401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000

IR-2024-285, Nov. 1, 2024

WASHINGTON — The Internal Revenue Service announced to­day [November 1, 2024] that the amount individuals can contrib­ute to their 401(k) plans in 2025 has increased to $23,500, up from $23,000 for 2024.

The IRS also issued technical guid­ance regarding all cost‑of‑living adjustments affecting dollar limita­tions for pension plans and other re­tirement-related items for tax year 2025 in Notice 2024-80, posted to­day on IRS.gov.

Highlights of changes for 2025

The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan is increased to $23,500, up from $23,000.

The limit on annual contributions to an IRA remains $7,000. The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost‑of‑living adjustment but remains $1,000 for 2025.

The catch-up contribution limit that generally applies for employees aged 50 and over who participate in most 401(k), 403(b), governmental 457 plans, and the federal govern­ment’s Thrift Savings Plan remains $7,500 for 2025. Therefore, partic­ipants in most 401(k), 403(b), gov­ernmental 457 plans and the federal government’s Thrift Savings Plan who are 50 and older generally can contribute up to $31,000 each year, starting in 2025. Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in these plans. For 2025, this higher catch-up con­tribution limit is $11,250 instead of $7,500.

The income ranges for determining eligibility to make deductible con­tributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit all in­creased for 2025.

Taxpayers can deduct contribu­tions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduc­tion may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is cov­ered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase‑out ranges for 2025:

• For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $79,000 and $89,000, up from between $77,000 and $87,000.
• For married couples filing jointly, if the spouse making the IRA contribution is cov­ered by a workplace retirement plan, the phase-out range is in­creased to between $126,000 and $146,000, up from between $123,000 and $143,000.
• For an IRA contributor who is not covered by a workplace retirement plan and is mar­ried to someone who is cov­ered, the phase-out range is increased to between $236,000 and $246,000, up from between $230,000 and $240,000.
• For a married individual filing a separate return who is cov­ered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-liv­ing adjustment and remains be­tween $0 and $10,000.
• The income phase-out range for taxpayers making contribu­tions to a Roth IRA is increased to between $150,000 and $165,000 for singles and heads of household, up from between $146,000 and $161,000. For married couples filing jointly, the income phase-out range is increased to between $236,000 and $246,000, up from between $230,000 and $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 between $0 and $10,000.
• The income limit for the Sav­er’s Credit (also known as the Retirement Savings Contri­butions Credit) for low- and moderate-income workers is $79,000 for married couples filing jointly, up from $76,500; $59,250 for heads of house­hold, up from $57,375; and $39,500 for singles and married individuals filing separately, up from $38,250.

• The amount individuals can generally contribute to their SIMPLE retirement accounts is increased to $16,500, up from $16,000. Pursuant to a change made in SECURE 2.0, indi­viduals can contribute a higher amount to certain applicable SIMPLE retirement accounts. For 2025, this higher amount remains $17,600.
• The catch-up contribution lim­it that generally applies for employees aged 50 and over who participate in most SIM­PLE plans remains $3,500 for 2025. Under a change made in SECURE 2.0, a different catch-up limit applies for em­ployees aged 50 and over who participate in certain applicable SIMPLE plans. For 2025, this limit remains $3,850. Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in SIMPLE plans. For 2025, this higher catch-up contribution limit is $5,250.