The IRS has announced that the amount of tax-favored funds that you can sock away for retirement is increasing. In 2026, the amount most individuals can contribute to their 401(k) plans will tick up $1,000 to $24,500—it was $23,500 for 2025.
The announcement is tied to cost‑of‑living adjustments for pension plans and other retirement-related items for tax year 2026 (those adjustments are required by law).
Here’s a look at some of the most common plans and what will be different next year:
401(k) and Similar Plans
The amount individuals can contribute to their 401(k) plans in 2026 is $24,500—that limit applies to employee contributions made to 401(k) plans and similar plans maintained by non-profit and government employers—403(b) plans, most 457 plans and the federal government’s Thrift Savings Plan for workers.
The catch-up contribution limit that generally applies for employees aged 50 and over who participate in most 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan will increase to $8,000 for 2026 (up from $7,500 in 2025). That means that participants in most 401(k), 403(b), governmental 457 plans and the federal government’s Thrift Savings Plan who are 50 and older generally can contribute up to $32,500 each year, starting in 2025.
SECURE 2.0 allows for a higher catch-up contribution limit for employees aged 60, 61, 62 and 63 who participate in these plans. For 2026, this higher catch-up contribution limit is $11,250, the same as in 2025 (compared to $8,000 for everyone else). That means they can contribute up to $35,750.
Typically, these are pre-tax contributions made to retirement plans by workers. You’re likely already familiar with how it works at the onset—you tick a box on a benefits form that allows you to set aside part of your earnings for retirement. From a tax standpoint, the benefit is two-fold: earnings don’t count towards your current year income (which reduces your potential tax bill) and it grows tax-deferred. When you reach retirement age, withdrawals are taxable as you take the money out—certain exceptions may apply, including money transferred directly to charity. (Note: For those earning more than $145,000, some of the contributions will have to be after-tax, to a Roth. More on that at the end of this story.)
IRA Plans
The limit on annual contributions to an IRA has also ticked up, reaching $7,500 in 2026 (compared to $7,000 in 2025). The limit applies to the total amount contributed to your traditional and Roth IRAs. IRA plans also allow catch‑up contributions for individuals aged 50 and over—that creeps up to $1,100 for 2026 ($100 more than in 2025) for a total of $8,600 for workers age 50 and above.
With a traditional IRA, contributions are tax-advantaged. If you meet the criteria—that’s where these limits come into play—contributions will be tax-deductible, resulting in a lower tax bill. As with a 401(k) plan, the earnings inside an IRA grow tax-deferred and are subject to tax when you make withdrawals.
In addition to the contribution limits, phase-outs apply. What this means is that if during the year, you or your spouse was covered by a retirement plan at work, your tax deduction may be reduced, or phased out, until it is eliminated, depending on your filing status and income. Here are the phase‑out ranges for 2026:
- 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 individual contributing to an IRA 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 in 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 (those numbers do not change because they not subject to an annual cost-of-living adjustment).
Importantly, if neither you nor your spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.
Roth IRA Plans
When it comes to tax, Roth IRAs are treated much differently than traditional IRAs. Unlike a traditional IRA, contributions to a Roth IRA are not deductible when made. The upside? Qualified withdrawals are typically tax-free, assuming that you meet the criteria, including that you’ve owned your account for five years and you have reached age 59½ or more (some exceptions apply).
As noted above, the limit on annual contributions to an IRA is $7,500 in 2026—that limit applies to the total amount contributed to your traditional and Roth IRAs.
Income phase-outs also apply to Roth IRAs. For 2026, those numbers have increased to between $153,000 and $168,000 for singles and heads of household, up from between $150,000 and $165,000 in 2025. For married couples filing jointly, the income phase-out range is increased to between $242,000 and $252,000, up from between $236,000 and $246,000 for 2025. And, as with traditional IRAs, the phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
SIMPLE Retirement Accounts
A SIMPLE IRA plan—SIMPLE stands for Savings Incentive Match Plan for Employees—makes it easy for small businesses who are not currently sponsoring a retirement plan to contribute to IRAs. Contributions to SIMPLE IRA accounts are always 100% vested, or owned, by the employee.
