Not all married couples earn dual incomes. For example, during the course of a marriage, one spouse may leave the workforce to care for a family member or tend to his or her own health issues. Regardless of why you left and whether it’s temporary or long-term, you might still want to save for retirement while your spouse continues working.

The good news is you can do just that with a “spousal” IRA — which, among other requirements, must be set up in the nonworking spouse’s name. Even better, you generally have until April 15, 2026, to make eligible IRA contributions for 2025. In some situations, these contributions can reduce taxable income when filing your 2025 joint return. Let’s dive into what you and your working spouse need to know.

Rules for Nonworking Spouses

For the 2025 tax year, a nonworking spouse can potentially make a deductible traditional IRA contribution of up to $7,000 ($8,000 for individuals who were age 50 or older as of December 31, 2025). However, to make a spousal IRA contribution, you must meet two requirements:

1. You and your spouse must file a joint return.
2. Your combined earned income must at least equal the sum of your and your spouse’s combined contributions.

But here’s where it gets a bit tricky. If your working spouse participates in a qualified retirement plan through a job or self-employment, the deductibility of your spousal IRA contribution is phased out for the 2025 tax year between joint modified adjusted gross income (MAGI) of $236,000 to $246,000. Contact your tax advisor for help calculating MAGI for this purpose.

If your working spouse is not covered by a qualified retirement plan through a job or self-employment, you — as the nonworking spouse — can make a deductible traditional IRA contribution. In this situation, there are no limitations on your joint MAGI.

For instance, say you’re a stay-at-home parent who’s 40 years old. You and your spouse file jointly, and your joint MAGI is $230,000 for 2025. All income comes from your spouse’s employer, which sponsors a qualified retirement plan that your spouse participates in, but you don’t. In this scenario, for the 2025 tax year, you can make a deductible contribution of up to $7,000 to a traditional spousal IRA because your joint MAGI is below the $236,000 deduction phaseout threshold, and your spouse supplies the requisite earned income.

Alternatively, under the same circumstances, let’s say your joint 2025 MAGI is $250,000. In this case, you can’t make a deductible contribution to a traditional spousal IRA because your joint MAGI exceeds the $246,000 deduction phaseout ceiling. However, you can make a nondeductible contribution regardless of how high your joint MAGI might be.

Rules for Working Spouses

Now let’s look at things from your working spouse’s perspective. If neither you nor your partner participates in a qualified retirement plan through a job or self-employment, your working spouse can make a deductible contribution of up to $7,000 for the 2025 tax year to a traditional IRA set up in his or her name. The limit increases to $8,000 if your spouse was age 50 or older as of December 31, 2025. The only limitation is that you must together have enough earned income to at least match the combined amount of your contributions. All the requisite earned income can come from the working spouse.

On the other hand, say your working spouse does participate in a qualified retirement plan. In this case, his or her ability to make a deductible traditional IRA contribution for the 2025 tax year is phased out between joint MAGI of $126,000 and $146,000.

Hypothetical Examples

Timothy and Tamara are joint filers who turned 40 in 2025. The couple has a joint MAGI of $175,000 for 2025. All the couple’s income comes from Tamara’s employer, which sponsors a qualified retirement plan that she participates in, but Timothy doesn’t participate in a plan. For the 2025 tax year, Tamara, the working spouse, can’t make a deductible traditional IRA contribution because the couple’s joint MAGI exceeds the applicable deduction phaseout ceiling ($146,000). However, she can make a nondeductible contribution to a traditional IRA.

As the nonworking spouse, Timothy can make a deductible contribution of up to $7,000 to an eligible traditional spousal IRA. Why? Because the couple’s joint MAGI is below the deduction phaseout threshold for nonworking spouses ($236,000).

Here’s a different example: Addie, a 35-year-old nonworking spouse, and Adam, her 40-year-old working spouse, have a joint MAGI of $800,000 for 2025. Neither Addie nor Adam participates in a qualified retirement plan. Despite the couple’s high joint MAGI, they can each make a deductible traditional IRA contribution of up to $7,000 for the 2025 tax year.

Roth IRA Contributions

Tax deductibility isn’t an issue with Roth IRA contributions. You make those contributions with after-tax dollars, and you’re subject to the same annual contribution limits as those for traditional IRAs. The Roth IRA tax advantage is at the back end. You can withdraw all your Roth account earnings — along with the sum of your annual contributions — tax-free after age 59½ as long as you’ve had at least one Roth IRA open for more than five years. Withdrawals that pass these tests are called “qualified Roth distributions.”

However, eligibility to contribute to a Roth IRA for the 2025 tax year is phased out between MAGI of $236,000 to $246,000 for joint filers. Also, you must have enough earned income to at least match the combined amount of Roth contributions made by you and your spouse. Again, all the earned income can come from one working spouse. Roth IRA contribution eligibility doesn’t depend on whether you or your spouse participates in a qualified retirement plan.

Important: Be aware that the $7,000 contribution limit ($8,000 if you were age 50 or older as of December 31, 2025) is the combined limit for traditional IRA contributions (whether deductible or not) and Roth IRA contributions for the 2025 tax year. So, if you contribute the maximum to a Roth IRA, you can’t contribute anything to a traditional IRA. If you contribute the maximum to a traditional IRA, you can’t contribute anything to a Roth IRA.

If your joint MAGI is too high to make a deductible traditional IRA contribution, but low enough to make a Roth contribution, it’s often better to make a Roth contribution rather than a nondeductible traditional IRA contribution. The reason: You can withdraw accumulated Roth account earnings as tax-free qualified distributions — assuming you pass the qualified distribution tests. In contrast, earnings that accumulate in a traditional IRA, including one funded solely with nondeductible contributions, are fully taxable when withdrawn.

Even if your joint MAGI permits making deductible traditional IRA contributions, you may still want to consider making Roth IRA contributions, depending on your current and expected future tax bracket. After all, a Roth IRA features future tax-free withdrawals while a traditional IRA only sets you up for future taxable withdrawals.

Beneficial Decisions

Leaving the workforce doesn’t mean you have to stop saving for retirement. However, as you can see, the rules for contributing to traditional and Roth IRAs can be complex depending on your situation. For best results, work closely with your Isdaner tax advisor to make decisions that achieve your retirement goals and optimize your tax outcomes.