Maximize Your IRA and HSA Contributions Before Tax Day

As tax season gets closer, it’s a perfect moment to revisit your financial plans and make sure you’re taking full advantage of tax‑favored accounts like IRAs and HSAs. These accounts can offer meaningful tax perks, but you must contribute by the federal filing deadline to count them toward the 2025 tax year. Here’s a clear breakdown to help you make the most of these options before April 15. Getting Ahead With IRA ContributionsAdding money to an IRA before the tax deadline can be a smart move if you’re aiming to build your retirement savings while also reducing your taxable income. For 2025, the contribution limit is $7,000 if you’re younger than 50. Once you hit age 50, you can contribute up to $8,000 thanks to the catch‑up contribution allowance designed to help older savers bolster their retirement funds. These limits apply to the total amount you contribute across all your IRAs. That includes both Traditional and Roth IRAs. In addition, you can’t contribute more than what you earned during the year. However, if you didn’t earn income but your spouse did, you may still be able to contribute through a spousal IRA using your spouse’s earnings. How Traditional IRA Deductions WorkYou can put money into a Traditional IRA regardless of your income level. But whether you can deduct those contributions depends on how much you earn and whether you or your spouse is covered by a retirement plan at work. For example, if you’re single and have access to a workplace retirement plan, you can take the full deduction if your income is $79,000 or less. If you earn between $79,001 and $88,999, you’ll still get a partial deduction. Once your income reaches $89,000, the deduction is no longer allowed. For married couples where both spouses are covered by workplace retirement plans, the full deduction is available if your combined income is $126,000 or less. If your income falls between $126,001 and $145,999, your deduction is reduced. At $146,000 or above, the deduction is eliminated. Even if your contributions don’t qualify for a deduction, your investment earnings can still grow tax‑deferred until you withdraw the money during retirement. Different Rules for Roth IRAsRoth IRAs use a separate set of income‑based rules, and your eligibility to contribute depends entirely on how much you make. If your income is within the lower range, you can contribute the full amount. If your income falls into the mid‑range, your contribution limit phases down. And if your income exceeds the annual threshold, you won’t be able to contribute at all. Since these income limits change from year to year, it’s important to review the updated figures before contributing to your Roth IRA. HSAs: A Tax‑Smart Tool for Healthcare ExpensesIf you’re enrolled in a high‑deductible health plan (HDHP), you qualify for a Health Savings Account, or HSA—one of the most tax‑friendly accounts available. You have until April 15, 2026, to make contributions that count toward the 2025 tax year. The contribution cap for individuals with self‑only coverage is $4,300. For those with family coverage, the limit is $8,550. And if you’re 55 or older, you can add an additional $1,000 as a catch‑up contribution. HSAs come with a rare trio of tax advantages: your contributions may reduce your taxable income, your money grows tax‑free, and withdrawals for qualified medical costs are also tax‑free. Keep in mind that employer contributions count toward your annual limit. Additionally, if you were HSA‑eligible for only part of the year, you may need to prorate your contribution amount—unless you qualify for the “last‑month rule,” which allows you to contribute the full amount as long as you were eligible in December. If you don’t remain eligible the following year, however, you could owe taxes and a penalty. Avoid Exceeding Contribution LimitsGoing over the annual contribution limits for IRAs or HSAs can lead to costly consequences. If excess contributions aren’t corrected, the IRS may impose a 6% penalty for each year the extra funds stay in your account. To avoid this, double‑check the limits and factor in any employer contributions. If you’ve already added too much, you can withdraw the excess before the tax deadline to prevent penalties. Take Action Now to Strengthen Your Financial FutureIRAs and HSAs can be powerful tools for reducing taxes and building long‑term savings, whether for retirement or healthcare needs. But to take advantage of these benefits for the 2025 tax year, you must make your contributions by April 15, 2026. If you’re unsure about how much to contribute or which type of account best suits your situation, a financial professional can help you sort through the details. They can clarify the rules, help you avoid missteps, and ensure you’re maximizing every opportunity. There’s still time to make contributions—but the deadline will be here before you know it. If you’d like help reviewing your options, reach out soon so you can head into tax season prepared and confident.