Retirement account contribution limits are adjusted for inflation each year. Inflation has moderated in recent months. Some contribution limits and income limits are projected to go up in 2025.
Before the IRS publishes the official adjustments for the next year in late October or early November, I calculate them using the published inflation numbers by the same rules the IRS uses as stipulated by law. I’ve maintained a track record of 100% accuracy ever since I started doing these calculations. The IRS Notice 2024-80 confirmed everything I have here.
- 2024 2025 401k/403b/457/TSP Elective Deferral Limit
- 2024 2025 Annual Additions Limit
- 2024 2025 SEP-IRA Contribution Limit
- 2024 2025 Annual Compensation Limit
- 2024 2025 Highly Compensated Employee Threshold
- 2024 2025 SIMPLE 401k and SIMPLE IRA Contribution Limit
- 2024 2025 Traditional and Roth IRA Contribution Limit
- 2024 2025 Deductible IRA Income Limit
- 2024 2025 Roth IRA Income Limit
- 2024 2025 Healthcare FSA Contribution Limit
- 2024 2025 HSA Contribution Limit
- 2024 2025 Saver’s Credit Income Limit
- All Together
- 2024 2025 Tax Brackets and Standard Deduction
2024 2025 401k/403b/457/TSP Elective Deferral Limit
The 401k/403b/457/TSP contribution limit is $23,000 in 2024. It will go up by $500 to $23,500 in 2025.
If you are age 50 or over by December 31, the catch-up contribution limit is $7,500 in 2024. It will stay the same at $7,500 in 2025.
If your age is 60 through 63 by December 31, 2025, you have a higher catch-up limit in 2025. It’ll be $11,250 in 2025.
If your prior year’s wages from the employer were over $145,000, your 2024 catch-up contribution must go to a Roth subaccount in the plan. The limit will be the same at $145,000 in 2025. The IRS has postponed enforcement of this rule.
Employer match or profit-sharing contributions aren’t included in these limits. If you work for multiple employers in the same year or if your employer offers multiple plans, you have one single employee contribution limit for 401k, 403b, and the federal government’s Thrift Savings Plan (TSP) across all plans.
The 457 plan limit is separate from the 401k/403b/TSP limit. You can contribute the maximum to both a 401k/403b/TSP plan and a 457 plan.
2024 2025 Annual Additions Limit
The total contributions from both the employer and the employee to all defined contribution plans by the same employer is $69,000 in 2024. It will increase to $70,000 in 2025.
The age-50-or-over catch-up contribution is separate from this limit. If you work for multiple employers in the same year, you have a separate annual additions limit for each unrelated employer.
2024 2025 SEP-IRA Contribution Limit
If you have self-employment income, you can contribute a percentage of your self-employment income to a SEP-IRA. The SEP-IRA contribution limit is always the same as the annual additions limit for a 401k plan. It is $69,000 in 2024, and it will increase to $70,000 in 2025.
Because the SEP-IRA doesn’t allow employee contributions, unless your self-employment income is well above $200,000, you have a higher contribution limit if you use a solo 401k. See Solo 401k When You Have Self-Employment Income.
2024 2025 Annual Compensation Limit
The maximum annual compensation that can be considered for making contributions to a retirement plan is always 5x the annual additions limit. Therefore the annual compensation limit is $345,000 in 2024. It will increase to $350,000 in 2025.
2024 2025 Highly Compensated Employee Threshold
If your employer limits your contribution because you’re a Highly Compensated Employee (HCE), the minimum compensation to be counted as an HCE is $155,000 in 2024. It will go up to $160,000 in 2025.
2024 2025 SIMPLE 401k and SIMPLE IRA Contribution Limit
Some smaller employers offer a SIMPLE 401k or a SIMPLE IRA plan instead of a regular 401k plan. SIMPLE 401k and SIMPLE IRA plans have a lower contribution limit than standard 401k plans. The contribution limit for SIMPLE 401k and SIMPLE IRA plans is $16,000 in 2024. It will go up to $16,500 in 2025.
Employers with fewer than 25 employees and larger employers that contribute more to the plan have a higher contribution limit. The regular contribution limit to their SIMPLE plans is $17,600 in 2024 and 2025.
If you are 50 or over by December 31, 2024, the catch-up contribution limit in a SIMPLE 401k or SIMPLE IRA plan is $3,500 in 2024 ($3,850 for smaller employers). It will be the same $3,500 in 2025 for ages 50-59 and 64 and over and $5,250 for ages 60 through 63.
Employer contributions to a SIMPLE 401k or SIMPLE IRA plan aren’t included in these limits.
2024 2025 Traditional and Roth IRA Contribution Limit
You need taxable compensation (“earned income”) to contribute to a Traditional or Roth IRA but there’s no age limit. The Traditional IRA or Roth IRA contribution limit is $7,000 in 2024. It will stay the same at $7,000 in 2025.
If you are age 50 or over by December 31, the catch-up limit is $1,000 in 2024. It will stay the same at $1,000 in 2025.
The IRA contribution limit is shared between the Traditional IRA and the Roth IRA. If you contribute the maximum to a Roth IRA, you can’t contribute the same maximum again to a Traditional IRA, and vice-versa.
The IRA contribution limit and the 401k/403b/TSP or SIMPLE contribution limit are separate. You can contribute the respective maximum to both a 401k/403b/TSP/SIMPLE plan and a Traditional IRA or Roth IRA.
2024 2025 Deductible IRA Income Limit
The income limit for taking a full deduction for your contribution to a Traditional IRA while participating in a workplace retirement plan in 2024 is $77,000 for single filers and $123,000 for a married couple filing jointly. The deduction completely phases out when your income goes above $87,000 in 2024 for singles and $143,000 for married filing jointly.
The full-deduction limits will go up in 2025 to $79,000 for single filers and to $126,000 for a married couple filing jointly. The deduction will completely phase out when your income goes above $89,000 in 2025 for singles; and above $146,000 for married filing jointly.
When you’re not covered in a workplace retirement plan but your spouse is, the income limit for taking a full deduction for your contribution to a Traditional IRA is $230,000 in 2024. The deduction completely phases out when your joint income goes above $240,000 in 2024.
The full-deduction limit will go up to $236,000 in 2025. The deduction completely phases out when your joint income goes above $246,000 in 2025.
When you exceed the income limit for taking a deduction for contributing to a Traditional IRA, consider contributing to a Roth IRA instead.
2024 2025 Roth IRA Income Limit
The income limit for contributing the maximum to a Roth IRA depends on your filing status. It’s $146,000 for singles and $230,000 for married filing jointly in 2024. These limits will go up to $150,000 for singles and $236,000 for married filing jointly in 2025.
You can’t contribute anything directly to a Roth IRA when your income goes above $161,000 in 2024 for singles and $240,000 in 2024 for married filing jointly. These limits will go up to $165,000 for singles and $246,000 for married filing jointly in 2025.
Your contribution eligibility is prorated in the income phase-out range. When you exceed the income limit for contributing to a Roth IRA, consider doing the Backdoor Roth.
2024 2025 Healthcare FSA Contribution Limit
The Healthcare FSA contribution limit is $3,200 per person in 2024. It will go up to $3,300 in 2025.
Some employers allow carrying over some unused amount to the following year. The maximum amount that can be carried over to the following year is set to 20% of the contribution limit in the current tax year. As a result, the carryover limit is $640 per person in 2024. It will go up to $660 in 2025.
2024 2025 HSA Contribution Limit
You need to have a High Deductible Health Plan with no other coverage to contribute to a Health Savings Account (HSA). Not all high-deductible health insurance is HSA-eligible. Medicare or your spouse having a general-purpose healthcare FSA counts as having other coverage, which makes you ineligible to contribute to an HSA.
You don’t need taxable compensation (“earned income”) to contribute to an HSA.
The HSA contribution limit for single coverage is $4,150 in 2024. The HSA contribution limit for family coverage is $8,300 in 2024. These limits will go up to $4,300 for single coverage and $8,550 for family coverage in 2025. The new limits were announced previously in the spring. Please see HSA Contribution Limits.
Those who are 55 or older by December 31 can contribute an additional $1,000. If you are married and both of you are 55 or older by December 31, each of you can contribute the additional $1,000 but they must go into separate HSAs in each person’s name.
2024 2025 Saver’s Credit Income Limit
The income limits for receiving a Retirement Savings Contributions Credit (“Saver’s Credit”) in 2024 for married filing jointly are $46,000 (50% credit), $50,000 (20% credit), and $76,500 (10% credit). These limits in 2025 will go up to $47,500 (50% credit), $51,000 (20% credit), and $79,000 (10% credit).
The limits for singles are half of the limits for married filing jointly. The 2024 limits are $23,000 (50% credit), $25,000 (20% credit), and $38,250 (10% credit). The 2025 limits will be $23,750 (50% credit), $25,500 (20% credit), and $39,500 (10% credit)
All Together
| 2024 | 2025 | Increase | |
|---|---|---|---|
| 401k, 403b, or 457 plan employee contributions limit | $23,000 | $23,500 | $500 |
| 401k, 403b, or 457 plan ages 50-59 and 64+ catch-up contributions limit | $7,500 | $7,500 | None |
| 401k, 403b, or 457 plan ages 60-63 catch-up contributions limit | $7,500 | $11,250 | $3,750 |
| SIMPLE plan contributions limit | $16,000 | $16,500 | $500 |
| SIMPLE plan contributions limit at eligible employers | $17,600 | $17,600 | None |
| SIMPLE plan ages 50-59 and 64+ catch-up contributions limit | $3,500 | $3,500 | None |
| SIMPLE plan ages 50-59 and 64+ catch-up contributions limit at eligible employers | $3,850 | $3,850 | None |
| SIMPLE plan ages 60-63 catch-up contributions limit | $3,500 | $5,250 | $1,750 |
| Maximum annual additions to all defined contribution plans by the same employer | $69,000 | $70,000 | $1,000 |
| SEP-IRA contributions limit | $69,000 | $70,000 | $1,000 |
| Highly Compensated Employee definition | $155,000 | $160,000 | $5,000 |
| Annual Compensation Limit | $345,000 | $350,000 | $5,000 |
| Traditional and Roth IRA contribution limit | $7,000 | $7,000 | None |
| Traditional and Roth IRA age 50+ catch-up contribution limit | $1,000 | $1,000 | None |
| Deductible IRA income limit, single, active participant in workplace retirement plan | $77,000 – $87,000 | $79,000 – $89,000 | $2,000 |
| Deductible IRA income limit, married, active participant in workplace retirement plan | $123,000 – $143,000 | $126,000 – $146,000 | $3,000 |
| Deductible IRA income limit, married, spouse is active participant in workplace retirement plan | $230,000 – $240,000 | $236,000 – $246,000 | $6,000 |
| Roth IRA income limit, single | $146,000 – $161,000 | $150,000 – $165,000 | $4,000 |
| Roth IRA income limit, married filing jointly | $230,000 – $240,000 | $236,000 – $246,000 | $6,000 |
| Qualified Charitable Distributions (QCD) limit | $105,000 | $108,000 | $3,000 |
| Healthcare FSA Contribution Limit | $3,200 | $3,300 | $100 |
| HSA Contribution Limit, single coverage | $4,150 | $4,300 | $150 |
| HSA Contribution Limit, family coverage | $8,300 | $8,550 | $250 |
| HSA, age 55 catch-up | $1,000 | $1,000 | None |
| Saver’s Credit income limit, married filing jointly | $46,000 (50%) $50,000 (20%) $76,500 (10%) | $47,500 (50%) $51,000 (20%) $79,000 (10%) | $1,500 (50%) $1,000 (20%) $2,500 (10%) |
| Saver’s Credit income limit, single | $23,000 (50%) $25,000 (20%) $38,250 (10%) | $23,750 (50%) $25,500 (20%) $39,500 (10%) | $750 (50%) $500 (20%) $1,250 (10%) |
Source: IRS Notice 2023-75, Notice 2024-80.
2024 2025 Tax Brackets and Standard Deduction
I also calculated the 2025 income tax brackets, standard deduction, capital gains tax brackets, gift tax exclusion limit, and the QCD limit. Please read 2025 Tax Brackets, Standard Deduction, Capital Gains, etc.
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Dads Dollars Debts says
Great post. It looked rosy until I saw the graph. It is unfortunate the government is not raising IRA limits, though I am happy to put another $500 into my 401k. Nice update. Thanks!
Pete says
IRA limits are ridiculous. Why are people who are not offered a 401(k) plan through their employer being penalized by only being able to save $6,500 tax-deferred (assuming 50+) while a person being offered a 401(k) plan through their employer can save $24,500 tax-deferred?
Shirley says
Thank you for the post. Great information! If I exceed my income limit to contribution to tradition and Roth IRAs, and want to do the non-deductible contribution to the tradition IRA, will I still be limited to $5500 max contribution for 2018?
Harry Sit says
The limit is the same whether you can deduct the contribution or not.
Lynne says
Hi Mike – Good to know, thanks. Any idea whether HSA contribution limit might go up at all?
And as previous poster said, disappointing that Roth IRA limit isn’t going up. Although now that we have a Roth 401(k) option at work, and I’ve been splitting my contributions between that and the traditional 401(k), maybe I’ll increase the Roth 401(k) part and decrease the traditional if I can do that without my taxes going up much.
Harry Sit says
HSA limits were already announced back in March. See 2016 2017 2018 HSA Contribution Limits.
AlwaysLearning says
Thank you very much for this information.
Is the 401(k) annual compensation limit adjusted in the same manner? From 2016 to 2017 it increased from $265,000 to $270,000 and I was wondering if we could expect a similar increase in 2018.
Harry Sit says
It’s 5x the annual addition limit. It will be $275,000 in 2018.
Jennifer says
2019 Compensation limit
Cheryl says
401(k) annual compensation limit for 2019 is $280,000.
Asif Sheikh says
My employer offers me all 3 plans 401k, 403b and 457. Also they contribute in my 401k. Wondering how much i can contribute in total as all 3 plans have separate limits so that means i can max out all 3 or is there a limit. I ask plan advisors and they push me to maximize their plan.
Harry Sit says
Your own contributions to the 401k and the 403b plans have a shared limit. Maxing out one will stop you from contributing to the other. 457 is separate.
KD says
HCE limit not increasing is a giant depressor for me personally. Could you please clarify what income is included and excluded from this limit? Thanks!
Harry Sit says
It’s enforced by the employer. So only your income with that employer counts. Interest, capital gains, and income from a different employer don’t count. Within the employer, it’s basically W-2 plus 401k contribution plus cafeteria plan deductions (health insurance, FSA, pre-tax HSA, …). The employer uses your 2017 compensation to determine whether you are an HCE in 2018. It goes by $5,000 increments. So it will go up to $125,000 in 2019.
The White Coat Investor says
It always feels like my bills just went up when this happens.
Roger says
Hi Harry,
I know most of the limits have an unrounded value that inflation gets applied to, but I’ve never been able to find such a value for the IRA contribution limit. How do you calculate when the IRA limit will be increased?
Thanks!
Harry Sit says
By the method specified in the Internal Revenue Code section 219(b)(5)(C). The unrounded value is now $5,900 and change. The IRA contribution limit will go up to $6,000 in 2019.
B says
Can you contribute to a Roth 403(b) at $18,000 and a personal Roth account at $5,500 in the same year, for a total of $23,500? Or is it a one or the other scenario?
Harry Sit says
You can do both if your income allows.
Gus says
Do you have any Earned Income Tax Credit numbers for 2018, including the investment income limit?
Also, is there a place to find all the formulas and rules for all these kinds numbers? (E.g. like the “Internal Revenue Code section 219(b)(5)(C)” reference you gave above, or something else spelling out the formulas.) I have some idea how it’s done, and have put some formulas in a spreadsheet, but I’d like to be sure of using exactly the right starting numbers, the months used for CPI adjustments (and if it’s cpi-u or something else), the precise rounding rules etc.
Also, is it possible for legislation to substantially change the rules/limits for tax year 2018? (For example, there was talk of much higher HSA contribution limits.)
Harry Sit says
I don’t have the EITC numbers. Code section 32 has the formula and rounding rules for EITC. Changes are always possible when Congress passes a bill and the President signs it.
Paul J says
I have looked at the IRS website and do not see the numbers of the retirement contribution limits for 2018. can you show me your references for the numbers
Harry Sit says
The first paragraph.
Gail says
My company does not offer a 403b. How can I encourage them. Gail
Paul says
A 403(b) plan, also known as a tax-sheltered annuity plan, is a retirement plan for certain employees of public schools, employees of certain Code Section 501(c)(3) tax-exempt organizations and certain ministers.
Do you qualify as one of the above?
AN says
hi, thanks for the great post, if I am maxing out my 401K contribution at 18K can I still contribute to some sort of IRA ? what is the income cut off where you cant contribute to any other savings plans?
Also can you explain what this means?
Maximum annual additions to all defined contribution plans by the same employer $54,000 $55,000. Is this something I can contribute it if I fall under HCEs? thanks for your help
Harry Sit says
You can still contribute to some sort of IRA although there are income limits for taking a deduction on traditional IRA contribution or contributing directly to a Roth IRA. These income limits are listed in the article. If you exceed both income limits you can still make a non-deductible contribution to a traditional IRA, which can then be converted to Roth if you follow specific steps. This is known as a backdoor Roth. See link in the article.
The maximum annual addition applies when you have a super-generous employer. After you contribute your $18,000, they can contribute up to $37,000 in 2018. Most employers don’t contribute nearly as much.
Tim Meamber says
Harry –
I receive a $101k pension. My wife and I, both over 50, earn approximately $40k (total) in self employment, which allows us to continue to contribute $6500 to my wife’s Traditional IRA and Roth IRA, and $6500 to my Roth IRA. In 2017, I took two distributions ($25k and $65k) from my 457b account, had taxes removed, and rolled them into a different Roth IRA account than the one we actively contribute to. Though not earnings, will that last distribution of $65k (completed on 10/05/2017) put us over the Roth IRA income limit (MFJ) for 2017 and produce a penalty for my wife and I actively contributing $13k to the Roth account?
Thank you very much
Harry Sit says
The income from a rollover to the Roth IRA doesn’t count against the income limit for contributing to a Roth IRA.
Tim Meamber says
Thank you Harry. I had thought the IRS looked at my MAGI alone and would determine we were over the income limit maximum of $196,000.
Art says
Official limits announced – Harry as usual predicted well ahead of time to help us all.
Gus says
Some numbers depend on August CPI numbers (released in mid-September) and some numbers depend on September CPI numbers (released in mid-October) (and some numbers are finalized earlier). Due to roundoff rules, you could be pretty sure earlier, barring freak CPI numbers, but it must happen some years that some numbers are close to a roundoff borderline and you’d have to wait for the final relevant CPI number to be sure.
Another unpredictable thing is that the tax code might completely change in time for 2018.
LE says
I am 57, so am I understanding correctly that I can contribute to BOTH my Roth (6500.00 with my catch-up) and my 401K (24,500.00 with my catch up) for a combined contribution limit of $31,000 for 2018?
Harry Sit says
See comments 7 and 11.
MySwollenToe says
Dear Harry,
I am a young physician and new to your site and love it so far… Have been reading voraciously and your posts are easy to read and well detailed.. such a nice change. Long story short.. I have been getting screwed for several years >6 years from a FA that was putting me into high cost investments from his own company. I wizened up and moved it all to Vanguard and betterment.
My question to you is this:
At work we have a PSP that I am maximizing every year. (145K) I have a traditional IRA(55K) as does my wife (41K) and also a SEP (26K) I funded once about 2 years ago. I also opened a extra traditional IRA ( non deductible) last year for 5K.
I was told to perform the ROTH conversions for both myself and wife by several colleagues who read your site… How can I do this knowing I have a SEP and what happens to the PSP.. I do not want to have to pay any additional taxes or get penalized. Trying to do this correct.
How should I consolidate anything to make this work..
Thank you in advance.
Harry Sit says
Your colleagues probably referred to Backdoor Roth: A Complete How-To. I assume by PSP you meant Profit Sharing Plan. In order to convert the non-deductible contribution, you’d have to be willing to move the rest of your traditional IRA to a workplace retirement plan, such as your Profit Sharing Plan (and the plan has to be willing to accept incoming rollovers from a traditional IRA). If you’d like to do the same for your wife, she would be to be willing to move her traditional IRA and SEP and she would have to have a workplace plan to accept the incoming rollover to begin with. Not everyone can do it.
Bob says
When will you be announcing your estimate for 2019 Max contribution amount on 403b?
Harry Sit says
It will go to $19,000. Add $6,000 catch-up for age 50 and up. Full update in a week or two.
Vikash says
Thank you for this excellent article. I forwarded the link to few of my friends. Keep it coming.
Terri says
Thanks so much! Was searching for forecasts the other day & this just popped up today.
Art says
Thank you!
Tammy says
May I contribute to both a 403B and a simple IRA?
Harry Sit says
Yes but your SIMPLE IRA contribution counts toward the maximum for your 403b contribution.
Rich says
I always learn something from you, Harry. This time it’s “Employer contributions aren’t included in these limits.” I haven’t been paying attention all my life because I always thought what my employer contributed counted towards the max. But for better or for worse this is the first year ever for me that I will max out my 401K contribution, including the extra since I’m over 50. Thanks for including that detail in your post. Rich
Graham says
Great news that IRAs and 401k limits are both going up for 2019! Why is this the only place that I can find that info?
JoeyD says
Harry explains this in general terms in his opening paragraphs…but to expand on it….
The main reason why Harry is able to publish “before others do” is because technically, most of these limits that Harry posted officially require the inflation numbers published in July, August, and ALSO September. Harry is basing his numbers on only July and August’s publications only. The September publication is not out until Sept 13th.
Most sites will wait until the September publication so that the calculations are in effect “official” before they publish next year’s limits. So late this week and early next week expect to see lots of sites start publishing the same information Harry gave us a month ago. Harry is able to confidently publish the numbers early…because based on the actual inflation numbers published July and August, combined with the rounding rules that the IRS uses….there is virtually no chance that the September publication will make any difference.
Graham says
JoeyD – Thanks so much for the response! That makes sense to me.
JoeyD says
Just a few corrections to my initial post…I don’t want to give out bad info.
Technically, most of the limits actually require the inflation numbers for the 3rd quarter. This means inflation publications during August, Sept, and Oct. The publication in August shows the previous month’s (July) inflation was, so the publications in these 3 months covers the inflation values from July, Aug and Sept…Q3.
So the “official” limits will not be known until after the OCTOBER publication. This means you won’t see most other sites start to publish these limits until after Oct 11 this year.
The rest of the reasoning is the same: The Bureau of Labor and Statistics (BLS) publishes inflation numbers every month, so Harry can track them. Based on the inflation figures that were published through July, the math worked out such that there was virtually no chance that the Aug, Sep, and Oct inflation publications would make any difference to these limits.
This may not be the case every year. Some years the math may work out where Harry may need to wait until later in the year before having confidence to publish some or all of the following year’s limits.
Steve says
Any update to the income limits for the student loan interest deduction? There is a phase-out range similar to that for the traditional IRA deduction.
Harry Sit says
Sorry, I don’t track that one.
Harry Sit says
According to Wolters Kluwer the starting point of the student loan interest deduction phaseout in 2019 will be $140,000 for married filing jointly and $70,000 for single.
JoeyD says
Hi Harry,
As you know, historically we have been able to calculate the majority of the rest of the upcoming year’s tax brackets once the August inflation numbers were published in September. So normally, we would be able to calculate the 2019 tax brackets, standard deduction, etc. this Thursday the 13th when the CPI numbers are released.
With the recent tax law changes it’s not 100% clear to me if this will still be the case. I know they are switching the inflation basis to use the Chained CPI numbers, but I’m not sure what the “base” year is going to be used, what months they will use to create the average, etc. In addition, the Chained CPI numbers (unlike the others) when released are only preliminary…they are essentially updated every quarter and are only finalized about 1 year after the initial publication. I don’t know how that may impact the inflation factor. We also need to keep track of the income brackets used to determine the capital gains rate separately…I think (not 100% sure) that they are still utilizing brackets and inflation rate under the old laws.
Do you know (technically) how the new 2019 brackets will be calculated, and do you anticipate publishing the 2019 tax brackets shortly after the CPI numbers are released on Thursday?
Harry Sit says
The cycles didn’t change. Tax brackets use September to August cycles. Most tax bracket numbers for 2018 started fresh as the new base (except the one for capital gains). So you first get the average of September 2016 to August 2017 chained CPI. Then you do the same for September 2017 to August 2018 and see how much the average increased. Apply the increase to the fixed numbers in the law and then do the rounding. I don’t know how they deal with chained CPI revisions. I imagine they use the numbers known at the time of calculation and remember those.
I don’t track the tax brackets closely because going over a tax bracket doesn’t make that much of a difference, whereas the contribution limits are hard limits.
JoeyD says
Thanks, Harry. Yeah, that is my first guess as well…that they will use whatever the interim values are at the time (prior to the finalization) in order to create the inflation values to apply to tax brackets. When the tax brackets are published, I’ll check that assumption.
Thanks for the confirmation that they are continuing the September to August cycle. At this point I’m assuming the “base year chained CPI-U” will be the final (revised) numbers from Sept 2016-Aug 2017.
JoeyD says
So based on the CPI numbers published today, here would be my predictions for the 2019 tax brackets. (I’ll just post Single and Married Filing Joint statuses for simplicity): This is for tax year 2019….for returns that will be filed in April 2020.
NOTE: These are just my own estimates based on how I interpret the tax law changes that went into effect for 2018. Once the IRS publishes the actual rates I will follow-up with the actual amounts to avoid any confusion.
Standard Deduction:
SIN: $12,200
MFJ: $24,400
BRACKETS
[Bracket] : [Starts at income $ level]
Cap Gains Tax Brackets:
SINGLE
0% : $0
15% : $39,650
20% : $437,000
MARRIED JOINT:
0%: $0
15% : $79,300
20% : $491,650
Income Tax Brackets:
SINGLE:
10% : $0
12% : $9,700
22% : $39,450
24% : $84,200
32% : $160,700
35% : $204,100
37% : $510,300
MARRIED JOINT:
10% : $0
12% : $19,425
22% : $78,950
24% : $168,400
32% : $321,450
35% : $408,200
37% : $612,350
AMT Personal Exemption:
SINGLE: $71,700
JOINT: $111,700
AMT Exemption Phaseout Thresholds
SINGLE: $510,300
JOINT: $1,020,600
AMT Income Brackets (AMTI, both Single and Married Joint)
26% : $0
28% : 196,100
Harry Sit says
Kelly Phillips Erb reported on Forbes the numbers projected by Bloomberg Tax. The standard deduction numbers match yours. The bracket numbers are within $25 here and there from yours. Your capital gains numbers are off more from theirs.
https://www.forbes.com/sites/kellyphillipserb/2018/09/14/projected-2019-tax-rates-brackets-standard-deduction-amounts-and-more/
JoeyD says
Thanks, Harry…I’ll take a look. The bracket numbers are likely off due to differences in rounding methodology (I think some brackets are rounded down to nearest $25, others to $50, etc.) It’s not always clear to me what they are.
I’ll look at the capital gains numbers…I based my numbers off of the “old law” and CPI-U inflation rates. It may be that even though the based cap gains brackets themselves are based on old law, the inflation rates may now be changed to C-CPI-U like the regular income tax brackets.
Harry Sit says
Wolters Kluwer published their projections here:
http://news.cchgroup.com/2018/09/14/projected-annual-inflation-amounts-for-2019/
They don’t match 100% to the numbers from Bloomberg Tax.
Both sources matched my numbers published a month ago for IRAs.
JoeyD says
The numbers from Wolters Kluwer match my original ones exactly with the exception of the MFJ 12% bracket (where I am off $25). Wolters Kluwer is likely correct…and that value is not *directly* calculated from the inflation figures, but is to be calculated to be 2X the rounded SIN status.
