As we approach 2025, it’s important to review some key numbers that could affect various aspects of your financial plan:
IRA Contribution Limits
The maximum amount you can contribute to a Traditional or Roth IRA remains at $7,000 in 2025 (or 100% of your earned income, if less). The catch-up contribution for individuals aged 50 or older also remained at $1,000. Income limits and tax deductibility rules also apply to both types of IRAs.
Traditional IRA Income Limits
The income limits for deducting Traditional IRA contributions increased for 2025:
- Single/Head of Household: You can fully deduct your IRA contribution if your modified adjusted gross income (MAGI) is less than $79,000 (up from $77,000 in 2024).
- Married Filing Jointly: The full deduction is available if your MAGI is less than $126,000 (up from $123,000 in 2024). If your spouse is covered by a retirement plan and you are not, you can fully deduct your IRA contribution with a MAGI of $236,000 or less (up from $230,000 in 2024).
Roth IRA Income Limits
Roth IRA contribution eligibility income limits have increased as well:
- Single/Head of Household: Full contributions are allowed with a MAGI less than $150,000 (up from $146,000 in 2024). Partial contributions are allowed for income between $150,000 and $165,000.
- Married Filing Jointly: Full contributions are allowed with a MAGI less than $236,000 (up from $230,000 in 2024). Partial contributions are allowed for income between $236,000 and $246,000.
Employer Retirement Plans
Contribution limits for 401(k), 403(b), most 457 plans, and the Federal Thrift Savings Plan increased:
- Contribution Limit: $23,500 (up from $23,000 in 2024).
- Catch-up Contribution: For those aged 50 and older, the catch-up limit is $7,500 ($31,000 total). Additionally, workers aged 60 to 63 can contribute an enhanced catch-up contribution of $11,250 ($34,750 total).
For SIMPLE IRAs, the contribution limit is $16,500, with a $3,500 catch-up limit ($20,000 total) for those aged 50 and older.
For SEP IRAs the limit is the lesser of 25% of W-2 pay or $70,000 (based on the first $350,000 of compensation); the contribution is effectively limited to 20% of pay if self-employed.
Health Savings Account (HSA) Limits
For 2025, contribution limits for HSAs are higher:
- Individual Coverage: $4,300 (up from $4,150 in 2024)
- Family Coverage: $8,550 (up from $8,300 in 2024)
- Catch-Up Contribution: Individuals aged 55 or older can contribute an additional $1,000.
Qualified Charitable Distributions (QCD)
The limit for 2025 was increased to $108,000 per person, allowing individuals over 70 ½ to make charitable donations from IRA accounts.
Medicare and Social Security Adjustments
The Social Security cost-of-living adjustment (COLA) is 2.5% for 2025. The standard monthly premium for Medicare Part B enrollees will be $185.00 for 2025, an increase of $10.30 (5.8%) from $174.70 in 2024.
Annual Gifting Limits
For 2025, the amount you can give to an individual increased to $19,000 from $18,000 in 2024. Married couples can gift up to $38,000 jointly without triggering gift tax filing requirements. Keep in mind that if you are paying for medical expenses or tuition directly, those do not count towards that limit.
If you have any questions about how these new 2025 figures might affect your financial situation, please reach out to your financial advisor.
Presented by Carl Holubowich, CFP®
