Figuring the Nontaxable and Taxable Amounts: IRA Withdrawals (2025 IRS Guide)

This guide covers “Figuring the Nontaxable and Taxable Amounts” within ira withdrawals. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs), published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Figuring the Nontaxable and Taxable Amounts

If your traditional IRA includes nondeductible contributions and you received a distribution from it in 2025, you must use Form 8606 to figure how much of your 2025 IRA distribution is tax free.

Note:

When figuring the nontaxable and taxable amounts of distributions made prior to death in the year the IRA account owner dies, the value of all traditional (including SEP and SIMPLE) IRAs should be figured as of the date of death instead of December 31.

Contribution and distribution in the same year.

If you received a distribution in 2025 from a traditional IRA and you also made contributions to a traditional IRA for 2025 that may not be fully deductible because of the income limits, you can use Worksheet 1-1 to figure how much of your 2025 IRA distribution is tax free and how much is taxable. Then, you can figure the amount of nondeductible contributions to report on Form 8606. Follow the instructions under Reporting your nontaxable distribution on Form 8606 next to figure your remaining basis after the distribution.

Reporting your nontaxable distribution on Form 8606.

To report your nontaxable distribution and to figure the remaining basis in your traditional IRA after distributions, you must complete Worksheet 1-1 before completing Form 8606. Then, follow these steps to complete Form 8606.

1. Use Worksheet 1-2 in chapter 1 of Pub. 590-A, or the IRA Deduction Worksheet in the Form 1040 instructions to figure your deductible contributions to traditional IRAs to report on Schedule 1 (Form 1040), line 20.

2. After you complete Worksheet 1-2 in chapter 1 of Pub. 590-A or the IRA Deduction Worksheet in the Form 1040 instructions, enter your nondeductible contributions to traditional IRAs on line 1 of Form 8606.

3. Complete lines 2 through 5 of Form 8606.

4. If line 5 of Form 8606 is less than line 8 of Worksheet 1-1, complete lines 6 through 15c of Form 8606 and stop here.

5. If line 5 of Form 8606 is equal to or greater than line 8 of Worksheet 1-1, follow instructions 6 and 7 next. Don't complete lines 6 through 12 of Form 8606.

6. Enter the amount from line 8 of Worksheet 1-1 on lines 13 and 17 of Form 8606.

7. Complete line 14 of Form 8606.

8. Enter the amount from line 9 of Worksheet 1-1 (or, if you entered an amount on line 11, the amount from that line) on line 15a of Form 8606.

Worksheet 1-1. Figuring the Taxable Part of Your IRA Distribution

• 
  Use only if you made contributions to a traditional IRA for 2025 that may not be fully deductible and have to figure the taxable part of your 2025 distributions to determine your modified AGI. See Limit if Covered by Employer Plan in chapter 1 of Pub. 590-A.

  Form 8606 and the related instructions will be needed when using this worksheet.

  Note. When used in this worksheet, the term “outstanding rollover” refers to an amount distributed from a traditional IRA as part of a rollover that, as of December 31, 2025, hadn't yet been reinvested in another traditional IRA, but was still eligible to be rolled over tax free.

Example.

Rose Green has made the following contributions to her traditional IRAs.

Rose needs to complete Worksheet 1-1 to determine if her IRA deduction for 2025 will be reduced or eliminated. In 2025, she makes a $2,000 contribution that may be partly nondeductible. She also receives a distribution of $5,000 for conversion to a Roth IRA. She completed the conversion before December 31, 2025, and didn’t recharacterize any contributions. At the end of 2025, the fair market values of her accounts, including earnings, total $20,000. She didn't receive any tax-free distributions in earlier years. The amount she includes in income for 2025 is figured on Worksheet 1-1.

Worksheet 1-1. Figuring the Taxable Part of Your IRA Distribution—Illustrated

• Use only if you made contributions to a traditional IRA for 2025 that may not be fully deductible and have to figure the taxable part of your 2025 distributions to determine your modified AGI. See Limit if Covered by Employer Plan in chapter 1 of Pub. 590-A.

