26 U.S.C. § 219 — Retirement savings

(a) Allowance of deduction: You can deduct the qualified retirement contributions you made for the year. (b) Maximum amount of deduction: (1) Your deduction can't be more than the smaller of the "deductible amount" (defined in paragraph (5)) or your taxable compensation for the year. (2) This section doesn't apply to an employer's contribution to a simplified employee pension (SEP). (3) For contributions on an employee's behalf to a section 501(c)(18) plan, the deduction is capped at the smaller of $7,000 or 25 percent of the employee's compensation (as defined in section 415(c)(3)). (4) This section doesn't apply to amounts put into a SIMPLE retirement account under section 408(p). (5) Deductible amount: (A) The base deductible amount is $5,000. (B) Catch-up contributions: if you turned 50 before the end of the year, your deductible amount goes up by $1,000. (C) Cost-of-living adjustment: for tax years after 2008, the $5,000 base amount rises each year — multiply $5,000 by the cost-of-living factor under section 1(f)(3) (using 2007 as the base year), add that to $5,000, then round down to the nearest $500. For tax years after 2023, the $1,000 catch-up amount is adjusted the same way (using 2022 as the base year) and rounded down to the nearest $100. (c) Kay Bailey Hutchison Spousal IRA: (1) If this paragraph applies to you, your deduction limit under (b)(1) becomes the smaller of the dollar amount in (b)(1)(A), or the sum of your own compensation plus your spouse's compensation — with your spouse's compensation reduced by whatever your spouse already deducted, any nondeductible contribution your spouse made, and any Roth IRA contribution your spouse made. (2) This applies to you if you file a joint return and your compensation for the year is less than your spouse's. (d) Other limitations and restrictions: (1) [Repealed.] (2) You can't deduct a rollover contribution from another retirement plan or account. (3) If your IRA is an endowment contract, you can't deduct the part of your payment that pays for life insurance. (4) You can't deduct an amount paid into an inherited IRA or inherited annuity. (e) Qualified retirement contribution: this term means (1) cash you paid during the year into an individual retirement plan for your own benefit, and (2) amounts contributed on your behalf to a section 501(c)(18) plan. (f) Other definitions and special rules: (1) "Compensation" includes earned income but not pension, annuity, or deferred-compensation payments; it includes military differential wage payments, and amounts paid to you for graduate or postdoctoral study that are included in your gross income. (2) For married couples, the deduction is figured separately for each spouse, ignoring community property laws. (3) A contribution is treated as made on the last day of the prior tax year if it's actually made by your filing deadline for that year (not counting extensions). (4) [Repealed.] (5) If your employer pays into your IRA, that payment counts as your compensation and is included in your gross income, whether or not you can deduct it — except for certain self-employed individuals. (6) If you were allowed to deduct more than you actually contributed, you're treated as making an extra contribution the next year, limited to the smaller of that shortfall or the excess-contribution amount defined in section 4973(b)(2). This "amount contributed" figure ignores this rule itself and never includes rollovers; and if a deduction was wrongly allowed for a now-closed prior year, this extra amount gets reduced accordingly. (7) For the income limits in (b)(1)(B) and (c), compensation earned by Armed Forces members in a combat zone is counted without regard to the combat-pay exclusion in section 112. (8) For electing not to deduct IRA contributions, see section 408(o)(2)(B)(ii). (g) Limitation on deduction for active participants in certain pension plans: (1) If you or your spouse are an active participant in certain plans for any part of a plan year, the dollar limits in (b)(1)(A) and (c)(1)(A) get reduced — but not below zero — by the amount figured under paragraph (2). (2) That reduction equals the limit multiplied by a fraction: your adjusted gross income minus the "applicable dollar amount," divided by $10,000 ($20,000 for joint returns). No limit gets reduced below $200 unless it's phased all the way to zero, and any reduction that isn't a multiple of $10 is rounded down to the next $10. (3) For this subsection, your adjusted gross income is figured after applying sections 86 and 469, and without regard to sections 85(c), 135, 137, 221, and 911, or this section's own deduction. The "applicable dollar amount" is $80,000 for a joint return, $50,000 for anyone else, or zero for a married person filing separately. (4) A husband and wife who file separate returns and live apart the entire year aren't treated as married for this subsection. (5) "Active participant" means someone who takes part, for a plan year, in a listed employer plan — a 401(a) trust plan, a 403(a) annuity plan, a government plan, a 403(b) annuity, a SEP, or a SIMPLE account — or who makes deductible contributions to a 501(c)(18) plan. This applies whether or not your rights in the plan are forfeitable, but a 457(b) deferred-compensation plan doesn't count as a government plan for this purpose. (6) You're not treated as an active participant just because of: (A) service in a reserve component of the Armed Forces, unless you served more than 90 days of active duty (not counting training) that year; or (B) being a volunteer firefighter in a government plan, as long as your accrued benefit is worth $1,800 a year or less (as a single life annuity starting at 65). (7) If this subsection applies to you solely because your spouse is an active participant, your own applicable dollar amount is $150,000 instead, and the denominator in paragraph (2) is $10,000. (8) For tax years after 2006, the dollar amounts in (3)(B)(i), (3)(B)(ii), and (7)(A) increase each year the same way — multiplied by the cost-of-living factor under section 1(f)(3), using 2005 as the base year — and any increase is rounded to the nearest $1,000.