Weather 
Your nest egg just got a bit bigger.
Starting next year, Americans can contribute up to $25,500 to their 401(k) accounts — a $1,000 increase from $24,500 in 2026. This allows workers to have more room to save for retirement through their employers.
Depending on tax circumstances, Americans can secure more cash for retirement while potentially reducing their taxable income — and all they need to do is change a digit through their online investment portal.
“Along with the Working Families Tax Cuts, this increase in the pension limitations will help American families keep more of their hard-earned income,” IRS CEO Frank J. Bisignano said in a press release. “With the new adjustment in place now, the IRS is giving taxpayers and employers the information needed to make retirement planning decisions for the year ahead.”
The change does not mean that folks will see $1,000 from the government. The move simply allows Americans to contribute more of their own money to tax-advantaged retirement accounts.
According to the IRS, the annual contribution limit applies to the following:
- 401(k) plans
- 403(b) plans (common for teachers and nonprofit employees)
- Governmental 457 plans (for state and local government employees)
- Federal Thrift Savings Plans (for federal workers)
Older workers can also start saving more as people 50 and up will now be able to make additional contributions — called catch-up contributions. This means folks 50 and older will see a contribution cap of $34,000 — an increase of $1,500.
People 60 to 63 may now contribute $37,250 — also a $1,500 boost.
Those with an IRA — a retirement savings account that folks can open themselves rather than an employer-sponsored plan — will see no change.
The IRS said the annual contribution limit remains:
- Under age 50: $7,500
- 50 and older: $8,600 ($7,500 plus the $1,100 catch-up contribution)
Earlier this month, the agency released new tax brackets for 2027, which raise income thresholds for each level after inflation grew. Plus, the standard deduction — the part of income that is untaxed — will also get a bit of a boost of up to $16,600 for individuals and reach $33,200 for married couples filing jointly.
The move marks a $500 increase in the deduction for singletons and a $1,000 hike for married couples filing together.
Additionally, the income threshold for each tax bracket increased by about 3.22% to 3.25%, to account for inflation.
Brackets determine how much income tax workers owe, rising from a 10% rate for the lowest level to 37% for the richest.
The child tax credit — which lets filers with kids reduce their tax liability — is getting an increase of $100, to $2,300.
Because of all the changes heading into the new year, make sure to keep track of your accounts come April.
