IRA Contribution Limits 2021
The Internal Revenue Service sets the IRA contribution limits every year. It also determines how much one can claim a deduction for their IRA contributions. The IRA contribution limit for 2020 was $6,500 which was upped from $5,500 from 2018. Also, those who are 50 and older get an extra $1,000 to contribute. This makes it $7,000 for aged 50 and older.
Most recently, the IRA contribution limits were increased from $5,500 to $6,000. Before that, the last increase came in 2013. While the 401(k) contribution limits are updated regularly, the IRA contribution limits, not so much. From 2002 to the present day, here are the IRA contribution limits.
| Year | IRA Contribution Limit | IRA Contribution Limit (50 and older) |
| 2002 | $3,000 | $3,500 |
| 2003 | $3,000 | $3,500 |
| 2004 | $3,000 | $3,500 |
| 2005 | $4,000 | $4,500 |
| 2006 | $4,000 | $5,000 |
| 2007 | $4,000 | $5,000 |
| 2008 | $5,000 | $6,000 |
| 2009 | $5,000 | $6,000 |
| 2010 | $5,000 | $6,000 |
| 2011 | $5,000 | $6,000 |
| 2012 | $5,000 | $6,000 |
| 2013 | $5,500 | $6,500 |
| 2014 | $5,500 | $6,500 |
| 2015 | $5,500 | $6,500 |
| 2016 | $5,500 | $6,500 |
| 2017 | $5,500 | $6,500 |
| 2018 | $5,500 | $6,500 |
| 2019 | $6,000 | $7,000 |
| 2020 | $6,000 | $7,000 |
| 2021 | TBA | TBA |
The Internal Revenue Service is expected to announce the IRA contribution limits for 2021. Although it is expected that the contribution limits will stay the same as in 2020, the agency may increase the limits. Same as the 401(k) contributions, the taxpayers can deduct their contributions. However, IRA contributions are more subject to income restrictions.
IRA Deduction Income Limits
Regardless of how much you contribute to an IRA, you can get a full deduction. Whether or not you can claim the full deduction comes down to your filing status, income, and if you or your spouse is covered by a retirement plan at work.
At the time of writing, if you’re covered by retirement plan at work, the thresholds are as follows.
| Filing Status | Modified AGI* | Deduction |
| Single | Less than $65,000 $65,000 to $75,000 More than $75,000 | Full Deduction Partial Deduction No Deduction |
| Head of Household | Less than $65,000 $65,000 to $75,000 More than $75,000 | Full Deduction Partial Deduction No Deduction |
| Married Filing Jointly | Less than $104,000 $104,000 to $124,000 More than $124,000 | Full Deduction Partial Deduction No Deduction |
| Married Filing Separately | Less than $10,000 More than $10,000 | Partial Deduction No Deduction |
*Modified Adjusted Gross Income refers to adjusted gross income but certain deductions and adjustments added back.
As you can see from the table above, the IRA deduction literally forces married couples to file taxes jointly. If you and your spouse earn a similar income but file taxes separately for other reasons, you may want to reconsider. Because the income threshold for married filing separately is so low, you may get more in return if you were to file taxes jointly.
