Make the Most of Your IRA and HSA Contributions Before Tax Day

With tax season fast approaching, now is an ideal moment to review your financial game plan—especially when it comes to maximizing contributions to your IRAs and HSAs. These accounts offer valuable tax advantages, but you must make your contributions before the federal filing deadline to count them toward the 2025 tax year.

Below is a clear breakdown of what to know and how to make the most of these opportunities before April 15.

Why Contributing to an IRA Matters Right Now

If you’re hoping to strengthen your retirement savings and potentially lower your taxable income, adding funds to an IRA before the deadline is one of the most effective moves you can make.

For the 2025 tax year, contribution limits are:

• Up to $7,000 if you're under age 50
• Up to $8,000 if you’re age 50 or older, thanks to catch-up contributions

These limits apply to the total amount you put across all IRAs, including both Traditional and Roth accounts. You also can’t contribute more than your earned income for the year. However, if you didn’t earn income but your spouse did, you may still be able to make contributions through a spousal IRA based on their earnings.

How Your Income Impacts Traditional IRA Deductions

Anyone can contribute to a Traditional IRA regardless of income level. Whether those contributions are deductible on your tax return, however, is determined by your income and whether you or your spouse has access to a workplace retirement plan.

Here’s how the 2025 deduction rules break down if you have a workplace plan:

• Single filers: Full deduction if income is $79,000 or below. Partial deduction if income is between $79,001 and $88,999. No deduction if income is $89,000 or higher.
• Married filing jointly, both spouses covered by workplace plans: Full deduction if combined income is $126,000 or less. Partial deduction up to $145,999. No deduction at $146,000 or above.

Even if your contributions aren’t deductible, the money still grows tax-deferred until you begin withdrawals during retirement—providing long-term value.

Roth IRA Eligibility Works Differently

Roth IRAs follow a separate set of rules. Instead of focusing on deductions, your ability to contribute at all depends on your income. If you fall below certain limits, you can contribute the full amount. If you’re in a middle range, your allowed contribution may be reduced. And if your income exceeds the maximum threshold, you can’t contribute for that year.

Because these thresholds shift annually, it’s wise to confirm your eligibility before making a Roth IRA contribution.

HSAs: A Triple-Tax-Advantaged Tool for Medical Savings

If you’re enrolled in a high-deductible health plan (HDHP), you may qualify for a Health Savings Account (HSA). These accounts offer remarkable tax benefits while helping you prepare for medical expenses.

For the 2025 tax year, you can make HSA contributions until April 15, 2026. Contribution limits are:

• $4,300 for individuals with self-only coverage
• $8,550 for family coverage
• Additional $1,000 catch-up contribution if you’re age 55 or older

HSAs offer a rare trio of tax advantages:

• Contributions may reduce your taxable income
• Growth inside the account is not taxed
• Withdrawals for qualified medical expenses are tax-free

Employer contributions also count toward your annual limit, so be sure to factor those in. If you were only HSA-eligible for part of the year, you may need to prorate your contribution limit unless you qualify for the “last‑month rule,” which allows full contributions if you were eligible in December. Just be aware: If you don’t maintain eligibility the following year, you may owe taxes and penalties.

Why Staying Below Contribution Limits Is Essential

Exceeding the IRS contribution limits for your IRA or HSA can trigger costly consequences. If excess contributions remain in the account past the deadline, the IRS may impose a 6% penalty each year the excess stays in place.

To prevent this, keep track of how much you—and if applicable, your employer—have contributed throughout the year. If you realize you’ve gone over the limit, withdraw the extra funds before the tax deadline to avoid any penalties.

Take Action Now to Maximize Your Savings

IRA and HSA accounts provide significant tax perks and can go a long way toward bolstering your retirement and healthcare savings. But to make these contributions count for the 2025 tax year, you’ll need to finalize them before April 15, 2026.

If you’re uncertain about how much to contribute or which type of account aligns best with your financial situation, a financial professional can help you navigate the rules, avoid potential pitfalls, and ensure that you’re taking full advantage of available opportunities.

There’s still time to maximize your tax benefits—don’t wait until the last minute. If you'd like assistance reviewing your options, reach out soon so you’re fully prepared ahead of the deadline.