The Internal Revenue Service (IRS) has announced significant changes to the contribution limits for 401(k) plans and individual retirement accounts (IRAs), effective in 2026. The new limits will allow individuals to save more for retirement, with the 401(k) contribution limit set to rise to $24,500, an increase from $23,500 in 2025. Additionally, the IRA contribution limit will increase to $7,500, up from $7,000 this year.
These adjustments, revealed in an IRS release on January 30, 2024, are part of a broader set of cost-of-living adjustments impacting retirement savings accounts. The increase in contribution limits reflects the IRS’s efforts to help taxpayers save adequately for their retirement amid rising living costs.
Details of the Increased Contribution Limits
For those aged 50 and older, the catch-up contribution limit for 401(k) plans will also see an increase, rising to $8,000 in 2026. This provision allows older workers to contribute additional funds to their retirement accounts, fostering increased savings as they approach retirement age.
The limits for IRA contributions will similarly benefit older taxpayers. The catch-up contribution limit for individuals aged 50 and above will increase by $1,100 to $1,100 in 2026.
According to the IRS, taxpayers may deduct contributions to a traditional IRA under specific circumstances. If either the taxpayer or their spouse is covered by a workplace retirement plan, the deduction may be phased out based on their income and filing status.
Updated Phase-Out Ranges for Deductibility
The IRS has adjusted the phase-out ranges for taxpayers eligible to deduct IRA contributions. For single taxpayers covered by a workplace retirement plan, the phase-out range will rise to between $81,000 and $91,000, up from the previous range of $79,000 to $89,000 in 2025.
For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range increases to between $129,000 and $149,000, compared to $126,000 to $146,000 in 2025.
If a contributor is not covered by a workplace retirement plan but is married to someone who is, the phase-out range is now between $242,000 and $252,000, an increase from $236,000 to $246,000 this year. For married individuals filing separately who are covered by a workplace retirement plan, the phase-out range remains unchanged at between $0 and $10,000.
The income phase-out range for contributing to a Roth IRA is also set to rise. For singles and heads of household, the range will increase to between $153,000 and $168,000, compared to $150,000 to $165,000 in 2025. For married couples filing jointly, the range will rise to between $242,000 and $252,000 from $236,000 to $246,000 the previous year.
Additionally, the IRS has raised the income limit for the Saver’s Credit, aimed at assisting low- and moderate-income workers. For married couples filing jointly, the income limit is now $80,500, up from $79,000 in 2025. Heads of household will see an increase to $60,375, while singles and married individuals filing separately will have a limit of $40,250, compared to $39,500 in 2025.
The IRS’s announcement provides essential guidance for retirement planning, enabling individuals to maximize their savings as they prepare for the future. With these changes, taxpayers can make informed decisions that align with their financial goals.
