It may be 2026, but taxpayers still have time to make last‑minute retirement contributions that could lower their 2025 tax bill.
While most tax‑saving moves must be made by December 31 to count for that year’s return, certain retirement strategies involving Traditional and Roth IRAs can be completed several months into the following year. For these contributions, tax year 2025 doesn’t end until April 15, 2026. The ability to deduct a contribution to a traditional IRA depends on the saver’s income and other factors, such as whether the taxpayer is covered by a 401(k) or other workplace retirement plan. The potential tax savings can be substantial. A large, lump‑sum contribution to a retirement account may qualify for a full or partial tax deduction, potentially saving thousands of dollars. Even taxpayers who don’t qualify for a deduction still benefit from the April deadline as an opportunity to boost retirement savings.
A Real‑World Example:
A client contacted our office recently and made a last‑minute $7,000 IRA contribution for the 2025 tax year, saving her nearly $2,000 in federal and state income taxes. She had money sitting in the bank—why not put it into an IRA and save on taxes?
In fact, if she were 50 or older, she could have contributed up to $8,000 for 2025. For every $100 she contributed, she saved approximately $27.75 in taxes. I explained that it ultimately comes down to a cash‑flow decision—whether contributing makes sense based on current needs versus long‑term savings.
Despite the benefits, many taxpayers continue to leave money on the table. Anyone with earned income can open and fund an IRA. Click to view the 2025& 2026 IRA Contribution Limits.
Who Can Deduct an IRA Contribution for the 2025 Tax Year:
Among the many ways Americans can benefit:
- A single taxpayer with no workplace retirement plan can deduct the full amount of an IRA contribution.
- A single taxpayer covered by a workplace plan may deduct the full amount if their adjusted gross income is $79,000 or less (2025 tax year).
- Married couples filing jointly can deduct the full amount of an IRA contribution if neither spouse is covered by a workplace plan.
- If only one spouse is covered by a workplace plan, the other spouse may deduct the full IRA contribution if joint income is $236,000 or less (2025 tax year).
So what’s the difference between a traditional IRA and a Roth IRA? Many taxpayers choose a traditional IRA for the upfront tax break. Contributions may be tax‑deductible, but withdrawals in retirement are taxed as ordinary income. A Roth IRA, by contrast, does not offer a current‑year deduction. However, qualified withdrawals in retirement are tax‑free, which can provide significant long‑term benefits. Eligibility to contribute directly to a Roth IRA is based on income. For the 2025 tax year, Roth IRA contribution phaseouts begin at approximately $150,000 for single filers and $236,000 for married couples filing jointly.
Nondeductible IRAs:
The April deadline also allows taxpayers who don’t qualify for a deductible traditional IRA contribution to continue saving by making after‑tax, nondeductible contributions to a traditional IRA. These funds grow tax‑deferred, and only the earnings are taxed when withdrawn in retirement. Taxpayers making nondeductible contributions must keep careful records of their basis over time.
When to Consider a backdoor Roth IRA:
Taxpayers whose income is too high to contribute directly to a Roth IRA may still be able to do so using a backdoor Roth strategy. This involves:
- Making a nondeductible contribution to a traditional IRA
- Converting those funds to a Roth IRA
- Paying any tax due on earnings
- Allowing the funds to grow tax‑free going forward.
Options for business owners or the self-employed:
For self‑employed individuals, the SEP‑IRA contribution limit for the 2025 tax year is $70,000. In many cases, contributions can be made until October 15, 2026, if a filing extension is requested.
Unfortunately, small‑business owners often reinvest heavily in their businesses while neglecting their own retirement savings.
Save your tax refund:
Consider using some or all your tax refund to increase your retirement savings. You can include retirement account routing information directly on your Form 1040, effectively turning your refund into a subsidized retirement contribution.
If you would like to make an IRA contribution for the 2025 tax year before filing your taxes, please give our office a call at (207) 761-4733, or email info@pineharboradvisors.com. As always, do not hesitate to reach out with any questions.
View our 2025 & 2026 Financial Data Chart tax bracket and financial data charts here. &
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisors LLC nor any of its representatives may give legal or tax advice.