handsnhearts:
If you AND your spouse were NOT covered by a retirement plan at work, you can take the full deduction regardless of your income level.
https://www.irs.gov/retirement-plans/ira-deduction-limitsIf one of you have access to a retirement account through work and the other does not, the spouse that does not have access can take the deduction as long as the total income is below 184k.
If you are both covered by retirement plans at work, you can't deduct if you made over 98k.
You are correct in your assumption that if you cannot deduct the IRA amount, it will not give you a tax benefit upfront. You can still contribute to a "non-deductible IRA" and defer taxes on the growth portion of the account. When you take withdrawals down the road, you will only have to pay tax on the growth, not the original principle. This requires good recordkeeping. Others might recommend a "backdoor Roth IRA" where you contribute to a non-deductible IRA and then convert that IRA to a Roth IRA. This is applicable for married couples who make more than the 184k income limit for Roth IRAs. I'd do some research and maybe meet with a CPA if you want to go this route.
If you make less than 184k, I would def. do a Roth for both of you. (5,500 each or 6,500 if over age 50)
I would put 529 plans last, you are correct, there is no federal deduction for 529, you are only saving taxes on the growth component of the account. I think these work best when you have a large lump sum to contribute and a long time horizon for the account to grow. However, you do not get a federal tax benefit upfront from these account.
Hope this helps and good luck with your tax planning! Congrats on the high income. That is certainly a good problem.