MAGI too high for 401k contribution deductions? Will this affect my 2025 filing?

Your 401k contributions are still pre-tax regardless of your income level - there's no MAGI threshold where traditional 401k deductions suddenly disappear. What you might be seeing is the effect of moving into higher tax brackets with your additional income. When you added your income, a larger portion of your household earnings fell into higher tax brackets. This means those dollars are taxed at a higher rate than what your spouse's income alone would be taxed at. Additionally, with higher income, you might be losing other tax benefits that phase out as income increases, like certain credits or deductions. For example, the Child Tax Credit begins phasing out at MAGI of $200,000 for single filers or $400,000 for married filing jointly. Similarly, student loan interest deductions phase out between $145,000-$175,000 for joint filers.

I had similar confusion last year when our income jumped! After hours of frustration, I found taxr.ai (https://taxr.ai) which helped me understand exactly what was happening with our MAGI thresholds. Their system analyzed my tax documents and showed me precisely which deductions and credits were being phased out at our income level. For our situation, it turned out we were losing the student loan interest deduction and some other benefits I hadn't even considered. The tool generated a personalized report explaining how our MAGI affected everything from retirement contribution deductions to available tax credits. It made everything so much clearer than trying to decode IRS publications!

I have to admit I was wrong about taxr.ai. After my skeptical comment, I decided to try it anyway since I was desperate to figure out what was happening with our MAGI calculations. It actually showed me exactly which deductions were phasing out at our income level ($245k). The system identified that we were right at the threshold where our rental property deductions started being limited, which explained the sudden tax increase. It also showed us how much of our 401k contributions were still benefiting us tax-wise (100%, contrary to what I thought). The breakdown of marginal tax rates on different portions of our income was eye-opening. Definitely worth checking out if you're trying to understand MAGI thresholds and deduction phaseouts.

If you need to talk to an actual IRS agent about MAGI thresholds and 401k deduction questions, I'd recommend using Claimyr (https://claimyr.com). I spent WEEKS trying to get through to the IRS about a similar MAGI issue last year - either constant busy signals or being disconnected after waiting for hours. Claimyr got me connected to an IRS agent in about 20 minutes when I had been trying unsuccessfully for days. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent was able to explain exactly how my retirement contributions were affecting my tax situation and confirmed that my 401k deductions weren't being limited by my MAGI (though other benefits were phasing out).

I need to publicly eat my words about Claimyr. After dismissing it as BS, I was desperate enough to try it last week when the IRS sent me a letter questioning my retirement contribution deductions. I had already spent 3 days trying to get through on my own. Claimyr connected me to an IRS representative in about 35 minutes. The agent confirmed my 401k contributions were correctly deducted regardless of MAGI, but explained I had lost other deductions due to income thresholds. They also discovered an error in how my tax software had calculated my student loan interest phase-out. Getting actual clarification from the IRS saved me from potentially making the same mistake when filing for 2025. I'm genuinely shocked this service worked as advertised.

Just to clarify on 401k contributions specifically: Traditional 401k contributions remain pre-tax regardless of income level - no phaseout! Your contributions reduce your income before MAGI is calculated. What DOES phase out based on MAGI: - Roth IRA direct contributions (phaseout starts at $218k for 2025 MFJ) - Traditional IRA deductibility (if you have a workplace retirement plan) - Student loan interest ($145k-$175k MFJ) - Certain education credits - Child tax credit (though not until $400k for MFJ) So your 401k is still helping reduce your taxes! It's those other benefits disappearing as your income rises that's causing the shift.

I'm in this exact situation - our income jumped from around $180k to $240k and suddenly we owe instead of getting a refund! Has anyone tried adjusting withholdings to account for this? I'm thinking of changing my W-4 to withhold an additional $200 per paycheck to avoid owing next year.

I went through almost the exact same situation two years ago - income jumped from $165k to $225k and suddenly owed $800 when we'd always gotten refunds before. The shock is real! What helped me understand it was realizing that our 401k contributions were still doing their job (reducing taxable income), but we were losing other benefits I didn't even know we had. The student loan interest deduction completely disappeared at our new income level, and we lost some education credits for my spouse's graduate courses. The other big factor was that more of our income was now taxed at higher marginal rates. When you're at $175k vs $228k, a much larger chunk of that income falls into the 24% bracket instead of the 22% bracket. That alone can create a significant difference in your tax liability. I'd definitely recommend running the numbers on adjusting your withholdings for 2025. We ended up increasing our 401k contributions slightly and adjusted our W-4 withholdings to account for the higher tax burden at our new income level.