With a new year comes many new changes – putting up a new calendar, making New Year’s resolutions, AND new contribution and gifting limits imposed by the IRS.
The IRS reviews the contribution limits and income phase-out ranges for retirement plans, health and dependent care savings accounts, and gift tax exclusions annually, and makes modifications if needed, mainly for inflation.
It’s wise to check these limits each year before making contribution elections to your employer provided benefits plans, contributions to various accounts or gifts throughout the year.
Beginning January 1, 2025, the contribution limits to many retirement plans were increased. Maxing out your employer provided retirement plan is one of the best ways to save for retirement because it often times allows you to receive “free money” with employer matching, along with an immediate tax benefit by reducing your taxable income.
Below are several of these changes as they compare to 2024:
Retirement Plan Contribution Limits
Plan Type |
2024 |
2025 |
Change |
Maximum employee elective deferral or pretax contribution limit for 401(k), 403(b) and most 457 plans – younger than age 50 |
$23,000 |
$23,500 |
$500 |
Maximum employee elective deferral or pretax contribution limit for 401(k), 403(b) and most 457 plans – age 50 and older |
$30,500 |
$31,000 |
$500 |
Maximum employee elective deferral or pretax contribution limit for 401(k), 403(b) and most 457 plans – age 60-63 |
- |
$34,750 |
$11,250 |
Traditional & Roth IRA contribution limit - younger than age 50 |
$7,000 |
$7,000 |
No change |
Traditional & Roth IRA contribution limit - age 50 & older |
$8,000 |
$8,000 |
No change |
SIMPLE Plan contribution limit - younger than age 50 |
$16,000 |
$16,500 |
$500 |
SIMPLE Plan contribution limit - age 50 & older |
$19,500 |
$20,000 |
$500 |
Defined contribution plan limit (employee + employer) |
$69,000 |
$70,000 |
$1,000 |
Many people take advantage of their employer provided retirement plans, but some also want to save more than the plan allows. One way to do this is by making contributions to a Traditional or Roth IRA.
You are allowed a tax deduction for contributions made to a Traditional IRA if your income is below a certain threshold. If your income is too high for the deductible contribution, you can still make the Traditional IRA contribution, but no tax benefit is received for the initial investment.
Similarly, you are only allowed to contribute directly to a Roth IRA if your income is below a certain threshold. To see if you are eligible to make these contributions in 2025, here are the new income phase-out ranges:
Income Phase-Out Ranges for IRAs
Contribution Types |
2024 |
2025 |
Change |
Traditional IRA deductible contribution - Single (covered by workplace retirement plan) |
$77,000 - $87,000 |
$79,000 - $89,000 |
$2,000 |
Traditional IRA deductible contribution - Married Filing Joint (covered by workplace retirement plan) |
$123,000 - $143,000 |
$126,000 - $146,000 |
$3,000 |
Traditional IRA deductible contribution - not covered by workplace retirement plan |
$230,000 - $240,000 |
$236,000 - $246,000 |
$6,000 |
Roth IRA contribution – Single |
$146,000 - $161,000 |
$150,000 - $165,000 |
$4,000 |
Roth IRA contribution - Married Filing Joint |
$230,000 - $240,000 |
$236,000 - $246,000 |
$6,000 |
In recent years, the IRS made several changes to the contribution limits for Health and Dependent Care Savings & Spending Accounts. For 2025, those accounts saw little changes:
Health and Dependent Care Savings & Spending Accounts
Heath Savings Accounts (HSAs) |
2024 |
2025 |
Change |
HSA Contribution Limit (Employer + Employee) |
Self-only: $4,150 Family: $7,750 |
Self-only: $4,300 Family: $8,550 |
Self-only: $150 $800 |
HSA Catch-Up Contribution Limit (Age 55+) |
$1,000 |
$1,000 |
No change |
Heathcare Flexible Spending Accounts (FSAs) |
2024 |
2025 |
Change |
Maximum salary deferral |
$3,200 |
$3,300 |
$100 |
Maximum rollover amount |
$640 |
$660 |
$20 |
Dependent Care Flexible Spending Accounts |
2024 |
2025 |
Change |
Maximum salary deferral (single and married filing jointly) |
$5,000 |
$5,000 |
$0 |
Maximum salary deferral (married filing separately) |
$2,500 |
$2,500 |
$0 |
The final change we want to point out is the increased estate and gift tax limits for 2025. The IRS typically increases this limit each year to account for inflation so 2025 limits saw a notable bump:
Estate and Gift Tax Limits
|
2024 |
2025 |
Change |
Annual gift tax exclusion |
$18,000 |
$19,000 |
$1,000 |
Gift tax and estate tax exclusion amount |
$13,610,000 |
$13,990,000 |
$380,000 |
Next Steps
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