Free Georgia HELOC Payment Calculator
Georgia HELOC Calculator
By SoFi Editors | Updated January 28, 2026
A Georgia HELOC calculator can help homeowners estimate monthly payments and understand the potential cost of borrowing against their home equity. By adjusting factors like interest rate, loan balance, and repayment term, you can see how different scenarios affect your budget.
Keep reading for more on home equity lines of credit in Georgia, how to use the Georgia HELOC calculator, alternatives to HELOCs, and more.
- Key Points
- • A home equity line of credit provides a revolving credit limit that allows homeowners to withdraw funds as needed rather than receiving a single lump sum.
- • This credit vehicle is secured by the residential property itself, meaning the home serves as collateral for the outstanding balance.
- • The lifecycle of a HELOC is divided into two distinct phases: a draw period for accessing funds and a subsequent repayment period for settling the debt.
- • A HELOC calculator helps estimate monthly payments during both the draw period and repayment period.
- • Failure to meet payment obligations carries the risk of foreclosure, as the lender maintains a legal interest in the home.
Calculator Definitions
• HELOC Balance: This figure represents the total amount of money currently withdrawn from the credit line that has not yet been repaid. It reflects the outstanding debt that will eventually need to be settled during the repayment phase.
• Current Interest Rate: This is the annual percentage charged on the borrowed funds, which is typically tied to a benchmark like the prime rate. Because most of these accounts have variable rates, this number will change over time based on market conditions.
• Draw Period: The draw period is the initial time frame, often lasting 10 years, during which a homeowner can actively withdraw funds from the credit line. During this window, payments are frequently limited to the interest accrued on the borrowed amount.
• Repayment Period: This phase begins once the draw period concludes, lasting between 10 and 20 years depending on the specific agreement. Homeowners can no longer withdraw money and must begin paying back both the principal balance and the interest.
• Monthly Interest Payment: This is the amount due each month to cover the cost of borrowing without reducing the actual principal balance. This type of payment is common during the draw phase to maintain a manageable short-term budget.
• Monthly Principal and Interest Payment: This figure represents the total amount required each month to pay down the debt and cover interest during the repayment phase. This payment is typically higher than interest-only payments because it works toward fully eliminating the balance.
How to Use the Georgia HELOC Calculator
A Georgia HELOC calculator helps you estimate monthly payments based on your home equity, loan terms, and interest rate. By entering a few basic details, you can quickly see how different borrowing scenarios may affect your budget before applying for a line of credit.
Step 1: Enter Your Planned or Actual HELOC Balance
Start by entering the total amount you have drawn or intend to withdraw from your revolving credit line. This input serves as the baseline for calculating interest charges, as costs are only applied to the funds actively in use rather than the entire approved limit.
Step 2: Estimate Your Interest Rate
The interest rate is the primary driver of the cost of borrowing. Because HELOCs typically utilize variable rates, selecting the current rate allows for an accurate snapshot of immediate monthly costs. This variable is sensitive to economic shifts, and testing different rate scenarios within the calculator can help a homeowner prepare for potential increases in the future.
Step 3: Choose the Length of Your Draw Period
The draw period defines the window of time during which capital is accessible — typically 10 years. Specifying this length helps the calculator map out the timeline for when withdrawals must cease and when the transition to the next phase will occur.
Step 4: Specify Your Repayment Period
The repayment period, often spanning 10 to 20 years, is when the full cost of the credit line is realized. During this phase, you will pay back both the principal and interest. A shorter repayment period leads to higher monthly payments but results in significantly lower total interest costs over the life of the agreement. Conversely, a longer period reduces the immediate monthly burden but increases the total cost of the debt.
Step 5: Review Your Results
By reviewing the projected monthly payments, homeowners can determine if their current spending and withdrawal habits are sustainable. These results should be used to inform a strategy that prioritizes the full retirement of the debt before the end of the term.
