You Still Have Time to Make Tax-Deductible Contributions to Lower Your 2024 Tax Bill

A traditional IRA allows you to make tax-deductible contributions. William Potter/Shutterstock

An individual retirement account (IRA) offers some distinct tax advantages. One rule allows you to claim a tax deduction for the previous year for IRA contributions made in the following year up until a certain point in time.

For tax year 2024, you have until April 15, 2025, to contribute to an IRA up to the maximum. The current contribution limit for IRAs is $7,000. If you’re age 50 or older, you can make additional catch-up contributions of $1,000 for a total of $8,000.

This is important due to the mechanisms of IRAs.

IRA Tax Advantages

A traditional IRA allows you to make tax-deductible contributions. This means it can help you lower your tax bill or increase your refund. Although 2024 is over, you still have until April 15, 2025, to make tax-deductible contributions for that year.

This means you can open a traditional IRA today and continue making contributions for the 2024 tax year.

How to Open a Tax-Advantaged IRA

You can easily open a traditional IRA online through one of the nation’s top brokers or banks. Most IRAs allow you to invest in virtually any security permitted by the IRS. This includes stocks, bonds, mutual funds, and exchange-traded funds (ETFs).

Some IRA providers even let you invest in alternative investments. You get to choose and manage your own investments with an IRA. But for the truly hands-off investor, many brokers allow you to have a robo-advisor manage an IRA for you.

Robo-advisors are digital platforms that recommend and manage a diversified portfolio based on your individual investment goals and time horizon. But whether you manage your own IRA or delegate investment management to an algorithm, its tax benefits remain the same.

And while tax-deductible contributions are key perks of a traditional IRA, there are other tax deductions you can take advantage of.

Key Tax Deductions

Tax deductions allow you to reduce your taxable income for the year. You typically have the option of taking the standard deduction or itemized deductions.

The standard deduction is a flat-dollar amount you can subtract from your taxable income. And it has increased because of President Donald Trump’s Tax Cuts and Jobs Act (TCJA).

For tax year 2024, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly. Most taxpayers take the standard deduction. But those with more complex tax situations may find that itemizing deductions could end up being more beneficial.

In this case, you can ignore the standard deduction and begin itemizing deductions. There are several types of itemized deductions. So let’s take a look at some of the most common ones.

One is the medical expense tax deduction. This allows you to deduct unreimbursed medical expenses that exceed 7.5 percent of your adjusted gross income (AGI). However, you can’t deduct expenses covered by your health insurance plan, a health savings account (HSA), or flexible spending account (FSA).

Still, there’s a variety of out-of-pocket expenses you can deduct such as the following:

• surgeries
• artificial limbs
• body scans
• chiropractors
• dental and vision services
• glasses, contacts
• hearing aids
• false teeth
• prescription drugs
• psychologist and psychiatrist visits
• service animals

Another common one is the mortgage interest deduction. This allows you to subtract from your taxable income the amount you paid in interest on your mortgage for a specific tax year.

In 2024, you can deduct the mortgage interest you paid on the first $750,000 of your mortgage debt on your main or second home. The cap lowers to the first $375,00 if you’re married but file separately.

You can also take advantage of the property tax deduction. This lets you deduct the property taxes you pay on your main residence and any other real estate. But the total amount of deductible state and local income taxes, which includes property taxes, is capped at $10,000 per year.

The Bottom Line

You have until April 15, 2025, to make tax-deductible contributions to your traditional IRA to count toward tax year 2024. You can also take the standard deduction to lower your taxable income. Or you can take itemized deductions like the medical expense deduction and the property tax deduction.

But before you file your taxes, take a look at ways to get tax help for free in 2025. You can also check out our guide on what to know about the 2025 tax season for more tips.

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