Savers get higher 401(k) and IRA limits for 2026 as new IRS rules take effect

The IRS raised the 401(k) contribution limit to $24,500 for 2026, giving workers another $1,000 in tax-deferred savings room — though only a fraction of employees take full advantage of the cap.

The agency announced the increase Thursday, up from $23,500 in 2025. The change applies to 401(k)s, 403(b)s, most 457 plans and the federal Thrift Savings Plan.

Workers 50 and older can save even more, according to the new IRS guidance, which raises the catch-up contribution limit to $8,000 for 2026 — up from $7,500 in 2025.

That means older savers can deposit up to $32,500 in their 401(k)s next year.

Employees aged 60 to 63 get an even bigger break.

They can contribute an extra $11,250 on top of the $24,500 base limit, for a total of $35,750.

That figure, which is unchanged from this year, stems from changes enacted in the Secure 2.0 Act of 2022.

Despite the higher limits, most workers don’t come close to maxing out.

Only 14% of participants contributed the maximum to their 401(k)s in 2024, according to Vanguard’s 2025 How America Saves report, which analyzed more than 1,400 plans and nearly 5 million participants.

The average combined savings rate, including employer contributions, was 12% in 2024, according to Vanguard.

A separate Fidelity Investments analysis of more than 25,000 corporate plans found the average combined rate was 14.2% during the second quarter of 2025.

The IRS also allowed workers to raise IRA contribution limits next year.

Employees will soon be able to contribute $7,500 to traditional or Roth IRAs, up from $7,000 in 2025.

The catch-up contribution for savers 50 and older rises to $1,100, from $1,000.

Income thresholds for Roth IRA contributions also increased.

Singles and heads of household can make full Roth contributions if their income is below $153,000, up from $150,000 in 2025.

The phase-out range extends to $168,000.

For married couples filing jointly, the Roth IRA phase-out range is $242,000 to $252,000, up from $236,000 to $246,000 in 2025.

The IRS also adjusted income ranges for deducting traditional IRA contributions.

For single taxpayers covered by a workplace retirement plan, the phase-out range is $81,000 to $91,000, up from $79,000 to $89,000 in 2025.

For married couples filing jointly where the contributing spouse has a workplace plan, the range is $129,000 to $149,000, up from $126,000 to $146,000.

The Saver’s Credit, which helps low- and moderate-income workers save for retirement, also saw higher income limits. Married couples filing jointly can now earn up to $80,500 and still qualify, up from $79,000 in 2025.

Workers with SIMPLE retirement accounts can contribute $17,000 in 2026, up from $16,500. The catch-up limit for those 50 and older rises to $4,000, from $3,500.

The announcement came hours after President Donald Trump signed a funding bill to end the longest federal government shutdown in US history.

It also followed the IRS releasing dozens of other inflation adjustments for 2026 last month, including federal income tax brackets and capital gains thresholds.

The annual adjustments are tied to cost-of-living increases and are designed to prevent inflation from eroding the value of retirement savings incentives.

For workers who can afford to max out their 401(k)s, the higher limits offer a chance to shelter more income from taxes while building retirement savings.

But the Vanguard data suggests most Americans are focused on more modest goals — or simply can’t spare the cash to hit the ceiling.