Recommended: Different Types of Home Equity Loans
What Is a Home Equity Line of Credit?
It’s a good idea to make sure you understand what a home equity line of credit is. A home equity line of credit (HELOC) is a revolving credit line that lets homeowners borrow against the equity in their home.
Home equity is the difference between your home’s current market value and the outstanding balance on your home loan and any other loans you might have where your home is used as collateral. A home equity line of credit works like a credit card, allowing you to draw funds as needed and repay them over time, typically with a variable interest rate.
It operates through two distinct lifecycles: the draw period and the repayment period.
• During the draw period, which typically lasts 10 years, the homeowner has the freedom to withdraw funds up to a predetermined limit, repay them, and withdraw them again. This revolving nature is what distinguishes it from installment-based financing. A HELOC interest-only calculator can show you what payments would be based on your balance during this period.
• Following this phase, a 20-year repayment period begins. At this point, the ability to take out more money is terminated, and the homeowner must begin a structured plan to pay back the borrowed principal plus the interest that has accrued over time. A HELOC repayment calculator can show you what those payments might be.
Since a HELOC is backed by your home, careful borrowing and planning for potential payment fluctuations are essential. When managed responsibly, it can offer homeowners a flexible and relatively affordable way to access funds.
Recommended:HELOC vs. Home Equity Loan
Home Equity Trends in Georgia
Regional market trends are the primary engine behind the amount of equity available to a homeowner. Property values do not exist in a vacuum; they are subject to the ebbs and flows of local demand, state-level economic health, and national interest rate environments. In Georgia, these trends have been particularly dynamic over recent years, directly impacting the borrowing limits and financial flexibility of local residents.
Recent data insights reveal that equity levels have shifted significantly across the Southeast. In Georgia, home equity has increased a whopping 189% over the last five years. The average homeowner in Georgia has $107,666 in equity as of 2025.
Nationwide, average home equity has increased 142% from 2020 to 2025, accounting for about $11.5 trillion in value. Here’s a look at how equity has risen nationwide.
Current HELOC rates by state.
Compare current home interest rates by state and find a HELOC rate that suits your financial goals.
Select a state to view current rates:
How to Use the HELOC Calculator Data to Your Advantage
A HELOC calculator does more than estimate monthly payments — it helps you make smarter borrowing decisions before you tap into your home’s equity. By testing different scenarios, you can see how changes in rates, balances, and timelines affect your finances and use that insight to plan more confidently.
• Stress-test your budget: Run the calculator with higher interest rates to understand how potential market increases could impact your monthly payment and avoid surprises later.
• Plan withdrawals strategically: Use payment estimates to decide how much to borrow and when, helping you avoid drawing more than you can comfortably repay.
• Compare financing options: Evaluate HELOC costs against alternatives like home equity loans or personal loans to determine which option best fits your goals.
• Prepare for lender discussions: Enter conversations with lenders informed about your expected payments and borrowing limits, giving you more control when reviewing terms and offers.
Recommended: How to Get Equity Out of Your Home
Tips on HELOCs
A home equity line of credit (HELOC) can be a powerful financial tool when used wisely, but understanding how to manage it effectively is key. Using a HELOC calculator and following practical strategies can help you plan your borrowing, control costs, and make the most of the funds while protecting your home. Below are five tips on how to use HELOCs effectively:
• Plan for major projects: Estimate monthly payments for planned renovations or large purchases. This helps ensure your budget can handle the costs without overextending.
• Evaluate debt consolidation: Compare the HELOC’s potential payments and interest with existing high-interest debt. Consolidating can simplify payments and lower overall interest.
• Prepare for variable rates: HELOCs often have variable interest rates. Running multiple scenarios with higher rates helps you anticipate payment changes and plan accordingly.
• Monitor your borrowing: Keep track of how much you withdraw during the draw period. Staying aware of your balance prevents overspending and ensures you can manage future repayments.
