FILE-A sign marks the front of the Internal Revenue Service (IRS) headquarters building on January 30, 2024, in Washington, DC. (Photo by J. David Ake/Getty Images)

The Internal Revenue Service has announced new 401K and individual retirement account contribution limits that take effect next year.

In 2026, the amount individuals can contribute to their 401K will increase to $24,500, up from 23,500 this year, according to an IRS release on Thursday.

The agency also issued guidance for all cost‑of‑living adjustments impacting dollar limitations for pension plans and other retirement-related items for 2026.

The annual contribution limit for workers who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan is increased to $24,500, up from $23,500 for 2025.

For employees 50 years old and older who participate in most 401(k), 403(b), governmental 457 plans, the catch-up contribution limit for these accounts will rise to $8,000 in 2026.  Additionally, the limit on annual contributions to an IRA has been increased to $7,500 from $7,000.

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Meanwhile, there's an IRA catch-up contribution for people 50 and older, and it includes a cost-of-living adjustment of $1,100, up from $1,000 in 2025.

The IRS explains on its website that taxpayers can deduct contributions to a traditional IRA if they meet certain requirements.

IRS officials state that during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, which is contingent on filing status and income.