New 2026 401k and IRA Contribution Limits: What You Should Know

How to Save on Taxes in 2026?

If you are eager to boost your retirement savings and possibly reduce your tax bill, there is good news for 2026! Inflation-driven cost increases have prompted additional IRS updates in 2026 that can work in your favor.¹IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill | Internal Revenue Service. www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill. The upshot is that inflation-induced savings can help offset inflation’s higher prices.

Your 2025 Tax Return

All considerations equal, lower inflation is preferred. Yet, there are often aspects of higher inflation that may work in your favor. Consequently, the IRS provided “some relief” with higher 2026 federal tax brackets, which means you can earn more before catapulting into the next highest tax bracket.

Due to increases in the standard deduction and a favorable shift of the tax brackets, if your 2026 gross income is identical to your 2025 gross income, your 2026 tax bill will be reduced without you doing anything differently.

Read More:  IRS provides tax inflation adjustment for tax year 2026

What is the 401k contribution limit for 2026? 

401k plan contribution limit increases by $1,000 from $23,500 in 2025 to a new 2026 total of $24,500. For those Age 50 and older, the standard catch-up contribution limit also rises by $500 from $7,500 in 2025 to $8,000 in 2026, bringing the new total limit to $32,500 ($24,500 + $8,000).

Under a change made in SECURE 2.0 Act, a higher catch-up contribution limit applies for employees ages 60, 61, 62, and 63, who participate in these plans. For 2026, this “super” catch-up contribution limit remains $11,250, rather than the standard catch-up contribution limit of $8,000 for all others Age 50 and older. The total maximum contribution limit for those ages 60-63 rises $1,000 from $34,750 in 2025 to $35,750 ($24,500 + $11,250) in 2026.

What are the changes in retirement in 2026?

The major changes in retirement plans and accounts in 2026 are primarily driven by the SECURE 2.0 Act and the annual inflation adjustments. The most significant new SECURE 2.0 Act provision requires certain high-income earners age 50 and older, with over $150,000 in FICA wages, make their 401k plan catch-up contributions on a Roth or after-tax basis.  Pre-tax contributions are allowed only up to the standard deferral limit. The primary change is a shift from an upfront tax deduction to tax-free withdrawals in retirement. This eliminates a significant pre-tax deduction for high-earners nearing retirement, effectively requiring them to pay income tax on the catch-up portion of their savings now rather than in retirement. The current $150,000 income threshold will be adjusted for inflation in the future.

Traditional and Roth IRA contribution limits also go up from $7,000 in 2025 to $7,500 for 2026. Taxpayers age 50 and older in 2026 can contribute an additional $1,100, for a total of $8,600.

For the self-employed and small business owners, the annual increase in 2026 retirement plan contribution limits is an empowering development to significantly boost tax-advantaged savings. The higher contribution ceilings for plans like the SEP IRA, Solo 401k, and SIMPLE IRA enable business owners to defer greater amounts of income in 2026 for both themselves and their employees.

What Tax Changes Are Coming in 2026? 

In addition to capturing attractive deductions, you can also find 2026 retirement savings opportunities with these recent inflation adjustments. The easiest time to increase your contribution levels is at the beginning of the year. Be sure to notify your plan or payroll administrator to adjust your savings amount to reflect the new increased limits. Below are some major changes to review:

1. 401(k), 403(b), 457(b), and Thrift Savings Plan (TSP) – There is a large increase in 401(k), 403(b), 457(b), and Thrift Savings Plan (TSP) contribution limits for 2026.²401(K) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 | Internal Revenue Service. www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500#:~:text=Highlights%20of%20changes%20for%202026.
   

   Pro Tip: Bump up your employee payroll deferrals so that your qualified plan retirement contributions are maxed out – $24,500, or $32,500 if you are age 50 and older (increased from $23,500, and $31,000, respectively, in 2025).

This limit takes into account total Traditional (pre-tax) and Roth (after-tax) employee contributions you make to all defined contribution plans in a calendar year.

On top of higher 401(k), 403(b), 457(b), and TSP deferral limits, there is a relatively new “super max catch-up” opportunity for employees who are ages 60, 61, 62, or 63 by the end of 2026. Under a provision of SECURE 2.0, those eligible savers can make even higher 2026 plan year catch-up contributions of $11,250, which brings the total employee deferral cap to $35,750.

There is a separate plan limit that regulates the amount of most contributions, funded by both the employee and the employer, that can be made to any single defined contribution plan in any calendar year. The overall 2026 limit is $ 72,000, or $80,000 if you are age 50 and older and make catch-up contributions (up from $70,000 and $77,500, respectively, in 2025).

2. Individual Retirement Account (IRAs) and Roth IRAs – The amount workers can contribute to Individual Retirement Account (IRAs) and Roth IRAs is $7,500 for the 2026 tax year, which rises from last year’s tax year figure of $7,000.

