How IRA deduction rules apply
Counting your IRA contributions as tax deductions depends on the type of IRA you invest in, the retirement plan your employer offers, and your income.
Retirement
Can an IRA deduction be a tax perk for you?
The beauty of a traditional IRA is that contributions could immediately help reduce your taxable income.
3 minute read
Roth IRA
Contributions are never tax-deductible.
SELF-EMPLOYED OR OWN A SMALL BUSINESS?
You may be able to save even more with a SEP-IRA, SIMPLE IRA, or Individual 401(k).
Traditional IRA
Deductions vary according to your modified adjusted gross income (MAGI) and whether or not you're covered by a retirement plan at work.
If you (and your spouse, if applicable) aren't covered by an employer retirement plan, your traditional IRA contributions are fully tax-deductible.
If you (or your spouse, if applicable) are covered by an employer retirement plan, you can still make contributions to a traditional IRA, but depending on your income, they may qualify as partially tax-deductible or totally non-tax-deductible IRA contributions.
Details are provided at irs.gov:
If you are covered by a retirement plan at work
If you aren't covered by a retirement plan at work
If you are covered by a retirement plan at work
If you aren't covered by a retirement plan at work
The limits on the amount you can deduct don't affect the annual amount you can contribute. However, you can never claim a tax deduction for more than what you contributed to your IRA that year.
Get details on contribution limits & deadlines
Keep in mind that whether or not your contribution is tax-deductible shouldn't be the only consideration in choosing an IRA. Before deciding, you should also weigh in on factors like required minimum distributions (RMDs) and taxes on withdrawals.
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Neither Vanguard nor its financial advisors provide tax and/or legal advice. This information is general and educational in nature and should not be considered tax and/or legal advice. Any tax-related information discussed herein is based on tax laws, regulations, judicial opinions and other guidance that are complex and subject to change. Additional tax rules not discussed herein may also be applicable to your situation. Vanguard makes no warranties with regard to such information or the results obtained by its use, and disclaims any liability arising out of your use of, or any tax positions taken in reliance on, such information. We recommend you consult a tax and/or legal adviser about your individual situation.