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Retirement Savings Contribution Credit
The Savers Credit Can Lower Your Taxes While You Save for Retirement

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Individuals who save for retirement may qualify for a federal tax credit. The Retirement Savings Contribution Credit, or the Saver's Credit for short, is a federal tax credit designed to encourage low- and modest-income individuals to save for retirement.

The credit is a percentage of savings, from 10% to 50%. The credit also depends on your overall income and filing status.

Qualifying for the Retirement Savings Tax Credit

You qualify for the Saver's Credit if

You meet the income criteria,
You contributed money to a retirement plan,
You are not a full-time student,
You are age 18 or older,
You are not claimed as a dependent.

Income Limits

The income limits for the saver's credit depends on your filing status:

$26,500 or less for single, married filing separately, and qualifying widow(er).
$39,750 for head of household.
$53,000 for married filing jointly.

Dollar Amount of the Saver's Credit

The tax credit is calculated based on a percentage of your retirement contributions. The maximum credit is $1,000 for unmarried filers and $2,000 for married filers. The percentage is determined by your adjusted gross income and your filing status.

The percentage of contributions you get as a tax credit is 10%, 20%, or 50%, depending on your adjusted gross income.

You can contribute to just about any kind of retirement plan, such as 401(k), traditional IRA, Roth IRA, SEP-IRA, SIMPLE IRA, the federal Thrift Savings Plan, or 503(b) plans.

Consider a Roth IRA if You Qualify

If you qualify for the Retirement Savings Tax Credit, consider contributing to a Roth IRA. With a Roth, your contributions enjoy tax-free growth and you won't have to include the Roth distributions in your taxable income when you retire. A Roth plus the saver's credit is a very tax-efficient combination.