Understanding 2024 IRA Contribution Limits

Are you currently contributing to an IRA? Did you know that the contribution limits change each year? Individual Retirement Account (IRA) contributions can be a great way to tuck away more money for retirement, especially with the tax advantages. In this article, we’ll cover the basics of IRAs, including the difference between Traditional IRAs and Roth IRAs and the contribution and income limits for the 2024 tax year.

Traditional IRAs vs Roth IRAs

There are two types of IRAs: Traditional and Roth. Traditional IRAs contribute funds with pre-tax dollars, meaning you don’t pay taxes on money put into the account. For example, let’s say you make a $1,000 contribution to your Traditional IRA. On your individual income tax return, you will receive a deduction of $1,000, lowering your taxable income.

The opposite is true for Roth IRAs. This type of retirement account contributes money on a post-tax basis, meaning the money you contribute has already been taxed. You do not receive a deduction on your income tax return, but the funds grow tax-free.

Deciding which account you want to contribute to depends on your tax situation and your goals. For example, if you want tax-free withdrawals during retirement, you will opt for a Roth IRA. On the contrary, if you are in a higher tax bracket right now and want to lower your taxable income, you might elect to invest in a Traditional IRA.

2024 IRA Contribution Limits

For the 2024 year, individuals under the age of 50 can contribute $7,000 to an IRA. This threshold is increased to $8,000 for individuals 50 and older. These contribution limits apply to gross contributions, meaning total contributions to both a Traditional IRA and a Roth IRA cannot exceed $7,000 or $8,000 if you are over age 50.

2024 IRA Income Limits

To qualify for a tax deduction for Traditional IRA contributions, you need to be under a certain income. The ability to contribute to an employer-sponsored retirement plan can also impact eligibility. Let’s break down the limitations by filing status.

Single or Head of Household

If your modified adjusted gross income (MAGI) is under $77,000, you can take 100% of your contributions as a deduction. A MAGI between $77,000 and $87,000 allows you to take a percentage of contributions as a deduction, with no deduction allowed for income over $87,000. These thresholds are in place regardless of whether you contribute to an employer-sponsored plan or not.

Married Filing Joint

Married filing joint taxpayers who are covered by an employer-sponsored retirement plan can take a deduction if their MAGI is under $123,000. The phase-out range is between $123,000 and $143,000, with full phase-out once $143,000 is reached.

Married filing joint taxpayers who do not have the ability to contribute to an employer-sponsored retirement plan have a higher threshold, with a 100% deduction with a MAGI under $230,000. The phase-out range is between $230,000 and $240,000, with no deduction once MAGI is over $240,000.

Married Filing Separately

Married filing separately taxpayers are eligible for a full contribution deduction if MAGI is under $10,000. The deduction is not available if MAGI exceeds $10,000.


IRA contribution limits change each year, which is why it’s important to understand what you can contribute in 2024. To discuss the best IRA strategy for your situation, reach out to Kislay Shah CPA PC at kislay@shahcpaus.com or 646-328-1326.