• Understand long-term costs: Review the total payments over the life of the HELOC. This helps you assess the full financial impact and make responsible borrowing decisions.
Alternatives to HELOCs
While a revolving credit line is a powerful tool, it is not the only way to access the equity built up in a home. Homeowners should compare different financial instruments to find the best fit for their specific needs, as the structure of the debt can have a major impact on total costs and repayment stability. Below are four options to consider:
Home Equity Loan
A home equity loan is often confused with a HELOC, but the mechanics are quite different. This is a “closed-end” second mortgage where the funds are disbursed as a single lump sum at the start of the agreement. It typically features a fixed interest rate and a set repayment term, often ranging from five to 30 years. This is an ideal choice for someone who knows exactly how much they need for a one-time expense and prefers the stability of equal monthly payments from day one.
A home equity loan calculator can help you compare the cost of this product to that of a HELOC.
Recommended: What Is a Home Equity Loan?
Home Improvement Loan
For homeowners who have a very specific project in mind with a fixed cost, a home improvement loan can be an effective alternative. These are typically personal loans that are often unsecured, meaning no collateral is required. The primary advantage is the fixed nature of the financing; the borrower receives a set amount of money and pays it back with a fixed interest rate over a predetermined term, usually between three and seven years. This provides maximum predictability for a household budget, but rates are typically higher than with HELOCs or home equity loans.
Personal Line of Credit
A personal line of credit offers much of the same revolving flexibility as a HELOC but without using the home as collateral. Because these accounts are unsecured, they are based entirely on the borrower’s credit score and income history. They do not carry the risk of foreclosure, which can be an attractive feature for those who are naturally risk-averse. However, this lack of collateral means that lenders will charge significantly higher interest rates to compensate for the increased risk they are assuming.
Cash-Out Refinance
A cash-out mortgage refinance involves replacing the primary mortgage entirely with a new, larger one. The homeowner takes the difference between the old debt and the new debt in cash. This is a popular choice when current market interest rates are significantly lower than the rate on the original mortgage.
When comparing a cash-out refinance vs. home equity line of credit, a cash-out refinance leaves you with one payment. A home equity line of credit, on the other hand, gives you a second payment on top of your original mortgage payment.
The Takeaway
Using the Georgia HELOC calculator can help homeowners make informed decisions about borrowing against their home equity. By estimating monthly payments and comparing different loan terms, you can plan projects or debt consolidation with confidence.
SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.
Unlock your home’s value with a home equity line of credit from SoFi, brokered through Spring EQ.
FAQ
What is the difference between a HELOC and a home equity loan?
A HELOC is a revolving line of credit that lets you withdraw and repay funds as needed, typically with a variable interest rate. A home equity loan is an installment-based financing option that provides a lump sum upfront with a fixed interest rate and set monthly payments.
What can I use the money for from a HELOC?
The funds from this credit vehicle are extremely flexible and can be used for virtually any purpose. Common uses include funding home renovations, paying for college tuition, settling medical bills, or consolidating high-interest debt into a single account.
What happens when the draw period ends?
When the draw period concludes, usually after 10 years, you can no longer withdraw any more money from the credit line. The account then enters the repayment period, which typically lasts between 10 and 20 years. During this time, you must make regular monthly payments that cover both the principal balance you borrowed and the interest, which often results in a significantly higher monthly bill than the interest-only payments made earlier.
Are there closing costs or fees for a HELOC?
Yes, these accounts can come with various costs, including appraisal fees, application fees, and annual maintenance charges. Closing costs typically range from 2% to 5% of the credit limit, though some lenders may waive these fees if you meet certain criteria or keep the account open for several years.
