If you’re putting money away for retirement, you might be able to pay less in taxes thanks to something called the Saver’s Credit.
This is a special tax break offered by the government to help people save for retirement.
What is the Saver’s Credit?
The Saver’s Credit, officially called the Retirement Savings Contributions Credit, lets you cut your tax bill when you contribute money to a retirement account. This can include traditional or Roth IRAs, and work plans like a 401(k).
But not everyone can get this credit—you need to meet certain rules.
Why Does the Saver’s Credit Exist?
The IRS created this credit to encourage people with low or moderate incomes to save for retirement. Unlike a tax deduction (which lowers your taxable income), this is a tax credit—which reduces the actual amount of tax you owe, dollar for dollar.
You can get up to $1,000 back if you’re single, or up to $2,000 if you’re married and file jointly.
Basic Requirements
To qualify, you must meet the following:
- You are at least 18 years old.
- You’re not a full-time student during the year.
- No one else can claim you as a dependent on their tax return.
- Your income is below certain limits.
- You have made contributions to a retirement account like an IRA or 401(k).
Income Limits for 2025 Tax Returns (Filed in 2026)
- Married filing jointly: $73,000 or less
- Head of household: $54,750 or less
- Single, married filing separately, or widowed: $36,500 or less
How Much Can You Get?
If you qualify, the amount of your credit depends on your income, your tax filing status, and how much you contributed:
- The IRS gives you a credit for 10%, 20%, or 50% of your retirement contributions, up to $2,000 for individuals or $4,000 for couples.
- The lower your income, the bigger the percentage.
- If you contribute $2,000 and qualify for the 50% credit, you get $1,000 off your taxes.
Important: The Saver’s Credit is “non-refundable,” which means it can reduce how much tax you owe but won’t result in a tax refund past what you’ve paid in.
What Kinds of Accounts Count?
- Work retirement plans: 401(k), 403(b), SIMPLE IRA
- Traditional IRAs
- Roth IRAs
Tips and Reminders
- Make sure you put money into your retirement account before the tax filing deadline (usually April 15) for that tax year.
- If you’re not sure if you qualify, look for IRS Form 8880 or ask a tax professional. The IRS offers worksheets and online tools to help you.
Summary
The Saver’s Credit can help you save both for your retirement and on your taxes if you meet the guidelines above. Taking advantage of this credit means more money for your future and less owed to the IRS.
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