2025 457(b) Contribution Limit
The 2025 457(b) Contribution Limit is $23,500.
Effective 2025-01-01Source: Notice 2024-80 (IRS)Verified 2026-08-29
Compared with 2024
| Item | 2024 | 2025 | Change |
|---|---|---|---|
| Deferral limit | $23,000 | $23,500 | +$500 (+2.2%) |
Who it applies to
Employees of state and local governments and tax-exempt organizations who participate in deferred compensation plans under Section 457.
What changed this year, and why
Effective January 1, 2025, the IRS increased the elective deferral limit under Section 457 to $23,500.
Common questions
- What are Section 457 plans?
- These are deferred compensation plans for employees of state and local governments or tax-exempt organizations, allowing pre-tax contributions that grow tax-deferred until withdrawal.
Every amount on this page is a published figure rather than yours. The 457(b) contribution headroom takes the number you enter and works it out against them, showing which published figure it used.
Your limit is the lesser of the dollar cap and your includible compensation
For 2025, the basic elective deferral limit for a section 457 plan is the lesser of your includible compensation or $23,500. Includible compensation is generally your Form W-2 wages plus any elective deferrals already made. It includes wages, salaries, fees for professional services, certain employer-provided qualified transportation fringe benefits, and other amounts received for personal services performed. Because the limit is the lesser of the two amounts, a participant whose includible compensation for the year falls below $23,500 cannot defer the full dollar cap. Amounts deferred under a section 457 plan count toward the overall elective deferral limit shared with other plans, so contributions elsewhere may reduce what you can put into the 457 plan.
If you’re a participant in a section 457 plan (a deferred compensation plan for employees of state or local governments or tax-exempt organ- izations), you should have deferred no more than the lesser of your includible compensation or $23,500 in 2025.
Publication 525 (2025), Taxable and Nontaxable Income (IRS)
The special catch-up in the last 3 years before normal retirement age
A section 457 plan may allow participants who are within 3 years of normal retirement age to defer more than the basic annual limit. During any or all of those last 3 years before reaching normal retirement age, the plan can provide an increased limit equal to the lesser of twice the annual limit, which is $47,000 for 2025, or the basic annual limit plus any unused portion of the basic limit from prior years. The second option - using the unused basic limit - is only available if the participant is not also using age 50-or-over catch-up contributions for the same year. This special catch-up is determined by the plan's own definition of normal retirement age, so the window of eligibility varies by plan.
Increased limit. During any, or all, of the last 3 years ending before you reach normal re- tirement age under the plan, your plan may pro- vide that your limit is the lesser of: 1. Twice the annual limit ($47,000 for 2025), or 2. The basic annual limit plus the amount of the basic limit not used in prior years (only allowed if not using age 50-or-over catch-up contributions).
Publication 525 (2025), Taxable and Nontaxable Income (IRS)
The age 50 catch-up, and who can use it
Participants in governmental section 457 plans who have reached age 50 may be eligible for additional catch-up contributions beyond the standard deferral limit. To qualify, you must have reached age 50 by the end of the year, and no other elective deferrals can be made for you to the plan because of other limits or restrictions that would otherwise apply. If you meet these conditions, you can make additional elective deferrals above the basic $23,500 limit. This catch-up provision is available only to participants in governmental section 457 plans, not to those in plans maintained by tax-exempt organizations. The age 50 catch-up allows older workers to increase their retirement savings as they approach traditional retirement age. However, if you are within three years of your plan's normal retirement age and your plan provides the increased limit for that period, that alternative limit may be higher than the age 50 catch-up amount. Participants should consult their plan administrator to determine eligibility and the specific catch-up amount available under their plan's terms.
Catch-up contributions. You can gener- ally have additional elective deferrals made to your governmental section 457 plan if: • You reached age 50 by the end of the year, and • No other elective deferrals can be made for you to the plan for the year because of lim- its or restrictions.
Publication 525 (2025), Taxable and Nontaxable Income (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Notice 2024-80 (IRS)
- Deferral limit
The limitation on deferrals under section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is increased from $23,000 to $23,500.