IRS Ups 401(k) and IRA Contribution Limits For 2026: Here’s What You Need To Know

The IRS just gave retirement savers some good news: you’ll be able to stash away more money in your 401(k) and IRA next year. With inflation eating into everyone’s budget, these increased contribution limits mean you can shelter more of your income from taxes while building a more substantial nest egg for the future.

Whether you’re in your twenties just starting to think about retirement or you’re pushing fifty and trying to catch up, these new limits create fresh opportunities to maximize your long-term wealth. Here’s everything you need to know about the changes coming in 2026.

401(k) Limits Jump by $1,000

The IRS announced that 401(k) contribution limits will increase to $24,500 in 2026, up from $23,500 in 2025. This marks the largest single-year increase in two years, after smaller $500 bumps in 2024 and 2025.

This new limit applies across the board to 401(k)s, 403(b)s, most 457 plans, and the federal government’s Thrift Savings Plan. If you’ve been maxing out your contributions, you’ll want to adjust your payroll deductions to take advantage of that extra $1,000 in tax-deferred savings potential.

For context, if you’re earning $75,000 annually and contributing the maximum, you’re putting away nearly 33% of your gross income. That might sound aggressive, but it’s one of the most powerful wealth-building strategies available, especially when combined with employer matching.

Catch-Up Contributions Get More Generous

If you’re 50 or older, the catch-up game just got better. The catch-up contribution limit for those 50 and over increases to $8,000, up from $7,500. Combined with the base limit, that means you can contribute up to $32,500 total to your 401(k) in 2026.

But here’s where it gets interesting: if you’re between 60 and 63 years old, you’re in an even better position. Thanks to provisions in the SECURE 2.0 Act, workers in this age bracket can make catch-up contributions of $11,250, significantly more than the standard catch-up amount. That brings your total potential contribution to $35,750.

This enhanced catch-up window recognizes that your late fifties and early sixties are often your peak earning years, and it’s a critical time to accelerate retirement savings before you leave the workforce.

IRA Limits Rise for the First Time in Years

Individual Retirement Account contribution limits will increase to $7,500 in 2026, up from $7,000. This applies to both traditional and Roth IRAs, though you’ll need to split that total between them if you contribute to both types.

The IRA catch-up contribution for those 50 and older also gets a boost. The catch-up limit increases to $1,100, up from $1,000, marking the first time this amount has been adjusted for inflation thanks to SECURE 2.0. That means if you’re 50 or older, you can contribute up to $8,600 total to your IRA in 2026.

Even if you have a 401(k) through work, maxing out an IRA provides additional tax advantages and investment flexibility. Many financial advisors recommend contributing enough to your 401(k) to capture the full employer match, then maxing out your IRA before returning to increase 401(k) contributions further.

Roth IRA Income Limits Increase

If you’re eyeing a Roth IRA, the income thresholds for eligibility have also shifted upward. Single filers can now contribute to a Roth IRA with income between $153,000 and $168,000, while married couples filing jointly have a phase-out range of $242,000 to $252,000.

Roth IRAs are particularly valuable for younger workers who expect to be in a higher tax bracket later in life. You pay taxes on contributions now, but all withdrawals in retirement are tax-free if you follow the rules. That’s a powerful advantage when you’re building wealth over decades.

Special Consideration: High-Earner Catch-Up Rule

There’s one important change that affects high earners making catch-up contributions. If you earned more than $145,000 in FICA wages during 2025, any catch-up contributions you make in 2026 must be designated as Roth contributions, meaning they’ll be subject to income tax up front rather than being tax-deferred.

This won’t affect most workers, but if you’re in this income bracket, you’ll want to plan accordingly with your financial advisor or tax professional.

Traditional IRA Deduction Phase-Out Ranges

If you’re currently covered by a workplace retirement plan and want to make tax-deductible contributions to a traditional IRA, your ability to do so depends on your income. For single taxpayers with workplace retirement plans, the deduction phase-out range increases to $81,000 to $91,000.

For married couples filing jointly where the spouse making the IRA contribution has workplace retirement coverage, the phase-out range moves to $129,000 to $149,000. If you’re not covered by a workplace plan but your spouse is, your phase-out range is $242,000 to $252,000.

Understanding these thresholds is crucial for tax planning. If you’re just above the phase-out range, strategies like contributing to a traditional 401(k) to lower your taxable income could make you eligible for IRA deductions.

SIMPLE IRA and Other Plan Limits

For those with SIMPLE IRAs, typically found at smaller employers, limits are increasing as well. The contribution limit rises to $17,000, up from $16,500. Catch-up contributions for those 50 and older increase to $4,000, and workers aged 60 to 63 can contribute up to $5,250 in catch-up contributions.

Why These Increases Matter

While an extra $1,000 in contribution room might not seem like a game-changer, compound growth over time makes these increases more significant than they initially appear. That additional $1,000 contributed annually at a 7% average return could grow to over $21,000 after 20 years.

Financial experts point out that with Americans living longer and healthcare costs rising, the ability to save more now creates crucial financial security later. The challenge, of course, is that many workers struggle to take full advantage of these limits due to everyday expenses and competing financial priorities.

Action Steps for 2026

As you head into the new year, consider these moves:

Review your contribution percentage. If you’ve been contributing a flat percentage of your salary, that same percentage will now capture more of the increased limit. But if you were maxing out in 2025, you’ll need to increase your contribution to hit the new ceiling.

Update your payroll elections. Contact your HR department or plan administrator before January to adjust your 2026 contributions. Some plans auto-enroll employees at low percentages, so make sure yours reflects your actual savings goals.

Consider your catch-up strategy. If you’re eligible for catch-up contributions, decide whether you can afford to take full advantage. Even if you can’t max out immediately, increasing your contribution rate by just 1% can make a meaningful difference.

Evaluate Roth vs. traditional contributions. With the new mandatory Roth catch-up rule for high earners and rising income limits for Roth IRAs, this is a good time to reassess your tax strategy with a financial professional.

Don’t forget about IRAs. If you’ve been putting off opening an IRA, the increased limits make 2026 a solid time to get started. You have until April 15, 2027 to make contributions that count toward your 2026 limit.

While retirement might seem distant, these increased contribution limits represent one of the best tax-advantaged wealth-building opportunities available. The key is starting now and staying consistent, even if you can’t hit the maximum limits right away.