The Internal Revenue Service (IRS) has announced that for the tax year 2026, the annual contribution limit for workplace retirement plans like 401(k), 403(b), and most 457 plans will increase to $24,500, up from $23,500 in 2025.
Read more: IRS to disburse $1,390 payments amid inflation, here is how & when you will get
Bigger limits, bigger opportunity
The catch-up contribution limit will rise to $8,000 from $7.500 for participants aged 50 and over.
For the much older participants, aged 60-63, the “super catch-up” limit of $11,250 will remain unchanged, citing the SECURE 2.0 Act mandate.
The annual limit climbs to $7,500 (from $7,000) for 2026, and the catch-up contribution for 50-plus contributors will be $1,100 (up from $1,000) for the individual retirement account(IRA) side.
Additionally, the IRS raised income thresholds for the eligibility phase-out (for deductible traditional IRAs, Roth IRAs) and for the Saver's Credit, allowing moderate-income savers to benefit.
These adjustments reflect annual inflation corrections. The CBS MoneyWatch reports, “Without these increases, people saving for retirement would have a harder time sheltering income from taxes and inflation.”
{{/usCountry}}These adjustments reflect annual inflation corrections. The CBS MoneyWatch reports, “Without these increases, people saving for retirement would have a harder time sheltering income from taxes and inflation.”
{{/usCountry}}Also Read: IRS announces standard deductions for 2026: Key details here
What is driving the change?
The increases are part of the IRA's standard cost-of-living adjustments, the IRS said.
Only 4 out of 10 working Americans say that they are on track to maintain their current lifestyle in retirement, according to Vanguard research cited by CBS News.
According to CBS, however, experts caution that while the legal limits have been increased, many Americans cannot fully take advantage. For example, only roughly 14 % of Americans maxed out their 401(k) contributions in 2024.
According to The Sun, retirement savings advisers say the higher limits provide a renewed opportunity for those who have the capacity to save more. However, they also pointed out that not all employers permit catch-up contributions, and high earners may lose traditional tax-deferral benefits for certain catch-up contributions under secure-2.0 rules.