Economy

IRS Raises 2026 Contribution Limits for 401(k)s and IRAs

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Nov 13, 2025

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The Internal Revenue Service on Thursday announced higher contribution limits for retirement savings plans for the 2026 tax year, adjusting the caps to account for inflation. The maximum employee contribution for 401(k)s, 403(b)s, most 457 plans, and the federal Thrift Savings Plan will increase by $1,000 to $24,500. The annual limit for both traditional and Roth Individual Retirement Accounts (IRAs) will rise by $500 to $7,500.

The agency also adjusted catch-up contribution limits for savers aged 50 and older. The 401(k) catch-up limit will increase by $500 to $8,000, while the IRA catch-up contribution for the same age group will be $1,100, up from $1,000. A separate provision allows investors aged 60 to 63 to save an additional $11,250, an amount that remains unchanged from 2025.

Along with contribution caps, the IRS updated the income phaseout ranges that determine eligibility for direct Roth IRA contributions. For 2026, the income range for single filers will be $153,000 to $168,000. For married couples filing jointly, the range will be $242,000 to $252,000.

While the new limits allow for greater savings, reports suggest many workers do not contribute the maximum amount. According to a 2025 Vanguard report, 14% of 401(k) participants maxed out their contributions in 2024. An analysis by Fidelity Investments found a combined average 401(k) savings rate of 14.2% during the second quarter of 2025, a figure that includes employer contributions.

The announcement occurred hours after President Donald Trump signed a funding bill to end a government shutdown and about one month after the agency released other inflation-adjusted figures for 2026.

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• The new rules increase the maximum allowable contributions to retirement plans. The Internal Revenue Service adjusted the contribution caps for 2026 to account for inflation, allowing for greater savings. The limit for 401(k)s and similar plans will increase by $1,000 to $24,500, while the cap for Individual Retirement Accounts (IRAs) will rise by $500 to $7,500.

• Older savers are given additional opportunities to increase their retirement funds. The agency also raised the catch-up contribution limits for individuals aged 50 and older. These savers can now contribute an extra $8,000 to their 401(k)s, a $500 increase, and an additional $1,100 to their IRAs. A separate, unchanged provision allows those aged 60 to 63 to contribute an extra $11,250.

• Eligibility for certain retirement accounts has been broadened. Along with contribution caps, the IRS updated the income phaseout ranges that determine who can contribute directly to a Roth IRA. For 2026, the income range for single filers is now $153,000 to $168,000, and for married couples, it is $242,000 to $252,000, expanding eligibility.

How it may affect me

As a U.S. reader:

• You will have the opportunity to save more for retirement, with 401(k) limits rising by $1,000 and IRA limits increasing by $500 in 2026.

• The change may not affect most people’s savings, as data suggests only 14% of workers currently contribute the maximum amount to their 401(k) plans.

• More individuals may become eligible to contribute to a Roth IRA, as the income ranges that determine eligibility have been raised to account for inflation.

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