Learn more about home equity line of credits:
SoFi Loan Products Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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The SoFi Self-directed IRA ACAT 1% Match is governed by the following Terms & Conditions:
Offer: SoFi will match 1% of a customer's ACAT transfers, subject to a maximum match of $10,000 (equivalent to 1% of up to $1,000,000 in ACAT transfers), into their existing or newly opened SoFi self-directed individual retirement account (IRA) during the Offer Period. Transfers must be maintained in the IRA account for five (5) years from the settlement date. Matches will be paid in cash within 5 business days from the date which the funds settle in your SoFi self-directed IRA account.
Offer Period: The Offer Period is from February 17, 2026 - March 31, 2026, though SoFi may modify, suspend, or terminate the Offer at any time without advance notice.
Eligibility: The Match is available to customers who have an existing or newly opened SoFi self-directed IRA (Traditional IRA or Roth IRA) in good standing during the Offer Period through SoFi Securities LLC. Only asset transfers via ACAT are eligible. The transferred assets must be settled before the end of the Offer Period to be eligible for the match.
Calculations and Payments: Matches will be paid out in cash into the account the ACAT was transferred into within 5 business days of the settlement date. The 1% Match is calculated based on the total assets transferred (via ACAT). The customer's SoFi Invest IRA account must be in good standing to receive the payout.
Example: If you complete an ACAT of $20,000 into a SoFi Self-directed Traditional IRA during the Offer Period, you will be matched 1%, equaling $200.
Limitations: This Offer may not be combined with any other offers. The Match will not exceed $10,000 (equivalent to 1% of up to $1,000,000 in ACAT transfers). Qualifying deposits must remain in the SoFi IRA account that earned the Match for five (5) years to keep the entire match amount. If a member makes a withdrawal before the five (5) year Holding Period is complete, they will be subject to an early withdrawal fee and SoFi will remove a proportional amount of the Match from the member's account. The proportional amount is based on the breach in retention value, not retention period.
To avoid this fee, the total equity of the member's account ("total equity") must remain at the original pre-promotion total equity in the account, plus the qualifying deposit and match amount. If a withdrawal causes the total equity to fall below this combined amount, the fee will be applied. The fee will also apply if the member initiates a withdrawal and the total equity has decreased, for any reason including investment losses. Distributions required by law (e.g., required minimum distributions in IRAS) can also trigger the fee. However, the fee will not apply if the member's total equity has risen by an amount greater than the withdrawal amount, either by investment gains or additional deposits.
The proportional early withdrawal fee is deducted from the requested withdrawal amount. In the event of an ACAT transfer out, there will be an early withdrawal fee for the entire match amount. If insufficient cash is available in this account, the fee will be debited from an outgoing financial institution or added to a margin balance. SoFi reserves the right to liquidate securities to pay for this early withdrawal fee. SoFi will also bill an ACAT out fee separate from an early withdrawal fee. For additional details on the SoFi fee schedule click here.
Examples:
| Asset Transfer (ACAT) | 1% Match | Total Equity Balance | Withdrawal Date | Withdrawal Amount | Remaining Equity Balance | Early Withdrawal Fee |
|---|---|---|---|---|---|---|
| $20,000 | $200 | $20,200 | 5+ years from deposit date | -$2,000 | $18,200 | $0 (earned full match amount) |
| $20,000 | $200 | $20,200 | Less than 5 years from deposit date | -$2,000 | $18,200 | $19.80 |
| $20,000 | $200 | $25,000 Account balance increases due to investments | Less than 5 years from deposit date | -$2,000 | $23,200 | $0 |
| $20,000 | $200 | $15,000 Account balance decreases due to investments | Less than 5 years from deposit date | -$2,000 | $13,000 | $71.29 |
Fraud and Violations: SoFi reserves the right to decline, rescind, or delay granting the 1% Match if fraudulent activity or violations of these Terms are suspected. SoFi will liquidate any security to recover the match amount if required.
