Key Takeaways

• Traditional IRA contributions may be deductible, depending on your income, filing status, and whether you or your spouse are covered by a workplace retirement plan
   
• Roth IRA contributions are not deductible, but qualified withdrawals in retirement are tax-free
   
• You have until April 15, 2026, to make IRA contributions for the 2025 tax year
   
• For 2025, the contribution limit is $7,000 (under age 50) or $8,000 (age 50+)

While a lot of tax-saving opportunities for 2025 closed on New Year’s Eve, the window for your Traditional or Roth IRA is actually still wide open (through April 15).

And whether your contributions result in an immediate deduction or a long-term retirement hedge depends on your specific income landscape.

So let’s look at the numbers to see where you stand.

Are IRA contributions deductible for my traditional IRA?

Potentially, yes. If your contribution is deductible, the amount you put in reduces your taxable income for the year, dollar for dollar.

But whether you get that deduction depends on a few factors:

• Whether you or your spouse is covered by a workplace retirement plan
   
• Your modified adjusted gross income (MAGI)
   
• Your filing status
   
• Your marginal tax bracket
   
• Your age (those 50+ can contribute more)

You don’t need a paycheck of your own to build a retirement nest egg. If you file a joint return, you can use your spouse’s earned income to fund a ‘Spousal IRA,’ effectively doubling your household’s annual IRA savings.

If you (or your spouse) are covered by your Orange County, California company’s plan, the deduction becomes income-based. Below certain MAGI thresholds, the contribution is fully deductible. As income rises, the deduction phases out and eventually disappears. 

Here’s how those income limits play out for those with workplace retirement plans:

(Also, if your IRA contributions drop you into a lower tax bracket, you can see even more tax savings.)

So, make all the contributions you can before April 15. That way, you lock in all the tax savings you can for this year AND secure valuable time for your contributions to grow tax-deferred. 

Are IRA contributions deductible for my Roth IRA?

With a Roth IRA, your contributions are made with after-tax dollars. So there’s no deduction now. However, Roth IRAs are actually the most popular way to save for retirement outside of a workplace plan.

Because qualified Roth IRA withdrawals in retirement are tax-free (including your investment growth). And like traditional IRAs, Roth accounts allow earnings to grow tax-deferred along the way.

For 2025, your MAGI has to be under $150,000 (or $236,000 for married filing jointly) to contribute the full amount of $7,000. Or, $8,000 for those 50 or older.

Also, like traditional IRAs, you still have until April 15, 2026, to make your Roth IRA contributions for 2025.

So, while you don’t get immediate tax savings this year, you’ll end up with more after-tax money in retirement by maxing out a Roth than a traditional IRA.

How do I max out my IRA?

Before you assume you can’t afford to contribute more than you already are, take an honest look at your monthly cash flow. Using a basic cash flow calculator can be helpful here.

Small changes really can free up meaningful dollars over time. Maybe you could renegotiate your car insurance or trim your subscription services. Or, maybe it’s time to start bringing lunch to work instead of buying it out at your favorite Costa Mesa restaurant. 

And when it comes to investing the account itself, a portfolio built around low-cost index funds and exchange-traded funds (ETFs) can provide diversification without unnecessary fees eating into long-term returns. 

Automation can do a lot of the work for you. Setting up automatic contributions and automatic investing creates dollar-cost averaging, where your money is invested over time instead of all at once. Which reduces the risk of putting everything in when markets are temporarily high.

But, that said, you don’t need to force yourself to max out an IRA if you’re carrying high-interest debt or struggling to cover monthly expenses. 

Contribute what you reasonably can this year. And increase that amount later as your cash flow improves.

Final thoughts

Let’s set aside IRAs for a moment. If your goal is to keep more of what you earned this year, your #1 priority right now should be…

Getting your tax filing appointment on my calendar. 

Because the sooner you do that, the better shot we have at uncovering savings. 

Here’s my scheduling link, for that very purpose (just one, easy click):

calendly.com/tom-ameritax/new-meeting

FAQs

“Can I contribute to both a 401(k) at work and a personal IRA?” 

Absolutely. You can contribute to both in the same year. The main catch is that if you have a retirement plan at work, the IRS limits how much of your Traditional IRA contribution you can deduct from your taxes. There are no restrictions like that on contributing to a Roth IRA, as long as your income stays below certain levels.

“I don’t have a job, but my spouse does. Can I still contribute to an IRA?”

Yes, this is called a Spousal IRA. Even if you have zero earned income, you can open and fund an IRA based on your spouse’s earnings, as long as you file a joint tax return. 

“What happens if I accidentally contribute more than the IRA limit?” 

The IRS charges a 6% penalty tax every year on the excess amount until it’s corrected. To fix it without a penalty, you need to withdraw the extra money (and any earnings it made) before the tax filing deadline in April.

“If I get a tax extension until October, do I have more time to contribute to my IRA?” 

No. While an extension gives you more time to file your paperwork, the deadline to contribute to a Traditional or Roth IRA for the previous year is always the tax deadline (usually April 15). If you miss that window, your contribution will have to count toward the next tax year.

“Is there an age limit for making IRA contributions?” 

No. As long as you (or your spouse) have earned income like wages or self-employment pay, you can keep contributing to a Traditional or Roth IRA regardless of how old you are.

“Can I contribute to both a Traditional IRA and a Roth IRA in the same year?” 

Yes, you can split your money between the two types. However, the total combined amount you put into both cannot exceed the annual limit. For example, if you’re under 50 years old, you could put $3,500 in a Roth and $3,500 in a Traditional. But you couldn’t put $7,000 into each.