What Income Qualifies for a Roth IRA: MAGI, Phase-Outs, Backdoor Roth

To contribute to a Roth IRA, you need taxable compensation from work, and your modified adjusted gross income has to fall below the annual cutoffs for your filing status. Wages, self-employment profit, commissions, certain stipends, taxable alimony from pre-2019 divorces, and nontaxable combat pay all qualify as income for a Roth IRA. Investment income, pensions, Social Security, and rental income do not. For 2026, single filers lose access at $168,000 of MAGI and joint filers at $252,000.¹

Earned Income That Qualifies

Federal law limits Roth IRA contributions to money you actively worked for.² The qualifying categories are narrower than most people assume:

Wages and salaries from an employer, including tips and bonuses.
Net self-employment earnings, meaning your Schedule C or Schedule SE profit after business expenses.
Commissions and professional fees tied to sales or services.
Taxable alimony received under a divorce agreement finalized before 2019.³
Nontaxable combat pay. Service members can count this toward Roth IRA eligibility even though it’s excluded from taxable income.⁴
Graduate and postdoctoral stipends included in gross income to support advanced study.²

Your yearly contribution can’t be larger than your qualifying compensation. If you earned $4,000 from a summer job, that’s your ceiling, no matter what the general contribution limit says.⁵ The general limit for 2026 is $7,500, or $8,600 if you’re 50 or older.¹

Income That Does Not Qualify

Passive income won’t get you into a Roth IRA, however large it is. Interest, dividends, and capital gains from investments don’t count. Neither do pension payments, annuity distributions, Social Security benefits, or deferred compensation.³ Rental income is excluded too, even for hands-on landlords.

This catches retirees and early-retirement savers off guard. A year funded entirely by a pension and a brokerage account produces zero eligibility for a direct Roth contribution. The one exception involves a working spouse, covered below.

The MAGI Test on Top of the Earned Income Rule

Having qualifying income gets you in the door. Your modified adjusted gross income decides whether you can walk through it. Start with the adjusted gross income on Line 11 of Form 1040.⁶ Then add back:

Traditional IRA deduction
Student loan interest deduction
Excluded savings bond interest (Form 8815)
Employer-provided adoption benefits excluded from income
Foreign earned income or housing exclusions (Form 2555)

Then subtract any income from converting a traditional IRA to a Roth and any rollovers from employer plans into a Roth.⁷ Conversion income shouldn’t push you out of eligibility to make regular contributions.

For most W-2 employees who don’t claim foreign exclusions or a traditional IRA deduction, MAGI equals AGI. The add-backs only move the number if you actually claimed those deductions.

2026 Income Limits by Filing Status

Single filers and heads of household can contribute the full amount with MAGI below $153,000. Contribution room shrinks between $153,000 and $168,000. Above $168,000, direct Roth contributions stop entirely.¹

Married couples filing jointly, and qualifying surviving spouses, get the full contribution below $242,000. The phase-out runs from $242,000 to $252,000, and above $252,000 neither spouse can make a direct Roth contribution.¹

Married filing separately is treated harshly. If you lived with your spouse at any point during the year, your phase-out range is $0 to $10,000, which blocks nearly everyone in that filing status from contributing. That range is not adjusted for inflation. Spouses who lived apart for the entire year are treated as single filers for this purpose.

These thresholds shift with inflation each year. If your income sits close to the boundary, a year-end bonus, a stock option exercise, or a strong self-employment quarter can push you into or past the phase-out.

How the Phase-Out Reduces Your Contribution

Landing inside the phase-out band doesn’t eliminate your contribution, it shrinks it on a sliding scale. Take the amount your MAGI exceeds the lower threshold, divide by the width of the range ($15,000 for single filers, $10,000 for joint filers), and multiply by the full contribution limit. Subtract that result from the limit to get your reduced cap. The IRS rounds up to the nearest $10, and the minimum reduced contribution is $200 as long as you’re anywhere within the range.⁸

Predicting MAGI in the middle of the year is hard. December income, capital gains distributions from mutual funds, and last-minute deductions all move the final figure. Many people near the phase-out simply wait until early the following year to contribute, once their income is fixed.

Using a Spouse’s Income to Qualify

A non-working or low-earning spouse can still fund a Roth IRA if the couple files jointly and the working spouse has enough earned income to cover both contributions. This spousal contribution is sometimes called the Kay Bailey Hutchison Spousal IRA.⁵

Each spouse can contribute up to $7,500 (or $8,600 at 50 and older), but combined contributions can’t exceed the taxable compensation on the joint return. If one spouse earns $60,000 and the other earns nothing, both can max out. If the working spouse earned $10,000 total, the couple’s combined contributions are capped at $10,000. The joint MAGI limits still apply. The account itself is an ordinary Roth IRA in the non-working spouse’s name.

If You Earn Too Much: The Backdoor Roth

Income above the ceiling doesn’t permanently close the Roth door. There’s no income limit on contributing to a traditional IRA, and no income limit on converting a traditional IRA to a Roth. Combining those two facts creates an indirect path.

You make a nondeductible contribution to a traditional IRA, then convert that balance to a Roth. Because the contribution was after-tax, the conversion itself generally produces little tax, aside from any investment gains that built up between the two steps. Report the nondeductible contribution on Form 8606 with your return.⁹

One trap catches people who already hold pre-tax money in a traditional, SEP, or SIMPLE IRA. The pro-rata rule blocks you from converting only the after-tax dollars. The taxable share of the conversion reflects the ratio of pre-tax to after-tax balances across all your traditional IRAs combined. If 90% of your total traditional IRA balance is pre-tax, 90% of any conversion is taxable. The cleanest backdoor contributions happen when the traditional IRA balance is zero to start.

Fixing an Excess Contribution

People sometimes contribute more than they’re allowed because their income ended up higher than expected or they misjudged the phase-out reduction. The IRS charges a 6% excise tax on the excess for every year it stays in the account.¹⁰ The penalty repeats annually until you fix it.

To avoid the tax, pull out the excess plus any earnings on it by your tax-filing deadline, including extensions.¹¹ The earnings portion is taxable in the year you contributed. You can also recharacterize the excess Roth contribution as a traditional IRA contribution through a trustee-to-trustee transfer before the same deadline. If you already filed, you have six months from the original due date, not counting extensions, to recharacterize and file an amended return.⁹

Roth contributions for the 2026 tax year can be made from January 1, 2026 through April 15, 2027. A tax-filing extension does not extend the contribution deadline itself.

1
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
2
Office of the Law Revision Counsel. 26 USC 219 – Retirement Savings
3
eCFR. 26 CFR 1.408A-3 – Contributions to Roth IRAs
4
Internal Revenue Service. Miscellaneous Provisions – Combat Zone Service
5
Internal Revenue Service. Retirement Topics – IRA Contribution Limits
6
Internal Revenue Service. Adjusted Gross Income
7
Internal Revenue Service. Modified Adjusted Gross Income
8
Office of the Law Revision Counsel. 26 USC 408A
9
Internal Revenue Service. Instructions for Form 8606
10
Office of the Law Revision Counsel. 26 USC 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities
11
Internal Revenue Service. IRA Year-End Reminders