Not a Recommendation: This Match is not a recommendation to buy, sell, or hold any security, nor is the Offer a recommendation or endorsement of any investment strategy. The Match is not a recommendation that a customer rollover or transfer assets into a SoFi IRA, nor a recommendation for any specific account type. There are many factors that an investor should consider before initiating a rollover as it is one of a few options. An investor should consult with a qualified advisor prior to initiating a transfer or rollover. Customers that wish to participate in the Match are acknowledging the offer is not investment advice and are participating in the Match voluntarily.
Taxes: The Match is treated as taxable income as determined by applicable tax guidance and does not impact contribution limits. Recipient is responsible for any applicable federal, state or local taxes associated with receiving the offer; consult with your tax advisor to determine applicable tax consequences. Each investor's tax situation is unique, and SoFi does not provide tax advice.
Disclosures: SoFi reserves the right to change or terminate the Match at any time without notice. The Match is not transferable, saleable, or valid in conjunction with other offers and is available to U.S. residents for personal, non-commercial use only. Participation in this Match constitutes acceptance of these Terms.
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SoFi Self-directed IRA ACAT 1% Match Terms & Conditions
The SoFi Self-directed IRA ACAT 1% Match is governed by the following Terms & Conditions:
Offer: SoFi will match 1% of a customer's ACAT transfers, subject to a maximum match of $10,000 (equivalent to 1% of up to $1,000,000 in ACAT transfers), into their existing or newly opened SoFi self-directed individual retirement account (IRA) during the Offer Period. Transfers must be maintained in the IRA account for five (5) years from the settlement date. Matches will be paid in cash within 5 business days from the date which the funds settle in your SoFi self-directed IRA account.
Offer Period: The Offer Period is from February 17, 2026 - March 31, 2026, though SoFi may modify, suspend, or terminate the Offer at any time without advance notice.
Eligibility: The Match is available to customers who have an existing or newly opened SoFi self-directed IRA (Traditional IRA or Roth IRA) in good standing during the Offer Period through SoFi Securities LLC. Only asset transfers via ACAT are eligible. The transferred assets must be settled before the end of the Offer Period to be eligible for the match.
Calculations and Payments: Matches will be paid out in cash into the account the ACAT was transferred into within 5 business days of the settlement date. The 1% Match is calculated based on the total assets transferred (via ACAT). The customer's SoFi Invest IRA account must be in good standing to receive the payout.
Example: If you complete an ACAT of $20,000 into a SoFi Self-directed Traditional IRA during the Offer Period, you will be matched 1%, equaling $200.
Limitations: This Offer may not be combined with any other offers. The Match will not exceed $10,000 (equivalent to 1% of up to $1,000,000 in ACAT transfers). Qualifying deposits must remain in the SoFi IRA account that earned the Match for five (5) years to keep the entire match amount. If a member makes a withdrawal before the five (5) year Holding Period is complete, they will be subject to an early withdrawal fee and SoFi will remove a proportional amount of the Match from the member's account. The proportional amount is based on the breach in retention value, not retention period.
To avoid this fee, the total equity of the member's account ("total equity") must remain at the original pre-promotion total equity in the account, plus the qualifying deposit and match amount. If a withdrawal causes the total equity to fall below this combined amount, the fee will be applied. The fee will also apply if the member initiates a withdrawal and the total equity has decreased, for any reason including investment losses. Distributions required by law (e.g., required minimum distributions in IRAS) can also trigger the fee. However, the fee will not apply if the member's total equity has risen by an amount greater than the withdrawal amount, either by investment gains or additional deposits.
The proportional early withdrawal fee is deducted from the requested withdrawal amount. In the event of an ACAT transfer out, there will be an early withdrawal fee for the entire match amount. If insufficient cash is available in this account, the fee will be debited from an outgoing financial institution or added to a margin balance. SoFi reserves the right to liquidate securities to pay for this early withdrawal fee. SoFi will also bill an ACAT out fee separate from an early withdrawal fee. For additional details on the SoFi fee schedule click here.
