Skip to content
  • There are no suggestions because the search field is empty.

Are Traditional IRA contributions tax deductible?

Traditional IRA contributions are tax deductible if neither the IRA owner nor their spouse is covered by a retirement plan at work.

Traditional IRA contributions may be tax deductible depending on certain circumstances. The two factors that determine whether a Traditional IRA contribution will be deductible are income level, and whether the IRA owner (and/or their spouse, if married) is an active participant in an employer-sponsored retirement plan.

Active Participation Status

If an individual participates in any of the following plans for any part of the tax year, they are generally considered an active participant for determining the deductibility of a Traditional IRA contribution.

  • Qualified pension, profit sharing, 401(k), or stock bonus plan under IRC Section 401(a)
  • Qualified annuity under IRC Section 403(a)
  • SEP plan under IRC Section 408(k)
  • SIMPLE plan under IRC Section 408(p)
  • Governmental 457(b) plan
  • Tax-sheltered annuity plan under IRC Section 403(b)

Usually, if a person is participating in one of the above plans, Box 13 of their Form W-2 will contain a check in the “Retirement plan” box.

Income and Filing Status

If neither the IRA owner nor their spouse is considered an active participant in any employer-sponsored plan, any Traditional IRA contribution they are eligible to make will be fully deductible regardless of the individual’s (or, if married, the couple’s) level of modified adjusted gross income (MAGI). If, however, an individual (and/or spouse, if married) is an active participant in an employer-sponsored plan, the ability to take a deduction for a Traditional IRA contribution may be reduced (or eliminated) depending on the individual's (or, if married, the couple’s) level of MAGI.

The allowable deduction starts to decrease (phase out) when a person’s income rises above a certain amount and is eliminated altogether when it reaches a higher amount. The income amounts vary depending on a person’s tax filing status and may be adjusted by the IRS with cost-of-living-adjustments.

The IRS provides a worksheet for IRA owners to determine their MAGI as well as tables to determine if the phase-out applies.

While an individual’s ability to qualify for a tax-deduction may be restricted based on the deduction phase-out rules (active participation status, tax filing status and MAGI), this does not mean that they are ineligible to make a Traditional IRA contribution. To be eligible to make a regular or spousal contribution to a Traditional IRA, an individual must have earned income (or married to a spouse with earned income and filing a joint federal income tax return). In some instances, individuals who are eligible to make a Traditional IRA contribution, but ineligible for a tax deduction, will elect to make a nondeductible contribution to a Traditional IRA.

It is important to remember that IRA owners are responsible for determining whether their Traditional IRA contribution is deductible. If they are unsure, they will want to seek guidance from a tax professional.

Roth IRA contributions are never tax deductible.

Additional resources: