The IRS has updated the income thresholds that determine who can fund a Roth IRA, and the new numbers give a little more breathing room to savers who were previously on the edge of eligibility.
For 2025, the income phase-out range for single filers is $150,000 to $165,000, up from $146,000 to $161,000 in 2024.
For married couples filing jointly, the range moves to $236,000 to $246,000, compared with $230,000 to $240,000 last year.
What that means in practice: if your modified adjusted gross income lands below the bottom of your range, you can contribute the full amount.
If you're inside the range, the allowed contribution shrinks gradually.
Above the top number, direct contributions aren't permitted.
The contribution cap itself stays at $7,000 for people under 50, with an extra $1,000 catch-up allowed for those 50 and older.
So a couple both over 50 could still shelter up to $16,000 combined, assuming their income qualifies.
Why the fuss over a number that shifts by a few thousand dollars?
Because the Roth's main selling point is tax-free growth and tax-free withdrawals in retirement.
You pay tax on the money going in, then never again — provided you follow the five-year rule and withdrawal guidelines.
Higher earners who exceed the limit aren't entirely locked out.
A "backdoor" approach — contributing to a traditional IRA and then converting it — remains a common workaround.
It's legal, but it comes with paperwork and the pro-rata rule, which can complicate things if you hold other traditional IRA balances.
One trap worth flagging: the income test uses modified adjusted gross income, not your salary alone.
Bonuses, side gig income, dividends, and capital gains all feed into the calculation.
A year with a big freelance check or a sold stock position can quietly push you over the threshold.
You have until the tax filing deadline in April 2026 to make a 2025 contribution, which means you may not know your final MAGI until you file.
Many people wait, or contribute early and fix it later if they overshoot.
If you do contribute too much, the IRS charges a 6% excise tax on the excess for each year it stays in the account.
The fix is usually to withdraw the excess plus any earnings before the deadline, or apply it to a future year if you're still eligible.
The simplest move: check last year's tax return to see where your MAGI landed, then compare it against the new ranges before writing a check.
A few minutes of math beats a penalty letter later.
The bottom line is that these annual adjustments are small, but they matter at the margins.
Final Thoughts
If you've been telling yourself you earn too much for a Roth, run the numbers again — the ceiling moved, and you might now fit under it.