The worst holiday of the year, Tax Day, is almost upon us. But there’s some good news: If you haven’t filed your 2025 tax return yet, there’s still time to cut your tax bill by contributing to an IRA.

Opening an IRA takes about 10 minutes, and the payoff is huge — you could save hundreds or thousands up front, and far more than that in the long term.

Here’s exactly how to do it.

First: What is an IRA, and why open one now?

An IRA (individual retirement account) is a tax-advantaged account for retirement savings. With a “traditional” IRA, you can deduct your contributions from your taxable income. Contribute $7,000, and you could cut your federal tax bill by over $1,500, depending on your tax bracket.

There are long-term tax benefits, too. Dividends and capital gains — that is, profits from selling investments — within the account are not taxed. That could save you huge sums of money over the course of years.

When you put money in an IRA between Jan. 1 and April 15, your broker gives you a choice: apply the contribution to this year or to last year. So you can still make a 2025 IRA contribution and reduce your upcoming tax bill (or increase any refund you may be getting).

Ready to open an IRA? Here’s how.

Step 1: Pick a broker

The best brokers make it easy to open an IRA online with no minimum deposit and low fees. Beyond that, look for:

  • A wide range of investments. You’ll want access to stocks, ETFs, index funds, and bonds at minimum.
  • Research and educational tools. If you’re new to investing, these can help you choose where to put your money. If you’re a veteran, you may want advanced modeling and stock screening tools.
  • A good mobile app. Handy if you want to check on your account or make contributions on the go.

Not sure where to start? See our list of the best IRA brokers to compare your options.

Step 2: Open your account

Once you’ve picked a broker, head to their website or app and open a traditional IRA. You’ll need:

  • Your Social Security number
  • Your address and date of birth
  • Your bank account and routing number

Most brokers walk you through this in just a few minutes.

Step 3: Fund your account

Link your bank account and transfer money into your IRA. When you do, your broker will ask which tax year to apply the contribution to — make sure you select 2025.

For 2025, you can contribute up to $7,000 if you’re under 50, or $8,000 if you’re 50 or older.

One important note: ACH transfers between banks typically take one to three business days. To make sure your money arrives before the April 15 deadline, try to initiate your transfer by April 9.

Step 4: Choose your investments

This is the step many people skip, but it matters. Money sitting in an IRA uninvested earns a low interest rate. To grow your retirement fund, you need to actually invest it.

A simple starting point for most people is an S&P 500 Index ETF. These track the 500 biggest companies in the U.S. stock market, offer built-in diversification, and typically come with very low fees.

Many brokers also offer target-date funds, which automatically adjust your investment mix as you get closer to retirement — a solid hands-off option.

Once you’ve made your initial investment, consider setting up automatic monthly contributions. That keeps you investing consistently with no effort.

A couple more things to know

If you have a retirement plan through your employer, your traditional IRA contribution may not be fully deductible, depending on your income. Check out our list of IRA rules for the details, and consult a tax professional if you need advice.

Also worth knowing: there’s another type of IRA called a Roth IRA. You don’t get a tax deduction up front, but your withdrawals in retirement are tax-free. It’s a great option if you expect to be in a higher tax bracket later in life. It may also give you some peace of mind, since no one knows for sure how high tax rates will be in the future — or how tight their budget may be as a retiree.

Don’t wait — the deadline is almost here

Opening an IRA today could lower your 2025 tax bill and set you up for a stronger retirement. The hardest part is picking investments and keeping tabs on them over time. But opening and funding your account couldn’t be easier.

Check out our list of the best IRA brokers and open your account in minutes.

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