Examples:
| Asset Transfer (ACAT) | 1% Match | Total Equity Balance | Withdrawal Date | Withdrawal Amount | Remaining Equity Balance | Early Withdrawal Fee |
|---|---|---|---|---|---|---|
| $20,000 | $200 | $20,200 | 5+ years from deposit date | -$2,000 | $18,200 | $0 (earned full match amount) |
| $20,000 | $200 | $20,200 | Less than 5 years from deposit date | -$2,000 | $18,200 | $19.80 |
| $20,000 | $200 | $25,000 Account balance increases due to investments | Less than 5 years from deposit date | -$2,000 | $23,200 | $0 |
| $20,000 | $200 | $15,000 Account balance decreases due to investments | Less than 5 years from deposit date | -$2,000 | $13,000 | $71.29 |
Fraud and Violations: SoFi reserves the right to decline, rescind, or delay granting the 1% Match if fraudulent activity or violations of these Terms are suspected. SoFi will liquidate any security to recover the match amount if required.
Not a Recommendation: This Match is not a recommendation to buy, sell, or hold any security, nor is the Offer a recommendation or endorsement of any investment strategy. The Match is not a recommendation that a customer rollover or transfer assets into a SoFi IRA, nor a recommendation for any specific account type. There are many factors that an investor should consider before initiating a rollover as it is one of a few options. An investor should consult with a qualified advisor prior to initiating a transfer or rollover. Customers that wish to participate in the Match are acknowledging the offer is not investment advice and are participating in the Match voluntarily.
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Traditional IRA Contribution Limits
IRA Accounts > Traditional IRA > 2025-2026 Traditional IRA Contribution Limits
2025-2026 Traditional IRA contribution limits.
The contribution limit for a traditional IRA in 2025 is $7,000 or $8,000 for those age 50 and older. In 2026, the limit is $7,500 or $8,600 for those age 50 and older.
2025 and 2026 Traditional IRA contribution limits.
| 2025 contribution limits* | 2026 contribution limits* | |
|---|---|---|
| Under age 50 | $7,000 | $7,500 |
| Age 50 or older | $8,000 | $8,600 |
*Source: IRS Contribution Limits1, IRS 2026 Updates2
Tip: The annual IRA contribution limit applies to all your IRA accounts combined, including both Traditional and Roth IRAs.
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Eligibility criteria for traditional IRA contributions.
There are some criteria regarding income eligibility that you should be aware of as you’re getting ready to make contributions to a traditional IRA.
Contributions must be made with earned income.
The following are IRS-approved sources of earned income:
• Wages, salaries, and tips from which federal income taxes are withheld.
• Income from a job from which an employer did not withhold taxes, such as freelance work.
• Self-employed income.
Traditional IRAs have no income limit.
In other words, no matter how much money you make, you can contribute to a traditional IRA. By contrast, Roth IRAs do have income limits.
No age limit.
There is no age limit to contribute to a traditional IRA. -
2025 Traditional IRA income and tax deductibility limits.
While income doesn’t determine eligibility to contribute to a traditional IRA, it can have an impact on deductible contributions if an individual or their spouse has a retirement plan at work and their income exceeds a certain level. The chart below outlines traditional IRA contributions limits for 2025 based on filing status and whether you or your spouse are covered by an employer-sponsored retirement plan.
| Filing status | Modified adjusted gross income (MAGI) | Deduction limit |
|---|---|---|
| Single or head of household (and you are covered by an employer-sponsored retirement plan.) | $79,000 or less | Full deduction |
| More than $79,000 and less than $89,000 | Partial deduction | |
| $89,000 or more | No deduction | |
| Married filing jointly (and you are covered by an employer-sponsored retirement plan.) | $126,000 or less | Full deduction |
| More than $126,000 but less than $146,000 | Partial deduction | |
| $146,000 or more | No deduction | |
| Married filing jointly (and your spouse is covered by an employer-sponsored retirement plan.) | $236,000 or less | Full deduction |
| More than $236,000 but less than $246,000 | Partial deduction | |
| $246,000 or more | No deduction | |
| Married filing separately (and you or your spouse are covered by an employer-sponsored retirement plan.) | Less than $10,000 | Partial deduction |
| $10,000 or more | No deduction |
Tip: For help determining your Roth IRA contribution limits,
use our simple IRA contribution calculator.