  
  Form 8606 and the related instructions will be needed when using this worksheet.

  Note. When used in this worksheet, the term “outstanding rollover” refers to an amount distributed from a traditional IRA as part of a rollover that, as of December 31, 2025 hadn't yet been reinvested in another traditional IRA, but was still eligible to be rolled over tax free.

The illustrated Form 8606 for Rose shows the information required when you need to use Worksheet 1-1 to figure your nontaxable distribution. Assume that the $500 entered on Form 8606, line 1, is the amount Rose figured using instructions 1 and 2 given earlier under Reporting your nontaxable distribution on Form 8606.

Form 8606, page 1 — Nondeductible IRAs 2025

Form 8606, page 1 — Nondeductible IRAs 2025

Summary: This is an example of Form 8606 (2025) with items included as described in the text. Additionally, these line items are completed:

• "Name. If married, file a separate form for each spouse required to file Form 8606. See instructions." field contains Rose Green
• "Your social security number" field contains 001-00-0000
• Under"Part I: Nondeductible Contributions to Traditional IRAs and Distributions From Traditional, SEP, and SIMPLE IRAs":

• "1. Enter your nondeductible contributions to traditional IRAs for 2025 including those made for 2025 from January 1, 2026 through April 15, 2026" field contains 500

  "2. Enter your total basis in traditional IRAs See instructions" field contains 300

  "3. Add lines 1 and 2" field contains 800

  "4. Enter those contributions included on line 1 that were made from January 1, 2026, through April 15, 2026" field contains 0

  "5. Subtract line 4 from line 3" field contains 800

  "13. Add lines 11 and 12. This is the nontaxable portion of all your distributions" field contains 460 Footnote: From Worksheet 1-1 in Pub. 590-B.

  "14. Subtract line 13 from line 3. This is your total basis in traditional IRAs for 2025 and earlier years" field contains 340

  "15c. Subtract line 12 from line 7. If more than zero, also include this amount on Form 1040, 1040-SR, or 1040-NR, line 4b" field contains 0

• "1. Enter your nondeductible contributions to traditional IRAs for 2025 including those made for 2025 from January 1, 2026 through April 15, 2026" field contains 500
• "2. Enter your total basis in traditional IRAs See instructions" field contains 300
• "3. Add lines 1 and 2" field contains 800
• "4. Enter those contributions included on line 1 that were made from January 1, 2026, through April 15, 2026" field contains 0
• "5. Subtract line 4 from line 3" field contains 800
• "13. Add lines 11 and 12. This is the nontaxable portion of all your distributions" field contains 460 Footnote: From Worksheet 1-1 in Pub. 590-B.
• "14. Subtract line 13 from line 3. This is your total basis in traditional IRAs for 2025 and earlier years" field contains 340
• "15c. Subtract line 12 from line 7. If more than zero, also include this amount on Form 1040, 1040-SR, or 1040-NR, line 4b" field contains 0

Form 8606, page 2— Nondeductible IRAs 2025

Form 8606, page 2— Nondeductible IRAs 2025

Summary: This is an example of Form 8606 (2025) with items included as described in the text. Additionally, these line items are completed:

• Under"Part II: 2025 Conversions From Traditional, SEP, or SIMPLE IRAs to Roth IRAs":
• "16. If you completed Part I, enter the amount from line 8. Otherwise, enter the net amount you converted from traditional, SEP, or SIMPLE IRAs to Roth IRAs in 2025. " field contains 5,000
• "17. If you completed Part I, enter the amount from line 11. Otherwise, enter your basis in the amount on line 16 (see instructions)" field contains 460
• "18. Taxable amount. Subtract line 17 from line 16. Also include this amount on Form 1040, 1040-SR, or 1040-NR, line 4b" field contains 4,540 Footnote: From Worksheet 1–1 in Pub. 590-B.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

• Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs): Traditional IRAs — Are Distributions Taxable? — Figuring the Nontaxable and Taxable Amounts — Internal Revenue Service; 2025 edition.

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.