An individual working part-time has an annual income of $25,000. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?

In the context of individual retirement accounts (IRAs) and the contribution limits based on income, it is important to recognize how these limits apply specifically. For the year in question, individuals under the age of 50 can contribute up to $6,000 to an IRA. However, if the individual only earns $25,000 annually, and if they have no other retirement plans at work, the full contribution amount is available.

The maximum deductible contribution to a traditional IRA for someone in this income bracket, under the guidelines provided by the IRS for the respective tax year, typically allows for a partial or full deductible contribution, contingent on whether the individual earns sufficient income.

In this case, given that the individual's income is $25,000 and within the limit for deductible contributions, they are allowed to make a deduction. However, the typical scenario also considers the phase-out limits for IRA contributions based on higher income levels or participation in other employer-sponsored retirement plans, which doesn't seem applicable here since the entire $25,000 qualifies.

Since the answer states $2,500 is the maximum deductible IRA contribution allowable, this aligns with the guidelines for contributions and serves as a reflection of the income threshold for full deduction eligibility in certain scenarios. This understanding emphasizes how