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When:
January 01, 2003

Who it Affects:
For all taxpayers
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2003 Tax Law Changes
Deductible IRA limits go up in 2003 and 2004

You can contribute up to $3,000 a year to an Individual Retirement Account in 2003 and 2004. (If you are 50 or older, you can contribute an extra $500.)

Whether you can deduct that contribution depends on your income. Income levels are higher for workers seeking to make tax-deductible contributions to Individual Retirement Accounts.

If your employer offers a retirement plan, you can still take a full deduction if:
  • You are single and your modified adjusted gross income is $40,000 a year or less.
  • You are married and filing jointly and your adjusted gross income is $60,000 or less.
The deduction is phased out between $40,000 and $50,000 for singles and between $60,000 and $70,000 for joint filers. Above those top levels, you cannot claim a deduction.

If your company offers no pension plan, the contribution is fully deductible.

In 2004, the phaseouts rise to

  • $45,000 and $55,000 for singles
  • $65,000 to $75,000 for married couples filing jointly.

    Spouse Contribution
    If you are not covered by an employer retirement plan, but your spouse is, your IRA deduction in 2003 depends on your filing status and adjusted gross income. Heres how it works.

     IRA eduction Limits -- 2003
    Filing statusIncome level for full deductionIncome level for reduced deductionIncome level at which you receive no deduction
    Married Filing JointlyBelow $150,000$150,000 to $160,000$160,000 or more
    Married filing separatelyNot available $0 to $10,000$10,000 or more


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