• • The catch-up contribution amount for those accounts also increases to  $1,100, meaning those 50 and older can sock away a 2026 tax year contribution of $8,600.
  • The income ranges to be eligible to fund a Roth IRA are higher for the 2026 tax year. The new phase outs are:
    • between $153,000 and $168,000 for singles and heads of households (up from $150,000 to $165,000 in 2025), and
    • $242,000 to $252,000 for married couples filing jointly (up from $236,000 to $246,000 in 2025).³401(K) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 | Internal Revenue Service. www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500#:~:text=Highlights%20of%20changes%20for%202026.

3. Simplified Employee Pension (SEP)-IRA – For the self-employed and small business owners, the new amount you, as an employer, can contribute to a Simplified Employee Pension (SEP)-IRA is the lesser of 25% of the employee’s compensation or $72,000 in 2026 (increased from contributions of the lesser of 25% of the employee’s compensation or $70,000 in 2025).⁴Simplified Employee Pension Plan (SEP) | Internal Revenue Service. www.irs.gov/retirement-plans/plan-sponsor/simplified-employee-pension-plan-sep.

• • For the self-employed, the new amount you can save, as an employer and employee, in a solo 401(k) is $72,000 in 2026 (up from $70,000 in 2025). The solo 401(k) catch-up limit increases from $7,500 in 2025 to $8,000 in 2026.
  • The takeaway is that you can max out 2026 contributions of $80,000 if you are age 50 and older.

4. Savings Incentive Match Plan for Employees (SIMPLE) Retirement Over 25 Employees – The amount individuals can defer to a Savings Incentive Match Plan for Employees (SIMPLE) retirement account for over 25 employees also increases, from $16,500(2025) to $17,000 (2026).⁵Simplified Employee Pension Plan (SEP) | Internal Revenue Service. www.irs.gov/retirement-plans/plan-sponsor/simplified-employee-pension-plan-sep.

• • The SIMPLE IRA catch-up limit is $4,000 in 2026 (up from $3,500 in 2025), meaning those 50 and older can stash away a combined 2026 contribution of $21,000.
  • Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for those employees participating in SIMPLE plans who turn ages 60, 61, 62, and 63 by the end of the plan year. For 2026, this higher catch-up contribution limit remains $5,250 for a combined contribution limit of $22,250. 

Note: SECURE 2.0 increases the yearly SIMPLE IRA salary deferral limit and catch-up contributions for certain SIMPLE plans with less than 25 employees by 10% (2025). For 2026, this enhanced contribution limit is $18,100 with an enhanced catch-up limit of $3,850. 

How to Save on Healthcare, Education, and More in 2026

Though not exclusively a retirement plan, Health Savings Accounts (HSA) are uniquely triple-tax advantaged. HSA contributions reduce your taxable income, the earnings grow tax-free, and qualified withdrawals used to pay for qualified health care costs are tax-free. What changed:

1. Health Savings Accounts (HSA)
   • HSA funding limits for 2025 rise to $4,400 for singles and $8,750 for family.
   • Age 55 and older can continue to put an additional $1,000 in this high-deductible health insurance plan.8 

2. Flexible Spending Account (FSA)
   • You can defer an extra $100 into your healthcare Flexible Spending Account (FSA) in 2026, as the annual contribution cap to pay for qualified out-of- pocket healthcare expenses increase to $3,400.
   • The annual dependent care FSA maximum rises to $7,500 for single filers and married filing jointly couples in 2026, boosted from $5,000 for single filers and married filing jointly couples in 2025.

Read more: https://www.fsafeds.gov/support/faq/hcfsa 

3. Annual Gift Tax Exclusion

• • For 2026, the annual exclusion from gift tax is $19,000 per year per donor, which remains the same as 2025. The official estate and lifetime gift tax exclusion climbs to $15 million per individual for 2026 deaths, up from $13.99 million in 2025.
  • The higher lifetime exemption figures essentially enable wealthy taxpayers to transfer more to their heirs tax-free during life or at death. This increase means that a married couple can shield a total of $30 million in 2026 without paying any federal estate or gift tax. For a couple that has already reached their lifetime gift limit, this means that they may not give away an additional $2.02 million starting in 2026.

Read more: Frequently asked questions on gift taxes

Pro Tip: You can continue to make a tax-free gift per beneficiary of $19,000 in 2026 as an individual or $38,000 as a married couple for a 529 Savings Plan. Alternatively, you can front-load five years’ worth of tax-free gifts by contributing $95,000 as an individual or $190,000 as a married couple. 

Get in touch with a Team Hewins financial advisor to discuss how these 2026 changes can benefit you as part of your financial plan! 

Top 6 Search Questions for 2026 Retirement Limits

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