The number that decides whether you can fund a Roth IRA directly just moved again, and it is creeping closer to a lot of ordinary households.
The IRS raised the income phase-out ranges for 2025, meaning some people who were shut out last year can contribute this year, while others are about to hit the ceiling for the first time.
Roth accounts are attractive for a simple reason: you pay tax now, and withdrawals in retirement come out tax-free.
That makes the income cap one of the most consequential numbers in personal finance, because crossing it can shut you out of a benefit that compounds for decades.
For single filers, the ability to contribute starts phasing out at $150,000 of modified adjusted gross income and disappears completely at $165,000.
For married couples filing jointly, the range runs from $236,000 to $246,000.
Those are up from $146,000 to $161,000 for singles and $230,000 to $240,000 for couples in 2024.
If you are under the limit, you can put in up to $7,000 for 2025, or $8,000 if you are 50 or older.
The contribution window stays open until the tax filing deadline in April 2026, which gives you months to sort out your actual income before committing.
The catch that trips people up is what counts as income.
Bonuses, overtime, self-employment profit, taxable interest, dividends, and capital gains all feed into modified adjusted gross income.
A good year in the stock market or a one-time bonus can quietly push you over the edge without any raise at all.
If you land in the phase-out zone, you do not lose the whole contribution.
You can still put in a reduced amount, and the math depends on how far into the range you fall.
Go over the top of the range entirely and a direct Roth contribution is off the table.
There is a workaround many people use, though it comes with paperwork and plenty of confusion.
You can make a nondeductible contribution to a traditional IRA and then convert it to a Roth, a move commonly called a backdoor Roth.
The catch is the pro-rata rule, which looks at all your traditional IRA balances when calculating the tax on the conversion.
If you hold a large pre-tax IRA, the conversion can trigger a bigger tax bill than expected.
One more thing worth knowing: income limits apply to Roth contributions, not to Roth conversions.
There is no income cap on converting existing retirement money to a Roth, though you will owe tax on any pre-tax dollars you move.
The practical move is to check your projected income before the year ends, not after.
If you are near the edge, maxing out a 401(k) or health savings account lowers your modified adjusted gross income and can pull you back under the line.
Waiting until tax season to discover you overshot leaves you sorting out excess contributions and penalties instead of planning.
Our take: the annual inflation bump to these limits is easy to ignore, but it is the difference between years of tax-free growth and missing out entirely.
Final Thoughts
If your income drifts up each year, revisit this number every fall rather than assuming last year's answer still holds.