Wolters Kluwer did not publish cap gains brackets. However, as I suspected if I change my inflation methodology to C-CPI-U, my calculations will exactly match those of Bloomberg. So in short, I have reasonable confidence that the following are the 2019 tax brackets:
Standard Deduction:
SIN: $12,200
MFJ: $24,400
BRACKETS
[Bracket] : [Starts at income $ level]
Cap Gains Tax Brackets:
SINGLE
0% : $0
15% : $39,350
20% : $434,550
MARRIED JOINT:
0%: $0
15% : $78,750
20% : $488,850
Income Tax Brackets:
SINGLE:
10% : $0
12% : $9,700
22% : $39,450
24% : $84,200
32% : $160,700
35% : $204,100
37% : $510,300
MARRIED JOINT:
10% : $0
12% : $19,400
22% : $78,950
24% : $168,400
32% : $321,450
35% : $408,200
37% : $612,350
AMT Personal Exemption:
SINGLE: $71,700
JOINT: $111,700
AMT Exemption Phaseout Thresholds
SINGLE: $510,300
JOINT: $1,020,600
AMT Income Brackets (AMTI, both Single and Married Joint)
26% : $0
28% : 196,100
Again, the above are subject to change based on actual IRS publication…typically early Nov.
Finally, the last tax limit that I’m usually interested in is the Social Security earnings cap. In 2018 this was 128,400. The 2019 value won’t be known until the SS Admin posts the AWI in mid October. The last mid-year AWI estimate would put the 2019 SS Cap at 132,300….so it will be in that neighborhood.
RBB says
Hi – a few ques. Part-time MD w 403b and side consulting business. Looking at indiv 401k vs. sep for consulting business (hoping profits will be around $200k this year & double next year).
What is best way to save maximum tax deferred (or could be Roth) for consulting side? Already saving $18,500 through 403b.
If you defer 18,500 through employee 403b, can you also defer 18,500 th
Harry Sit says
That’s quite a different topic. See Solo 401k For Part-Time Self-Employment and the online spreadsheet linked there.
mart pitcher says
I am aged 69 close to 70 In the year ending 2018 I am able to save the maximum of 24500 in my 401 K I will retire in late 2019
In previous years this has not been the case. Am I able to save any additional funds as previous years catch up or is my limit 24500.
Brian Chapman says
I am a HCE. I have slowly been increasing my 401K contributions each year. I am putting the max into Catch up contributions. My question is the process by which my company determines if I have to roll back part of my contributions to my 401K. Do I just have to wait and see if I get a letter from my employer. Is there any way to view if the plan had to roll back HCE’s contributions. Is there a record that I can access or view? Thanks..
Harry Sit says
You can ask your employer’s HR or whatever other department that’s responsible for the plan whether the plan is a safe harbor plan. If it is, you won’t have to worry about your contributions being limited. If it’s not a safe harbor plan, you can ask how the plan did in previous years. For the current year, sometimes they do a projection; sometimes they just wait until the year is over.
Conrad Von Wald says
Can you explain the difference from 2017 AMT limits versus the 2018 limits and how it will impact IMT results? I thought the limits would help significantly reduce the requirements to file an AMT form. Great info on your site. Very useful and helpful for tax planning purposes. Well written and easy to follow. Thanks for your excellent work!
Harry Sit says
Consider AMT a thing of the past. 95% of people who were affected won’t pay AMT again for 2018.
Alison K says
Please can you confirm the 2019 contribution limit if you have two employers? Thank you!
Harry Sit says
The pre-tax and/or Roth 401k/403b contributions you can make yourself are combined as if you have only one employer. Assuming the two employers are separate and unrelated to each other, they can contribute more.
Art says
Official numbers are in. Harry on point as usual.
Harry Sit says
Yay, another year with 100% accuracy!
John says
I have option to contribute in 401K starting Dec 2018 thru my new employer’s 401K plan. I have about $120K income in 2018 from my consulting business. I plan to contribute to my individual IRA account from my business income. Rather than contributing in 2018 to 401K, can I contribute to 401K for year 2018 during Feb-Mar 2019 when I prepare my taxes? Or any other way to contribute more for retirement?
Thanks,
Renee says
I have a state pension, a 403 b and ROTH IRA, who should I talk to to make sure all this is legit for my income.
Jimmy says
Crap post. Only a lousy analyst lists the delta without the new total.
Fleischman says
Harry,
My wife made employee contributions worth $17500 through my LLC’s Solo-401k for Year 2018. Oct 30 was her last day as my employee. Nov 1 she started a job at a company with a SIMPLE IRA. Up to how much can her 2018 employee contribution be under the SIMPLE IRA?
Thank you.
Fleischman
Harry Sit says
If she’s under 50, $1,000. Another $3,000 if she’s 50 or over this year.
Bill says
My wife and I are both over 50. I have a 401k through work, a personal IRA and a Roth account and my wife has an IRA and we file jointly. If I were to max out ALL retirement savings available to me for 2019, what could I contribute to each of the above? I’m looking to save the absolute max across all categories if at all possible and want to know what that is for my case?
