Beginning in 2026, the amount individuals can contribute tax-free to their employer-sponsored 401(k) retirement plans will increase by $1,000 to $24,500, the IRS announced on Thursday.
The cap on annual contributions to individual retirement plans (IRA) will rise by $500 to $7,500.
The guidance is contained in IRS Notice 2025-67, which lists the cost-of-living adjustments affecting pension plans and other retirement-related items for tax year 2026.
Highlights of changes for 2026 include:
- The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan is increased to $24,500, up from $23,500 for 2025.
- The catch-up contribution limit that generally applies to employees aged 50 and over who participate in most 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan, is increased to $8,000, up from $7,500 for 2025. This means employees age 50 and older generally can contribute up to $32,500 each year, starting in 2026.
- An even higher catch-up contribution limit applies to employees aged 60, 61, 62, and 63 who participate in 401(k), 403(b), governmental 457 plans and the Thrift Savings Plan. For 2026, this higher catch-up contribution limit remains $11,250 instead of $8,000.
- The limit on annual contributions to an IRA is increased to $7,500 from $7,000. The IRA catch‑up contribution limit for individuals aged 50 and over is increased to $1,100 in 2026, up from $1,000 for 2025.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. However, if during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (Phase-outs of the deduction do not apply to taxpayers if neither they nor their spouse are covered by an employer retirement plan.)
The traditional IRA phaseouts for 2026 are as follows:
- For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $81,000 and $91,000, up from between $79,000 and $89,000 for 2025.
- For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $129,000 and $149,000, up from between $126,000 and $146,000 for 2025.
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $242,000 and $252,000, up from between $236,000 and $246,000 for 2025.
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
