Not all tax numbers stay the same over time. Many income limits and other tax numbers are adjusted each year, either for inflation, or by another statutory mandate. These tax numbers include the tax tables and tax brackets for each year, for example. The IRS announces the numbers each fall.
This year is a bit confusing because some of the retirement plan tax numbers were increased by cost of living adjustments. However, other numbers remain unchanged from the previous year because the amount of the change was below the amount legally required to change the figures.
2016 IRA Contribution Limits
The 2016 IRA contribution limits were recently published by the IRS. Note that these limits are for contributions made during the 2016 tax year, for use when filing income taxes due by April 2017. If you are looking for older information, you can check the 2014 IRA contribution limits.
The maximum IRA contribution for 2016 is $5,500. This is the same as the maximum deduction for 2015. The 2016 IRA catch-up contribution amount remains unchanged at $1,000 as well. Only taxpayers over age 50 are permitted to make a catch-up contribution to an IRA account.
Therefore, taxpayers under age 50 may contribute up to $5,500 to their IRA during the 2015 tax year and those over age 50 may contribute up to $6,500. Remember, however, that IRA contributions may be made through April 15th of the following year. In other words, contributions made anytime between January 1, 2016 and April 15, 2017 may be claimed on the 2016 income taxes. This is provided, of course that none of the amount contributed between January and April 15th, was deducted on your 2015 taxes.
Maximum Income for Deductible IRA Contributions 2016
Traditional IRA contributions are tax deductible for taxpayers with incomes below certain thresholds. These income limits are also adjusted each year for inflation. If you, or your spouse, are covered by an eligible retirement plan at work, then for 2016, the maximum adjusted gross income (AGI) for a full IRA contribution deduction is $98,000 for joint filers, and $61,000 for single filers. Taxpayers with high incomes above these amounts will have to calculate the phase-out for their 2016 IRA contributions. Those with incomes higher than $118,000 for married filing jointly, or $71,000 for those filing single, cannot deduct any part of their contribution to a traditional IRA account.
Taxpayers who do not have an eligible retirement plan offered at work, and whose spouse is also not covered by a work retirement plan may take a full deduction for IRA contributions regardless of how much money they earn.
If a taxpayer is not covered by a retirement plan at work, but their spouse IS COVERED, then the income limit for a fully deductible contribution is $183,000 or less. Deductible IRA contributions are phased out in such cases for incomes between $183,000 and $193,000 during 2015.