Employees can contribute $500 more in 401k plans in 2025, which means the annual contribution limit will be $23,500, up from the 2024 limits of $23,000 and the annual catch up contribution limit for ages 50 and or over is $31,000 and for those whose ages are 60 to 63, this yearly limit is $34,750.
The phase-out threshold ranges are also adjusted for 2025 for traditional IRAs, Roth IRAs, for simple retirement accounts and savers credit income limits have been increased. You can save tax free earnings that will be taxed at the time of withdrawal in this retirement plan for your retirement years security.
IRS Increased 401k Contribution Limits for 2025
The IRS has announced a significant increase in the contribution limits of 401k plans for the year 2025 and these adjustments happened to account for inflation and other economic factors. The new limit allows you to contribute up to $23,500 in 2025 which is up from the previous year limit of $23,000.
There are also many certain provisions for individuals aged 50 and over, known as catch-up contributions and the catch-up contribution limit for 2025 remains at $7,500, allowing older employees to contribute more towards their retirement. The higher catch-up contribution limit in 2025 for employees is set at $11,250 for aged between 60 to 63.
The annual contributions limit to an IRA will remain at $7,000 and the individuals aged 50 or over who were amended under the SECURE 2.0 Act to include an annual cost‑of‑living adjustment will see an IRA catch‑up contribution limit of $1,000 for 2025. If we talk shortly then we can say that:
- Individuals can contribute up to $31,000 yearly if they are about 50 or over and they contribute in most 401(k), 403(b), governmental 457 plans and the federal government’s Thrift Savings Plan.
- Individuals can contribute up to $34,750 in 2025 yearly if their ages are 60, 61, 62 and 63 and they contribute to IRA Plans.
Why Does the IRS Increase 401k Contribution Limits for 2025?
A 401k plan is a retirement saving plan which allows you to save a portion of your earnings without any tax limits. Taxes are taken out when you withdraw your savings and these savings can reduce the amount of taxable income of the year. These limits are increased to maintain limits with earnings.
Employees can save tax-free earnings until their withdrawal of benefits from an IRA Account. By contributing to these plans, individuals can build a more substantial nest egg which provides great security in their later years. There are also many benefits and changes of 401k plans which we thoroughly explore in this article.
Comparison between 2024 and 2025 IRS 401k Contribution Limits
You can make a comparison of the limits of IRS 401k Contribution Limits for the year 2024 and 2025 from the below table.
| Contribution Limits | 2024 | 2025 |
| Annual Contribution Limit | $23,000 | $23,500 |
| Catch-Up Contribution Limit (Age 50+) | $7,500 | $7,500 |
| Higher Catch-Up (Age 60-63) | $7,500 | $11,250 |
| Total Contribution (50+) | $30,500 | $31,000 |
| Total Contribution (60-63) | $30,500 | $34,750 |
IRS threshold adjustments 2025 for contributing in IRA Plans
The IRS has announced several threshold adjustments for 2025 that help you to make deductible contributions to traditional IRAs, to contribute to Roth IRAs and to claim the Saver’s Credit. If you want to know the phase out ranges of income where deductions do not apply in 2025 then take a deep look at below points:
2025 increased Phase-Out Ranges for Traditional IRA Contributions:
- For single taxpayers covered by a workplace retirement plan: $79,000 to $89,000 in 2025, up from the 2024 ranges of $77,000 to $87,000.
- For married couples filing jointly (spouse covered by a workplace retirement plan): $126,000 to $146,000, up from $123,000 to$143,000.
- For an IRA contributor who is not covered by a workplace retirement plan but married to someone who is covered: $236,000 to $246,000, up from $230,000 to $240,000.
- For married individuals filing separately: $0 to $10,000.
2025 increased Phase-Out Ranges for Roth IRA Contributions:
- Single Taxpayers and Heads of Household: $150,000 to $165,000 in 2025, up from the 2024 ranges of $146,000 to $161,000.
- Married Couples Filing Jointly: $236,000 to $246,000, up from $230,000 to $240,000.
- Married Individual Filing Separately: $0 to $10,000.
2025 Increased SIMPLE Retirement Accounts Income Limits:
- $16,500 for 2025, up from $16,000 in 2024
2025 Increased Saver’s Credit Income Limits:
- For married couples filing jointly: $79,000 up from $76,500.
- For heads of household: $59,250 up from $57,375.
- For singles and married individuals filing separately: $39,500 up from $38,250.
You can check further details as per your specific situation from experts or those who are already making contributions in IRS 401k plans.