You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Delivered daily
Kiplinger Today
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. Smart money moves start here.
Sent five days a week
Kiplinger A Step Ahead
Get practical help to make better financial decisions in your everyday life, from spending to savings on top deals.
Delivered daily
Kiplinger Closing Bell
Get today's biggest financial and investing headlines delivered to your inbox every day the U.S. stock market is open.
Sent twice a week
Kiplinger Adviser Intel
Financial pros across the country share best practices and fresh tactics to preserve and grow your wealth.
Delivered weekly
Kiplinger Tax Tips
Trim your federal and state tax bills with practical tax-planning and tax-cutting strategies.
Sent twice a week
Kiplinger Retirement Tips
Your twice-a-week guide to planning and enjoying a financially secure and richly rewarding retirement
Sent bimonthly.
Kiplinger Adviser Angle
Insights for advisers, wealth managers and other financial professionals.
Sent twice a week
Kiplinger Investing Weekly
Your twice-a-week roundup of promising stocks, funds, companies and industries you should consider, ones you should avoid, and why.
Sent weekly for six weeks
Kiplinger Invest for Retirement
Your step-by-step six-part series on how to invest for retirement, from devising a successful strategy to exactly which investments to choose.
What made the original IRA a no-brainer investment was a simple, indisputable fact: Contributions were deductible. Put $4,000 into an IRA, write off $4,000 on your tax return.
In the 25% bracket, that saves $1,000 and delivers instant gratification. But there are some restrictions to prevent some higher-income earners from getting that deduction. There are two tests that determine how much you can deduct if you save within a traditional IRA:
- Company plan test. Are you an active participant in a company retirement plan? You are, as far as the law is concerned, if you are eligible during any part of the year to participate in a pension, profit sharing, or similar plan. (If you are in a profit-sharing plan but no contribution is made to your account for the year, however, you are not considered covered for that year.) Or if you make a contribution to your 401(k) anytime during the tax year.The Form W-2 you receive from your employer should indicate to you -- and the IRS -- whether you're covered.If you are not tripped up by the company-plan test, you can deduct IRA contributions regardless of how high your income is.
- Income test. If you are covered by a plan, you may lose your right to the deduction. The write-off is phased out for active participants in company plans whose adjusted gross income(AGI) -- before subtracting IRA contributions -- exceeds certain levels. See IRS Publication 590 for more information.
You could still contribute up to the annual contribution limit to your account; it simply could not be deducted from your tax bill.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Do nondeductible contributions make sense?
Before Congress created the Roth IRA, nondeductible contributions to a regular IRA made good financial sense because -- deductible or not -- money inside an IRA grows without annual interruption from the IRS. Now, however, it would be a serious blunder for anyone who qualifies to use a Roth -- and that's almost everyone -- to make nondeductible contributions to a regular IRA.
-
How Much It Costs to Host a Super Bowl Party in 2026Hosting a Super Bowl party in 2026 could cost you. Here's a breakdown of food, drink and entertainment costs — plus ways to save.
-
3 Reasons to Use a 5-Year CD As You Approach RetirementA five-year CD can help you reach other milestones as you approach retirement.
-
Your Adult Kids Are Doing Fine. Is It Time To Spend Some of Their Inheritance?If your kids are successful, do they need an inheritance? Ask yourself these four questions before passing down another dollar.
-
Can I Deduct My Pet On My Taxes?Tax Deductions Your cat isn't a dependent, but your guard dog might be a business expense. Here are the IRS rules for pet-related tax deductions in 2026.
-
IRS Tax Season 2026 Is Here: Big Changes to Know Before You FileTax Season Due to several major tax rule changes, your 2025 return might feel unfamiliar even if your income looks the same.
-
2026 State Tax Changes to Know Now: Is Your Tax Rate Lower?Tax Changes As a new year begins, taxpayers across the country are navigating a new round of state tax changes.
-
3 Major Changes to the Charitable Deduction for 2026Tax Breaks About 144 million Americans might qualify for the 2026 universal charity deduction, while high earners face new IRS limits. Here's what to know.
-
Retirees in These 7 States Could Pay Less Property Taxes Next YearState Taxes Retirement property tax bills could be up to 65% cheaper for some older adults in 2026. Do you qualify?
-
Estate Tax Quiz: Can You Pass the Test on the 40% Federal Rate?Quiz How well do you know the new 2026 IRS rules for wealth transfer and the specific tax brackets that affect your heirs? Let's find out!
-
5 Types of Gifts the IRS Won’t Tax: Even If They’re BigGift Tax Several categories of gifts don’t count toward annual gift tax limits. Here's what you need to know.
-
The 'Scrooge' Strategy: How to Turn Your Old Junk Into a Tax DeductionTax Deductions We break down the IRS rules for non-cash charitable contributions. Plus, here's a handy checklist before you donate to charity this year.
