IRA Contribution Rules: Earned Income, Deadlines and Excess Contributions
Who can contribute to an IRA, how much for 2026, when the deadline falls, and how the IRS treats and corrects an excess contribution.
IRA rules look simple until a detail trips someone up: a contribution from investment income rather than wages, a deposit made after the deadline, or a Roth contribution in a year when income turned out higher than expected. This guide walks through the federal rules in the order they usually come up: who can contribute, how much, by when, and what happens if too much goes in.
The figures are for the 2026 tax year and come from the IRS. Many of the detailed rules are quoted from the 2025 editions of the IRS publications and form instructions, the latest available on November 9, 2026; the 2026 editions may renumber lines or add changes. State tax rules can differ.
You need taxable compensation
An IRA contribution has to be backed by taxable compensation, which broadly means pay for work: wages, salary, tips, commissions and self-employment earnings. IRS Publication 590-A lists what doesn’t count, including “earnings and profits from property, such as rental income, interest income, and dividend income” (IRS Pub 590-A (2025), checked November 9, 2026). Someone living entirely on investment income or a pension can’t make a regular IRA contribution from it.
There is no age limit. The IRS says that “for 2020 and later, there is no age limit on making regular contributions to traditional or Roth IRAs” (IRS: IRA contribution limits, page updated September 23, 2026, checked November 9, 2026). A teenager with a summer job can contribute; the IRS gives the example of a student earning $3,500 who can contribute that amount.
Spousal IRAs. A married couple filing jointly can each contribute even if only one has earnings. The IRS limits page says each spouse can contribute up to the limit, but “the total of your combined contributions can’t be more than the taxable compensation reported on your joint return.” Pub 590-A describes this as the Kay Bailey Hutchison spousal IRA rule.
How much: the 2026 limit
For the 2026 tax year, the most you can contribute to all of your traditional and Roth IRAs combined is $7,500, or $8,600 if you are 50 or older, or your taxable compensation for the year if that is less (IRS limits page, checked November 9, 2026). The extra amount for people 50 and over is $1,100 for 2026, up from $1,000 for 2025 (IRS news release IR-2025-111, November 13, 2025, checked November 9, 2026).
The limit is per person, not per account. Opening a second IRA doesn’t add room. Rollovers and qualified reservist repayments don’t count against it.
Two separate income tests
Income affects IRAs in two different ways, and they are easy to confuse.
Deducting a traditional IRA contribution. Anyone with compensation can contribute to a traditional IRA. Whether the contribution is deductible depends on income and workplace plan coverage. For the 2026 tax year, IR-2025-111 sets these modified AGI phase-out ranges:
| Situation | 2026 deduction phase-out |
|---|---|
| Single or head of household, covered by a workplace plan | $81,000 to $91,000 |
| Married filing jointly, contributing spouse covered | $129,000 to $149,000 |
| Not covered, married to a covered spouse (joint return) | $242,000 to $252,000 |
| Married filing separately, covered | $0 to $10,000 (not indexed) |
If neither spouse is covered by a workplace plan, the IRS limits page says all of the contributions are deductible. Above the top of a range, the contribution is still allowed but is nondeductible, and Pub 590-A says a nondeductible contribution must be reported on Form 8606.
Contributing to a Roth IRA. Roth eligibility itself phases out with income. For the 2026 tax year, IR-2025-111 sets the ranges at $153,000 to $168,000 for single filers and heads of household, $242,000 to $252,000 for joint filers, and $0 to $10,000 (not indexed) for married people filing separately. Pub 590-A’s 2025 text applies the $0 to $10,000 range to separate filers who lived with their spouse at any time during the year.
Modified AGI for Roth purposes starts from your AGI with some adjustments. Pub 590-A’s Worksheet 2-1 subtracts income from conversions and Roth rollovers and adds back items such as the traditional IRA deduction and the student loan interest deduction.
Working out a reduced Roth amount
Inside the phase-out range, the allowed Roth contribution shrinks in proportion. Pub 590-A’s Worksheet 2-2 does it in a few steps: subtract the bottom of the range from your modified AGI, divide by the width of the range ($15,000 for single filers, $10,000 for joint filers and separate filers who lived with a spouse), multiply your normal limit by that fraction, subtract the result from the normal limit, and “round the result up to the nearest $10. If the result is less than $200, enter $200.” The result is then capped at your normal limit minus any contributions to other IRAs for the year.
