Understanding the traditional IRA deduction calculator — concept and principle
Anyone with taxable compensation can contribute to a traditional IRA, but whether the contribution is deductible on a US federal return depends on your filing status, your modified adjusted gross income (MAGI) and whether you or your spouse are covered by a workplace retirement plan such as a 401(k). This calculator applies the 2026 rules to split a planned contribution into deductible and non-deductible parts.
How it is calculated
- Contribution limit for 2026: $7,500, plus a $1,100 catch-up if you are 50 or older ($8,600). The calculator caps your contribution at this limit.
- Phase-out range by situation: single or head of household and covered, $81,000–$91,000; married filing jointly and you are covered, $129,000–$149,000; married filing jointly, only your spouse covered, $242,000–$252,000; married filing separately, $0–$10,000. If neither of you is covered, there is no income limit.
- Below the range: fully deductible. At or above the top: nothing deductible. Inside the range: deduction = contribution × (top − MAGI) ÷ (top − bottom), rounded up to the next $10, with a $200 minimum if the result is above zero.
- Non-deductible part = contribution − deduction.
The principle
The deduction is aimed mainly at people without a workplace plan. Once you have one, it fades out linearly across a $10,000 band ($20,000 for joint filers), so a small rise in income never removes the whole benefit at once. The non-deductible part is still allowed; it grows tax-deferred and is tracked as "basis" so it is not taxed again when withdrawn.
Worked example
- Defaults: single, covered by a workplace plan, MAGI $85,000, age 45, planned contribution $7,500.
- Limit = $7,500 (under 50), so the full $7,500 counts. Range = $81,000–$91,000.
- Fraction remaining = (91,000 − 85,000) ÷ 10,000 = 0.6.
- Deduction = 7,500 × 0.6 = $4,500 (already a multiple of $10).
- Non-deductible part = 7,500 − 4,500 = $3,000 (Form 8606).
How to read the result
Each $1,000 of MAGI inside a single filer's range costs about $750 of deduction at full contribution. Near the bottom of the range, pre-tax 401(k) or HSA contributions that lower MAGI can restore the full deduction.
Common mistakes
- Guessing whether you are "covered" instead of checking the retirement plan box (box 13) on Form W-2.
- Using AGI instead of MAGI.
- Forgetting Form 8606 for the non-deductible part, which can lead to double taxation later.
Frequently asked questions
What is the deadline for a 2026 contribution?
Generally the tax filing due date in April 2027, not including extensions.
Can a non-working spouse get a deduction?
Yes, a spousal IRA can be funded from the working spouse's compensation on a joint return; the $242,000–$252,000 range applies if only the working spouse is covered.
Sources: IRS news release IR-2025-111 (2026 limits) · IRS Publication 590-A, Contributions to Individual Retirement Arrangements