Pete says
Depends on your adjusted gross income
Bill says
Assume around 130k
Pete says
For 2019:
YOU can contribute $25,000 into your 401(k) – ($19,000 + $6,000 catch-up)
-0- into a traditional IRA because your AGI > $123,000
$7,000 ($6,000 + $1,000 catch-up) into your ROTH IRA since your AGI < $193,000
Your WIFE can only contribute $7,000 into either a traditional or ROTH IRA since your AGI is < $193,000 and you participate in a work sponsiored retirement plan.
George V says
Do any of the limits change if you are drawing SS, while continuing to work full time?
Specifically, 401k and IRA, whether traditional or Roth…
Assume full retirement age, 66.
Harry Sit says
Drawing Social Security or not doesn’t affect your contribution limits. Your full-time income may make your Social Security benefits taxable. Your eligibility to contribute to a Traditional IRA stops in the year you reach 70-1/2 (can still contribute to Roth IRA).
Mark says
I was wondering if someone can please explain the total number of combined deferrals one can make.
For example, my employer does a 3% match which I take advantage of each year. I also started a side business last year that generated some extra money that I’m thinking I could do an Individual 401k with as well. Additionally, if my total income allows, I could do a Roth.
Is there a limit to having these several “types” or rules that will limit how much I could deffer with my individual 401k given that I also have an employer plan?
We aren’t talking huge amounts (5k from the employer plan and about 20k in a sole proprietorship. But that 20k could be almost completely vested and reduce my tax liability.
thanks much
Lynn Reagan says
I have a question regarding a 403(b) and traditional IRA contribution. I am close to retiring so will only make a few grand this year of which I would like to contribute 100% to my 403(b). This will be below the $19K limit so I should not have an issue; however, will this disqualify me from also making a contribution to my traditional IRA? I know typically you have to have earned income to contribute to an IRA but if 100% goes to a 403b can I still do this? For example, lets say my earned income for the year is $10,000. Can I put $10,000 in my 403(b) and $6,000 in my IRA?
Harry Sit says
Traditional 403b, no. Roth 403b, yes. You need to show enough compensation on your W-2 or self-employment income in order to contribute to an IRA.
Stephanie says
Are the 401(k) and Roth IRA contribution limits separate? Assuming you don’t max out on any income thresholds, you can contribute full $19,000 to 401(k) and $6,000 to Roth IRA, for a combined $25,000 for both these options? Just want to make sure the $6,000 Roth Contribution is separate from / doesn’t reduce the 401(k) contribution.
Harry Sit says
Yes they are separate, as stated under “Traditional and Roth IRA Contribution Limit.”
Denise W-P says
Hello, Are 457 contributions applied to the 401(a) annual compensation limits?
Harry Sit says
They are included as part of compensation.
Karen F says
Married filing jointly. We max out husband’s 401k, and make a traditional IRA contribution (but only a very small portion of this is deductible). I am a teacher and will see a significant increase in pay next year. Right now I do not contribute to a 403(b), but am covered by my state (PA)’s pension. I am looking to avoid a huge tax hit next year. Can we max out husband’s 401k AND max out my 403(b)?
Harry Sit says
Yes.
Gail Monsoo says
It is very important that you Max out your 403b. It lowers your taxable amount by $19,000 less than 50 years. $25,000 greater than 50 years. You are not preparing for additional income when you retire from your 403b. If you are paid biweekly take annual allowed and divide by 24.
If you have not started. Aim for May 15th payroll, and divide by 16.
Karen says
I want to make sure I understand this correctly. We can max out my husband’s 401k AND my 403b, thereby reducing our tax burden by $38,000?
Harry Sit says
Yes, each person can max out their own 401k or 403b separately. You don’t get a lower limit just because you are married. If both of you are under 50 and you contribute the maximum as pre-tax, not Roth, you reduce your joint _income_ by $38,000 (not your tax burden by $38,000).
Thrifty Femme says
When will we know if the highly compensated limit will increase in 2020?
REB says
I am a physician in private practice, who contributes the maximum to my practice’s 401K. I also do contract work for a hospital, who is offering a 403b. Can I make the maximum tax-free contribution (i.e., 25,000) to both in any given year?
Harry Sit says
No, the limit for your contribution as an employee is shared among all the plans you contribute to (except 457 plans).
George Van W says
If I max out the 401k contribution, $19k and also take the 50+ catch-up contribution, $6k in the 401k, can I also take the $6k IRA max contribution for both myself and non-working spouse ($6k each) plus $1k each for 50+ catch-up? Total of $39k in deferred income? Total annual income <$103k.
Am I reading this right?
Harry Sit says
Yes you can contribute to both a 401k and a traditional or Roth IRA. A non-working spouse can contribute to a traditional or Roth IRA using the working spouse’s income.
Josh says
Can I continue to contribute to a 403(b) after age 70 – not retired, still working?
Harry Sit says
You can continue to contribute as long as you are still working for that employer.