The amount that individuals can contribute to their SIMPLE retirement accounts will increase to $17,000 in 2026, up from $16,500 in 2025. The catch-up contribution limit for employees 50 and over who participate in SIMPLE IRA plans has increased to $4,000 for 2026, bringing total potential contributions for those over 50 to $20,500.
An even higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in SIMPLE plans. For 2026, this higher catch-up contribution limit is $5,250.
Thanks to SECURE 2.0, individuals can contribute a higher amount to certain applicable SIMPLE retirement accounts—typically those belonging to small employers with up to 25 employees. For 2026, this higher amount is increased to $18,100, up from $17,600 for 2025.
A catch-up limit also applies to employees aged 50 and over who participate in those applicable SIMPLE plans—for 2026, this limit remains $3,850.
Savers Credit
Some taxpayers are able to claim a tax credit for making eligible contributions to an IRA or employer-sponsored retirement plan. The Saver’s Credit, also known as the Retirement Savings Contributions Credit, is targeted to low- and moderate-income workers.
The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $80,500 for married couples filing jointly in 2026, up from $79,000 for 2025, and $40,250 for singles and married individuals filing separately, up from $39,500 for 2025. It’s $60,375 for heads of household, up from $59,250 for 2025.
Defined Benefit Plans
Defined benefit plans aren’t as popular as they used to be—they’re typically associated with old-school pensions. However, they’re still around for some businesses who appreciate the deductions on the employer side available for contributions.
In 2026, the limit on the annual benefit under a defined benefit plan (meaning how much you can receive under the plan) will increase to $290,000, up from $280,000 in 2025. The contribution limit (those are additions to the plan) will increase to $72,000 from $70,000.
QLACs
A qualified longevity annuity contract (QLAC) allows you to convert funds in a qualified retirement plan—like your 401(k) or IRA—into an annuity. The dollar limit on premiums paid for a QLAC remains $210,000 in 2026.
Qualified Charitable Distributions
A qualified charitable distribution (QCD) allows you to roll funds directly from your IRA to a qualified charity. Those amounts can be used to satisfy your required minimum distributions (RMDs) for the year and the amount donated is excluded from your taxable income—you won’t even have to itemize to do it.
The total amount of QCDs that you can exclude from your gross income increased to $111,000 in 2026, up from $108,000 in 2025.
In addition, as part of SECURE 2.0, you can make a one-time election for a QCD to a split-interest entity. That amount was initially $50,000, but adjusted for inflation, it will be $55,000 in 2026, up from $54,000 in 2025.
Domestic Violence Victim Distributions
Typically, when you make an early withdrawal from your retirement plan, you are socked with a 10% additional tax (an early withdrawal penalty)—unless it’s subject to an exception. As part of the SECURE 2.0 Act, an exception now exists for victims of domestic abuse. The exception allows withdrawals of up to $10,000 (indexed for inflation) or 50% of the present value of the plan’s non-forfeitable accrued benefit (vested accrued benefit), whichever is less. The adjustment for 2026 increases the withdrawal amount to $10,500.
Other Changes in 2026
While it wasn’t specifically addressed in the Notice, under the SECTION 2.0 Act, employees who are aged 50 or older with previous year FICA wages of $145,000 or more, indexed for inflation, must treat catch-up contributions to section 401(k), 403(b), or governmental 457(b) plans as after-tax Roth contributions. The final regulations also provide guidance relating to increased catch-up contribution limits under the SECURE 2.0 Act for employees between the ages of 60-63 and employees in newly established SIMPLE plans. You can read more here.
More Info
More details about retirement plans cost-0f-living adjustments can be found in the official guidance in Notice 2025-67.
Cost-of-living adjustments, including the official income tax brackets for 2026, can be found here, while Social Security cost-of-living adjustments are here.
Read the full article here
