Each year, the Internal Revenue Service (IRS) reviews economic indicators like inflation and wage growth to determine cost-of-living adjustments (COLAs) for qualified retirement plans. These adjustments help ensure contribution limits and income thresholds keep pace with changes in the economy—protecting the long-term value of retirement savings.
On November 13, 2025, the IRS released Notice 2025-67, outlining the cost-of-living adjusted limits for retirement savings for the 2026 tax year. These updates impact individual retirement accounts (IRAs), workplace retirement plans, and tax credits designed to encourage retirement contributions.
Below, we’ve summarized some of the key updates and what they could mean for your 2026 retirement savings plans.
2026 IRA Contribution Limits
The IRA contribution limit will increase from $7,000 in 2025 to $7,500 in 2026 for both Traditional IRAs andRoth IRAs. This higher limit allows individuals to set aside more money in tax-advantaged savings accounts.
Updated Income Phase-Out Ranges for IRA Deductibility
For taxpayers who participate in an employer-sponsored retirement plan, the income ranges at which IRA contributions are no longer tax-deductible have also increased:
- Single filers: $81,000 – $91,000 (up from $79,000 – $89,000)
- Married filing jointly: $129,000 – $149,000 (up from $126,000 – $146,000)
- Married filing jointly (spouse is an active participant): $242,000 – $252,000 (up from $236,000 – $246,000)
2026 Roth IRA Income Limits
The income limits for Roth IRA contributions are also shifting upward:
- Married filing jointly: Phase-out range of $242,000 – $252,000
- Single filers and heads of household: Phase-out range of $153,000 – $168,000
If your adjusted gross income (AGI) falls within or above these ranges, you may be ineligible to make direct Roth IRA contributions, though backdoor Roth strategies may be available (consult your tax professional or financial advisor).
Saver’s Credit Income Thresholds
The Saver’s Credit—also known as the Retirement Savings Contributions Credit—offers an income tax credit for eligible taxpayers who contribute to retirement plans, including IRAs and workplace plans like401(k)s and SIMPLE IRAs.
For the 2026 tax year, the income limits for eligibility have increased:
Married Filing Jointly
- 50% credit: Up to $48,500
- 20% credit: Up to $52,500
- 10% credit: Up to $80,500
Head of Household
- 50% credit: Up to $36,375
- 20% credit: Up to $39,375
- 10% credit: Up to $60,375
All Other Filers
- 50% credit: Up to $24,250
- 20% credit: Up to $26,250
- 10% credit: Up to $40,250
This credit can be a helpful tool for low-to-moderate income taxpayers to reduce their income tax liability while saving for retirement.
Key Terms and Additional Limits
Here are a few more updates and important definitions related to the 2026 retirement savings environment:
- Annual Compensation Limit: The limit for compensation that can be considered for retirement plan contributions is adjusted annually.
- Elective Deferrals and Catch-Up Contributions for workplace plans are governed by different limits, especially under the Secure 2.0 Act, which may require certain Roth catch-up contributions for high earners.
- Defined Benefit Plans and Defined Contribution Plans each have their own dollar limitations and annual benefit caps.
- The Social Security taxable wage base and other IRS thresholds may also impact your broader personal finance and health care planning.
Tax Considerations for IRA Contributions
While these new limits allow for more aggressive retirement saving, it’s important to understand the tax implications:
- Traditional IRA contributions may be tax-deductible depending on income and employer plan participation.
- Roth contributions are made with after-tax dollars but allow for tax-free withdrawals in retirement.
- Required minimum distributions (RMDs) apply to Traditional IRAs and other qualified retirement plans once you reach the appropriate age (currently 73 under the Secure 2.0 Act).
- Early distributions before age 59½ may incur penalties unless you meet IRS exceptions.
- Tax-exempt accounts must still be reported on your tax return, and Schedule K-1 may apply in some investment structures.
Start Planning for 2026 Today
These updated cost-of-living adjustments reflect the IRS’s effort to help taxpayers keep pace with inflation. Whether you're contributing to a Traditional IRA, Roth IRA, or simplified employee pension (SEP), staying informed on contribution limits and eligibility can make a big difference in your long-term retirement plan.
Mainstar Trust is here to provide custodial services for a wide variety of qualified retirement plans. While we don’t offer investment advice or guidance, we can help you open and maintain the right account type for your situation.
Ready to open or update your IRA? Contact Mainstar Trust to get started.