2026 Traditional IRA income and tax deductibility limits.
| Filing status | Modified adjusted gross income (MAGI) | Deduction limit |
|---|---|---|
| Single or head of household (and you are covered by an employer-sponsored retirement plan.) | $81,000 or less | Full deduction |
| More than $81,000 and less than $91,000 | Partial deduction | |
| $91,000 or more | No deduction | |
| Married filing jointly (and you are covered by an employer-sponsored retirement plan.) | $129,000 or less | Full deduction |
| More than $129,000 but less than $149,000 | Partial deduction | |
| $149,000 or more | No deduction | |
| Married filing jointly (and your spouse is covered by an employer-sponsored retirement plan.) | $242,000 or less | Full deduction |
| More than $242,000 but less than $252,000 | Partial deduction | |
| $252,000 or more | No deduction | |
| Married filing separately (and you or your spouse are covered by an employer-sponsored retirement plan.) | Less than $10,000 | Partial deduction |
| $10,000 or more | No deduction |
What Happens If You Contribute Too Much?
This error can be costly. Excess funds are taxed at 6% for each year they remain in the IRA. However, individuals can avoid this tax by withdrawing excess contributions by the due date of their individual tax return. They must also withdraw any income earned on the excess funds during that period. However you will need to report those earnings as income on your tax return. And you may have to pay a 10% penalty for early withdrawal of the earnings if you are under age 59½.
Strategies to Avoid Excess Contributions
It’s also important to be aware that the IRA contribution limit is a combined maximum for all the IRAs you may have, including Roth IRAs. So your contributions to a traditional IRA and a Roth IRA cannot exceed the overall yearly contribution limit, which in 2025 is $7,000 for those under age 50 and $8,000 for those 50 and older. In 2026, those limits change to $7,500 for those under age 50 and $8,600 for those 50 and older.
FAQ
Is there an income limit to contribute to a traditional IRA?
No, there is no income limit to contribute to a traditional IRA. Individuals, regardless of their income, can contribute $7,000 to a traditional IRA in 2025 (or $8,000 if they are age 50 or older). In 2026, they can contribute $7,500 to a traditional IRA in 2025 (or $8,600 if they are age 50 or older).
Does contributing to a traditional IRA reduce taxable income?
Contributing to a traditional IRA may reduce your taxable income for the year. However, some or all of your contributions may be ineligible for tax deduction depending on your income and whether or not you or a spouse is covered by a retirement plan at work.
Can I max out a 401(k) and a traditional IRA in the same year?
Yes, you can max out a 401(k) and a traditional IRA in the same year. You can contribute up to $23,500 to a 401(k) in 2025 (or up to $31,000 for those age 50 and older), and you can also contribute up to $7,000 in a traditional IRA (or up to $8,000 for those 50 and older) in 2025.
For 2026, you can contribute up to $24,500 in a 401(k) (or up to $32,500 for those age 50 and older), and you can also contribute up to $7,500 in a traditional IRA (or up to $8,600 for those 50 and older).
Note that those age 60-63 may contribute a higher 401(k) catch-up contribution of up to $11,250 in both 2025 and 2026 due to a SECURE 2.0 provision.
Also, under a new law that went into effect on January 1, 2026 as part of SECURE 2.0, individuals aged 50 and older who earned more than $150,000 in FICA wages in 2025 are required to put their 401(k) catch-up contributions into a Roth 401(k) account.
Article Sources
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1 Internal Revenue Service.
“Retirement Topics – IRA Contribution Limits”
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2 Internal Revenue Service.
“401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500”
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