The Retirement Savings Contributions Credit also known as Saver’s Credit is a tax incentive that encourages lower and moderate-income earners to contribute to retirement accounts. The saver’s credit is worth up to $1000 for individual or single filers and $2000 for married couples filing jointly.
What is Saver’s Tax Credit?
Saver’s Credit is a tax incentive that encourages lower and moderate-income earners to contribute to retirement accounts.
The amount of saver’s credit you get depends on your income level as represented by your adjusted gross income (AGI) and filing status and your contribution.
Depending on your AGI, your saver’s credit rate can be 50%, 20% or 10% of the first $2000 for single filers and $4000 for joint filers which you can contribute to eligible retirement accounts.
Example:
Angel earns $49,000 in tax year 2024 (for filing taxes in 2025) and is married filing jointly. Her husband, John was unemployed and made no income.
Each month, Angel contributes $120 to her traditional IRA and $50 to her 401(k)s, for a total annual contribution of $2040 from both accounts. After deducting her retirement contributions, her income falls within the 20% limit for 2024. She can claim a saver’s credit of 20% which results in $408 credit
Who is Eligible for the Saver’s Tax Credit?
The eligibility criteria are considered for both age, status, and income. To be eligible, Taxpayers;
- Must be 18 years or older
- Must not be claimed as a dependent on another person’s tax return.
- Must not be a student. This means you should not take full-time classes or full-time training sessions for any five months of the tax year, to be qualified.
Another criteria for eligibility is having and contributing and also being a beneficiary to eligible tax-advantaged retirement accounts such as;
- Traditional and Roth individual retirement accounts (IRA)
- 401(k)s
- 403(b)s
- 457(b
- SARSEP and SIMPlE plans
- Federal Thrift Savings Plans
- 501(c)(18)(D) plans
- ABLE accounts
The next criteria for eligibility is the income limits. The 2024 income limits are;
- Married couples filing jointly with adjusted gross incomes up to $76,500
- Head of Household with adjusted gross incomes up to $57,375
- Singles and married individuals filing separately with adjusted gross incomes up to $38,250
2024 Saver’s Tax Credit Income Eligibility
| Saver’s Credit Rate | Married filing jointly | Head of Household | Single filers |
| 50% of eligible contributions | AGI of no more than $46, 000 | AGI of no more than $34,500 | AGI of no more than $23,000 |
| 20% of eligible contributions | $46,001 – $50,000 | $34,501 – $37,500 | $23,001 – $25,000 |
| 10% of eligible contributions | $50,001 – $76,500 | $37,501 – $57,375 | $25,001 – $38,250 |
| 0% of eligible contributions | More than $76,500 | More than $57,375 | More than $38,250 |
Remember AGI is an abbreviation for Adjusted Gross Income
How to Claim Saver’s Credit
To claim the saver’s credit, you must complete Form 8880, “Credit for Qualified Retirement Savings Contributions,” when you file tax return. Seek a tax professional’s help if you are unable to fill the form.
You can check other tax benefits you are entitled to in various eligible retirement accounts if your income does not allow you claim the saver’s credit at the time.
