The IRS has released new information about how much you can contribute to your retirement plans in 2025.
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CONWAY GITTENS: Investors are bracing for what is likely to be a volatile week with a presidential election, a meeting of the Federal Reserve, several snapshots on the economy, and the continuance of earnings season. On the earnings front, Marriott is out with disappointing results on Monday. It missed sales and profit forecasts and dimmed full-year estimates.
In other headlines, the IRS has announced higher maximum savings limits for 401Ks beginning in 2025. The maximum for annual tax-free contributions is going up to $23,500 from $23,000. The same goes for 403b and other employee-sponsored retirement accounts.
Americans close to retirement are allotted an even bigger tax incentive. For those between the ages of 60-63, the so-called catch-up maximum is going up for the first time to $11,250 from $7,500.
Meanwhile, more lower-to-moderate income workers may be eligible for the retirement Saver’s Credit. The IRS measure allows for a dollar-to-dollar reduction on tax bills based on how much is set aside for retirement. A single person with an annual income of no more than $39,500 will be eligible – up from $38,350 in 2024. For head-of-household, that number goes up to $59,250 from $57,375 currently. For married couples filing jointly, that number goes up to $79,000 from $76,500.
For those not saving for retirement through an employee-sponsored 401K, but make deposits to an IRA or Roth IRA – the annual contribution remains at $7,000
The IRS says all the changes are part of a 2025 cost-of-living adjustment.
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