An invented example, applying the 2025 worksheet’s method to the 2026 figures: a single filer under 50 with $158,000 of modified AGI and compensation above the limit.
- $158,000 − $153,000 = $5,000
- $5,000 ÷ $15,000 = 0.333 (rounded to three places, as the worksheet allows)
- $7,500 × 0.333 = $2,497.50
- $7,500 − $2,497.50 = $5,002.50, rounded up to $5,010
That person could contribute up to $5,010 to a Roth IRA for the 2026 tax year, and the rest of the $7,500 limit could go to a traditional IRA. At $168,000 or more of modified AGI, no direct Roth contribution would be allowed. The 2026 worksheet, when published, is the authority for the exact steps. For why someone might choose between the two account types, see Roth or traditional?.
The deadline is the filing date, without extensions
Contributions for a tax year can be made at any time during that year or after it ends, up to the return’s due date. Pub 590-A says, “Generally, the contribution must be made by the due date of your return, not including extensions,” and for 2025 contributions, “for most people,” that meant April 15, 2026. The same rule applies to Roth IRAs. For the 2026 tax year, the deadline is the due date of the 2026 return, again without extensions.
A contribution made between January 1 and the deadline can count for either the current year or the previous one, so it helps to tell the IRA provider which year a deposit is for. Line 1 of the 2025 Form 8606, for example, refers to nondeductible contributions made “for 2025 from January 1, 2026, through April 15, 2026” (IRS: 2025 Form 8606, checked November 9, 2026).
Excess contributions and how they are corrected
An excess contribution is anything above your limit for the year. It can come from contributing more than the dollar limit, contributing without enough compensation, a Roth contribution above the income limit, or an improper rollover.
The tax for leaving it in place is 6% a year. The IRS limits page says excess contributions “are taxed at 6% per year for each year the excess amounts remain in the IRA,” capped at 6% of the combined value of all your IRAs at year end. Pub 590-A applies the same 6% to excess Roth contributions.
The usual fix is to withdraw the excess and the income it earned. Pub 590-A says the withdrawal must be completed “by the date your tax return for that year is due, including extensions,” and the earnings are included in gross income. Under the 2025 Form 5329 instructions, an excess withdrawn this way “will be treated as not having been contributed,” and the 10% additional tax on early distributions doesn’t apply to these corrective distributions (IRS Instructions for Form 5329 (2025), checked November 9, 2026). If the return was filed on time without the withdrawal, the same instructions allow it “no later than 6 months after the due date of your tax return, excluding extensions,” with an amended return marked “Filed pursuant to section 301.9100-2.”
Two other routes exist. Pub 590-A says an excess may be applied to a later year if that year’s contributions are below the limit. And a contribution made to one type of IRA can be recharacterized as made to the other, for example from Roth to traditional when income turned out too high, by the due date including extensions, moving any net income with it. Recharacterization doesn’t apply to conversions made after 2017.
The 6% tax and the corrections are reported on Form 5329. Excess contributions are a situation where the details matter, so a tax professional can confirm how the rules apply and which route fits.
Common questions
Can I contribute to an IRA if I’m covered by a 401(k)? Yes. Workplace coverage doesn’t stop a contribution; it only affects whether a traditional IRA contribution is deductible. Roth eligibility depends on income, not coverage.
Can I contribute from dividends or rental income? Not on their own. Pub 590-A excludes property income such as interest, dividends and rent from compensation. The contribution needs taxable compensation behind it.
Does a filing extension give me more time to contribute? No. The contribution deadline is the return’s due date without extensions. Extensions do matter for withdrawing an excess contribution.
What if I find an excess contribution from several years ago? The 6% tax applies for each year the excess remained in the IRA. Form 5329 and its instructions explain how earlier excess amounts carry forward, and a tax professional can confirm how to correct it.
Sources checked November 9, 2026: IRS: IRA contribution limits; IRS news release IR-2025-111; IRS Publication 590-A (2025); IRS Instructions for Form 5329 (2025); IRS 2025 Form 8606.