP IRAs
A SEP IRA (Simplified Employee Pension) is a tax-deferred retirement account for small business owners and self-employed people. It’s similar to a traditional IRA in that contributions can be tax deductible, and grow tax-deferred until you take withdrawals in retirement.
SEP plans can provide a significant source of income at retirement by allowing employers to set aside money in retirement accounts for themselves and their employees. A SEP does not have the start-up and operating costs of a conventional retirement plan, and allows for a contribution of up to 25% of each employee’s pay.
Contribution limits for tax year 2025 are $70,000, or up to 25% of compensation per employee, whichever is lower. For 2026, the annual contribution limits are $72,000, or up to 25% of compensation, whichever is lower.
There is no catch-up provision for SEP-IRAs, as there is with other types of retirement plans.
SEP IRAs are available to any size business and are easily established by adopting Form 5305-SEP, a SEP prototype, or an individually designed plan document.
Please note: If Form 5305-SEP is used, you cannot have any other retirement plan (except another SEP). There is no filing requirement for the employer, and only the employer makes contributions for themselves and each eligible employee. Employees do not contribute. Additionally, the employee is always 100% vested in (or, has ownership of) all SEP-IRA money.
Learn more: What Is a SEP IRA and How Does It Work?
