The number that decides whether you can fund a Roth IRA directly moved again for 2025, and it's tripping up savers who assume last year's rule still applies.
If you're single, the phase-out now starts at $150,000 of modified adjusted gross income and closes at $165,000.
Married couples filing jointly get a range of $236,000 to $246,000.
Those figures come from the IRS and reflect an inflation adjustment, which sounds like good news until you do the math.
Wages rose roughly 4% last year, and the income window crept up only a few thousand dollars in most brackets.
In practice, a raise that feels like progress can quietly push you past the limit and shut the door on direct contributions.
Grocery bills are still running well above pre-2021 levels, rent keeps climbing in most metros, and credit card APRs are hovering near record highs.
Every dollar you can shelter from taxes matters more than it did a few years ago, and the Roth is one of the few tools that lets your money grow and come out tax-free in retirement.
The tricky part is what counts as income.
Modified adjusted gross income isn't just your salary.
It can include bonuses, side gig earnings, taxable investment gains, and some deductions added back.
A good year in the stock market or a freelance check in December can push you over the line without any change to your paycheck.
If you're over the limit, you still have options.
You can make a traditional IRA contribution and convert it to a Roth, a maneuver commonly called a backdoor Roth.
The catch is the pro-rata rule: if you hold pre-tax money in any traditional IRA, part of your conversion becomes taxable.
Run the numbers before you move anything.
Another path is the mega backdoor Roth, available only if your employer's 401(k) plan allows after-tax contributions and in-service conversions.
Not every plan does, so check your summary plan description or ask HR.
You can put in up to $7,000 if you're under 50, or $8,000 if you're 50 or older.
That's the total across all your IRAs, not per account, so don't double up by mistake.
One more wrinkle: the limit applies to your income for the year you contribute, not the year you file.
If you're close to the edge, wait until you have a solid estimate of your final income before funding.
You have until the tax filing deadline the following April, which gives you room to adjust.
An inflation bump in the income thresholds doesn't mean you're safe.
Check your MAGI against the new numbers early, and if you're near the line, talk to a tax professional before you write the check.
The system rewards people who plan ahead and punishes those who assume.
Final Thoughts
A ten-minute check now beats an awkward fix later.