IRA tax deductions and how to claim them

If you contributed to a Traditional IRA account in 2023, you may be able to take a tax deduction for the contributions you made. The IRA contribution limits for 2023 are $6,500 for those under age 50 and $7,500 for those 50 and older. In 2024, the IRA contribution limit goes up to $7,000 for those under 50 and $8,000 for those 50 and older.

To clarify, the above contribution limits are the annual maximum limits for contributing to all personal IRAs. For example, if you have both Roth and Traditional IRAs, you cannot contribute more than the above limits between both accounts. However, although Traditional IRA contributions may be tax-deductible if you qualify, Roth IRA contributions are not.

How does the Traditional IRA tax deduction work?

The IRA deduction is an above-the-line tax deduction. When a deduction is “above the line,” it can lower taxable income before you calculate your adjusted gross income (AGI), and in turn, it can lower the amount of taxes you pay. You can take an above-the-line deduction regardless of whether you itemize deductions or take the standard deduction.

Your eligible deduction limit will be determined by your tax-filing status, AGI, and whether or not you (or your spouse) are covered by an employer retirement plan at work. You may be able to claim only part of the IRA tax deduction or none of it.

Allowable deductions will be deducted on Schedule 1 of Form 1040. The IRA deduction will be entered on line 20 and then you enter line 26 from Schedule 1 into line 10 on form 1040.

Single filers and heads of household

If you are a single filer or head of household and aren’t covered by an employer retirement plan, your Traditional IRA contribution is fully tax-deductible regardless of your modified AGI. 

For tax year 2023, if you are a single filer or head of household who is covered by an employer plan, your IRA contribution is fully deductible if your modified AGI is $73,000 or less. If your modified AGI is between $73,000 and $83,000, you may take a partial deduction. If your modified AGI is greater than $83,000, you may not take a deduction for your IRA contributions.

Joint filers

If you and your spouse are both not covered by a retirement plan at work, your traditional IRA contribution is fully tax-deductible regardless of your modified AGI.

For tax year 2023, if you or your spouse are covered by an employer retirement plan, you can claim the full IRA tax deduction if your household modified AGI is $116,000 or less. If your household-modified AGI is between $116,000 and $136,000, you can take a partial deduction. If your household-modified AGI is $136,000 or more, you may not take any deductions for IRA contributions.

Married filing separately

Unfortunately, for those married but filing separately, the deduction phaseouts are much lower, regardless of participation in workplace retirement plans. Those with a modified AGI of less than $10,000 may take a partial deduction. Those with modified AGI of higher than $10,000 may not take any deductions for IRA contributions.

If you are not covered by a retirement plan at work

Filing status	If your Modified AGI is	Then you can take
Single, head of household, or qualifying widower	Any amount	A full deduction
Married, filing jointly, or separately with a spouse who is not covered by an employer plan	Any amount	A Full deduction
Married filing jointly with a spouse who is covered by a plan at work	Less than $218,000	A full deduction
	$218,000-$228,000	A partial deduction
	$228,000 and above	No deduction
Married filing separately with a spouse who is covered by a plan at work	Less than $10,000	A partial deduction
	$10,000 and above	No deduction

If you are covered by a retirement plan at work

Filing Status	If your Modified AGI is	Then you can take
Single or head of household	Less than $73,000	A full deduction
	$73,000-$83,000	A partial deduction
	$83,000 and above	No deduction
Married filing jointly or qualifying widower	Less than $116,000	A full deduction
	$116,000-$136,000	A partial deduction
	$136,000 and above	No deduction
Married filing separately	Less than $10,000	A partial deduction
	$10,000 and above	No deduction