IRA Income Limits for 2016 and 2017

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The IRA income limits for 2016 and 2017 depend on your tax filing status and whether you're contributing to a traditional or a Roth IRA. Traditional IRA contributions are not restricted by income, but the ability to take a tax deduction is. On the other hand, Roth IRA contributions are income-restricted.

Traditional IRA income limits

The ability to contribute to a traditional IRA isn't restricted by income. You can contribute as much as you want, up to the IRS's annual maximum, regardless of how much money you earn.

However, the ability to deduct traditional IRA contributions on your tax return is restricted by income. Since the initial tax benefit is perhaps the biggest reason to contribute to a traditional IRA, this is indeed a pretty big restriction.

For the 2016 and 2017 tax years, here are the adjusted gross income (AGI) limits to take a traditional IRA deduction if you are covered by an employer's retirement plan. If your AGI is less than the lower end of the range, you are entitled to a full deduction of your traditional IRA contributions. If your AGI is above the higher limit, you cannot deduct any traditional IRA contributions. Finally, if your AGI falls within the range, you are allowed a partial deduction.

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Tax Filing Status

2016 Tax Year

2017 Tax Year

Single or Head of Household

$61,000-$71,000

$62,000-$72,000

Married Filing Jointly

$98,000-$118,000

$99,000-$119,000

Married Filing Separately

$0-$10,000

$0-$10,000

Data source: IRS.

If you are not covered by a retirement plan through your employer, your ability to take a traditional IRA deduction is only limited if your spouse is covered by a retirement plan. If you're not covered, here are the 2016 and 2017 limits:

Tax Filing Status

2016 Tax Year

2017 Tax Year

Single

No Limits

No Limits

Married Filing Jointly (Spouse not covered by an employer's plan)

No Limits

No Limits

Married Filing Jointly (Your spouse has a retirement plan)

$184,000-$194,000

$186,000-$196,000

Married Filing Separately (If your spouse is covered at work)

$0-$10,000

$0-$10,000

Data source: IRS.

Roth IRA income limits

Unlike a traditional IRA, not everyone is allowed to directly contribute to a Roth IRA. In order to make a contribution, your AGI must be below a certain threshold that depends on your filing status.

Just like with the traditional IRA limits, if you fall within your corresponding range, you can make a partial Roth IRA contribution, the amount of which you can calculate here. And if your AGI is above the higher threshold in your category, you cannot contribute to a Roth IRA directly.

Here are the 2016 and 2017 Roth IRA income limits:

Tax Filing Status

2016 Tax Year

2017 Tax Year

Single

$117,000-$132,000

$118,000-$133,000

Married Filing Jointly

$184,000-$194,000

$186,000-$196,000

Married Filing Separately

$0-$10,000

$0-$10,000

Data source: IRS.

It's also important to point out that I said you cannot contribute "directly" if you exceed the AGI limit. However, there is a back-door method of opening a Roth IRA, which essentially consists of contributing to a traditional IRA, and then immediately converting the account to a Roth IRA. The process is rather painless, so if you're set on a Roth IRA, the income limits don't necessarily mean you can't contribute to one.

Also notice that married people filing separately don't get much in the way of IRA tax benefits. The threshold for a full traditional IRA deduction or Roth IRA contribution is $0, and the ability to contribute at all goes away above an AGI of just $10,000. If you're married and plan on contributing to an IRA this year, be sure you're aware of this before choosing how to file your taxes.

How much can you contribute?

For both 2016 and 2017, the IRS allows total IRA contributions of $5,500 per year, per person, with an additional $1,000 catch-up contribution allowed if you're over 50.

Although 2016 is almost over, the reason I've included 2016 information in this discussion is because of the IRS's generous definition of the word "year" for IRA investors. Specifically, contributions to a traditional IRA can be made until the regular tax deadline for each calendar year. For our purposes, this means you can make your 2016 IRA contributions until April 15, 2017. In other words, there's still time -- just make sure you specify which tax year you'd like your contribution to be applied to during the first few months of 2017.

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