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.
Financial management
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 or SIMPLE IRA.
×
Modified adjusted gross income (MAGI)
An amount used to determine a taxpayer's IRA eligibility. Generally, it's the taxpayer's adjusted gross income calculated without certain deductions and exclusions.
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.
×
Required minimum distributions (RMDs)
Annual withdrawals required by the IRS from certain retirement accounts, beginning at age 73*. RMDs are intended to ensure that the assets in these types of accounts are eventually subject to taxation.
We're here to help
Have questions? Contact us
Open your IRA today
Vanguard funds not held in a brokerage account are held by The Vanguard Group, Inc., and are not protected by SIPC. Brokerage assets are held by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation, member FINRA and SIPC.
For additional financial information on Vanguard Marketing Corporation, see its Statement of Financial Condition: Audited and Unaudited
Broker-Dealer Form Client Relationship Summary (Form CRS) and Investment Advisor Form Client Relationship Summary (Form CRS)
© 1995–2023 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor of the Vanguard Funds. Your use of this site signifies that you accept our terms & conditions of use.