The IRA deduction has an income threshold that you should know before thinking that you can just take the deduction on 2024 Schedule 1. The contributions made to a traditional IRA or other qualifying plan is deductible.
On the other hand, if you have a Roth IRA, you can’t deduct your contributions since you’re paying tax on them. Why you can’t deduct Roth IRA contributions is because of how they’re funded. When you contribute to a traditional IRA, you fund your retirement account with pre-tax dollars – meaning that you’ll pay taxes later. This qualifies for a deduction.
If you have a traditional IRA, here are the income thresholds.
Before taking a look at the income thresholds, whether or not you’re covered by a retirement plan at work determines if you qualify for a deduction. If you can deduct IRA contributions, you may also get a partial deduction. So you may not be able to get to deduct all of your contributions.
Take the IRA Deduction calculator for the current tax year and see what portion of your contributions can be deducted.
MAGI limits if you’re covered by a retirement plan at work
| FILING STATUS | MODIFIED ADJUSTED GROSS INCOME | ELIGIBLE FOR |
|---|---|---|
| Single or Head of Household | Less than $65,000 $65,001 to $75,000 $75,001 or more | Full Deduction Partial Deduction No Deduction |
| Married Filing Jointly or Qualifying Widow(er) | Less than $104,000 $104,000 to $124,000 $124,001 or more | Full Deduction Partial Deduction No Deduction |
| Married Filing Separately | Less than $10,000 $10,001 or more | Partial Deduction No Deduction |
MAGI limits if you’re not covered by retirement plan at work
If you’re not covered by a retirement plan at work, and your filing status is other than married filing separately, there is no MAGI limit. You can simply go ahead and deduct all of your contributions.
However, if you’re married filing jointly and your spouse is covered by a retirement plan at work, here is the MAGI limits that you should know.
| Married Filing Jointly with a spouse who is covered by a retirement plan at work | Qualified Deduction |
|---|---|
| $0 – $198,000 | Full Deduction |
| $198,000 – $208,000 | Partial Deduction |
| $208,000 or more | No Deduction |
On the other hand, those who file a separate return can claim a partial deduction if MAGI is under $10,000. If over though, IRA deduction phases out completely.