How Can I Calculate Non-Deductible Traditional IRA Contributions?

Your nondeductible IRA contribution is simply the difference between what you contribute and what you're allowed to deduct. Whether your contribution is deductible depends on your income, filing status, and whether you (or your spouse) are covered by a retirement plan at work.

Basic Formula

Nondeductible Contribution = Total IRA Contribution − Deductible Amount

In 2025, your IRA contribution limit is $7,000. However, because of your filing status and AGI, the limit on the amount you can deduct is $3,500. You can make a nondeductible contribution of $3,500 ($7,000 – $3,500).

When Are Contributions Nondeductible?

Retirement plan at work: Your deduction may be limited if you (or your spouse, if you are married) are covered by a retirement plan at work and your income exceeds certain levels. No retirement plan at work: Your deduction is allowed in full if you (and your spouse, if you are married) aren't covered by a retirement plan at work.

Deduction Phaseout Ranges

How to Calculate a Partial Deduction

Use the worksheets in Appendix B to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits.

Simplified steps from Worksheet 1-2:

1. Start with the upper limit for your filing status (e.g., $146,000 for MFJ if you're covered)
2. Subtract your modified AGI
3. Divide by $20,000 (MFJ) or $10,000 (other filers)
4. Multiply by contribution limit ($7,000 or $8,000 if 50+)
5. Round up to next $10 (minimum $200)
6. Result = your deductible amount
7. Nondeductible = Contribution − Deductible amount

Example

You are 29 years old and single. In 2025, you were covered by a retirement plan at work. Your salary is $72,000. Your modified AGI is $90,000. You make a $7,000 IRA contribution for 2025. Because you were covered by a retirement plan and your modified AGI is above $89,000, you can't deduct your $7,000 IRA contribution. You must designate this contribution as a nondeductible contribution by reporting it on Form 8606.

Reporting Nondeductible Contributions

Enter on line 1 of Form 8606 your nondeductible contributions.

If you used the worksheet Figuring Your Reduced IRA Deduction for 2025 in Pub. 590-A, enter on line 1 of Form 8606 any nondeductible contributions from the appropriate lines of that worksheet.

Tracking Your Basis

You will have a cost basis in your traditional IRA if you made any nondeductible contributions. Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions.

Your basis carries forward each year on Form 8606, Line 14. This is critical for calculating the tax-free portion of future distributions.

Key Takeaways

• You can choose to treat deductible contributions as nondeductible (but not vice versa)
• File Form 8606 every year you make nondeductible contributions
• Keep records of all Form 8606s filed, you'll need them when taking distributions
• Your basis in traditional IRAs is the total of all your nondeductible contributions and your nontaxable amounts included in rollovers made to these IRAs minus the total of all your nontaxable distributions

Updated 2026 Limits

The basic contribution limit has increased by $500, and the "Catch-Up" limit for those 50+ has also seen its first cost-of-living adjustment.

2026 Deduction Phase-out Ranges

If you (or your spouse) are covered by a retirement plan at work, your ability to deduct that $7,500 starts to disappear as your Modified AGI (MAGI) hits these new 2026 windows:

Related Questions

• When I receive rmd from the IRS, how can i calculate the amount which was non deductible traditional IRA?
• What are the maximum allowable contributions to a solo 401(k) in 2026?

Sources:

Publication 590-A (2025) - Contributions to IRAs, Worksheet 1-2

Instructions for Form 8606 (2025) - Reporting nondeductible contributions

IRA Deduction Limits - Income phaseout tables

About Form 8606 - Nondeductible IRAs