IRA Contribution Limits for 2023 vs. 2022

Individual retirement accounts (IRAs) are one of the most popular tools for building retirement savings. More than 40 percent of U.S. households have an IRA, according to the Investment Company Institute. 

But each year, the IRS adjusts the rules for IRA eligibility based on inflation. In 2023, those adjustments will make a big difference in who can contribute to a Roth IRA, and who can deduct contributions to a traditional IRA from their taxable income.

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For both traditional and Roth IRAs, you can contribute up to $6,500 for 2023, up from $6,000 in 2022. Retirement savers age 50 and older can chip in an extra $1,000 a year as a catch-up contribution, so $7,500 in all. A person who turns 50 this year and starts contributing can sock away $112,500 in an IRA by age 65, not including any investment returns on the principal; a couple could save $225,000.

Starting with the 2024 tax year, the catch-up cap will be indexed to inflation, meaning people 50-plus can save more as the cost of living goes up. From 2025 on, IRA owners ages 60 to 63 will be able to make larger catch-up contributions: up to $10,000 or 50 percent more than the age-50 maximum, whichever amount is larger. Both provisions are part of the SECURE 2.0 Act, a set of measures designed to promote retirement saving that Congress passed in late 2022.

Traditional IRAs

A traditional IRA allows you to deduct your contribution from your income, which can reduce your taxes and make it easier on your budget to save. 

For example, suppose you’re in the 24 percent federal income tax bracket. To save $7,500 for retirement in a fully taxable account, you would have to earn about $9,868 before taxes. 

With a traditional IRA, however, you can deduct that $7,500 contribution, meaning that to get $7,500 to invest, you only have to earn $7,500. (You can only contribute earned income to an IRA; investment income and Social Security benefits don’t count.)

If you (or your spouse) don’t have a retirement plan of any kind, you can take the full deduction for an IRA. If you do have a retirement plan available from your employer — even if you don’t take advantage of it — your ability to deduct a traditional IRA contribution is limited by your income.