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The IRS sets annual contribution limits for IRAs. If you’re under age 50, you can contribute up to $7,000 a year to your traditional IRA in 2025. If you’re 50 or older, you can contribute an
extra $1,000, for a total of $8,000. There’s a catch, though, and it’s a big one. If you (or your spouse) have funds going into a retirement plan at work, such as a 401(k), your modified
adjusted gross income (MAGI) must fall below certain limits to fully deduct your IRA contributions on your tax return. MAGI is your adjusted gross income, as reported on your 1040 or 1040-SR
tax form, plus the value of certain deductions that you may have subtracted to calculate your adjusted gross income, such as student loan interest. These are the income limits for
deductible IRA contributions in the 2025 tax year if you or your spouse has a workplace plan available: * Single tax filers with a MAGI up to $79,000 can make a fully tax-deductible
contribution to a traditional IRA. Between $79,000 and $88,999, you get a partial deduction. At $89,000 and above, you can’t claim a deduction for your contributions. * Married taxpayers who
file a joint return must have $126,000 or less in MAGI to fully deduct contributions made by the spouse covered by a plan at work. This phases out for incomes up to $145,999; at $146,000
and up, you can’t take a deduction. There’s no such phaseout for individuals who don’t have access to a workplace retirement plan — they can fully deduct IRA contributions regardless of
their MAGI. (The caps on contribution amounts noted above still apply.) Married couples filing jointly with one spouse covered by a workplace retirement plan can deduct all IRA contributions
made by the other spouse if their MAGI is $236,000 or less, or part of the contributions if their MAGI is between $236,000 and $246,000. Of course, the more you contribute, the more you’ll
have in retirement. The AARP Traditional IRA Calculator will show you how much you can earn by adding a bit more to your account each year. Let’s say you’re single and, at 50, are just
starting an IRA. You don’t want to contribute the maximum $8,000, but you can manage $1,000. When you hit 65, you’d have $26,888, assuming you earned an average 7 percent annual return. How
could you do better? Try increasing contributions to the maximum allowable amount. Invest $8,000 a year and your nest egg will grow to $215,104 by age 65. Increase your contributions and
work until 70, and you’ll have $350,921. The calculator allows you to experiment with different scenarios — higher contribution rates, higher returns, later retirement dates.