Traditional IRA Deduction
The above-the-line tax deduction available to eligible taxpayers who contribute to a traditional IRA.
What is IRA Deduction?
The traditional IRA deduction allows eligible taxpayers to deduct contributions made to a traditional individual retirement account from their gross income, reducing their federal income tax bill. For 2024, the maximum contribution is $7,000 ($8,000 if age 50 or older). Deductibility depends on whether the taxpayer (or their spouse) is covered by a workplace retirement plan: those without a workplace plan can deduct the full contribution regardless of income; those covered by a workplace plan face income phase-out ranges ($77,000–$87,000 for single filers, $123,000–$143,000 for married filing jointly in 2024).
Example
A single filer earns $70,000 and has no workplace retirement plan. They contribute $7,000 to a traditional IRA and deduct the full amount above the line on Form 1040. This reduces their AGI to $63,000, saves approximately $1,540 in federal tax at the 22% marginal rate, and starts tax-deferred compounding on the $7,000.
Source: IRS — IRA Deduction Limits