What is the saver’s credit (retirement savings contributions credit)?

6 MIN READEditorial Policy

Key Takeaways

  • The saver's credit (retirement savings contributions credit) is a tax credit that helps workers offset the cost of saving for retirement.

  • Unlike a deduction, a tax credit reduces your tax bill.

  • Individuals may qualify for up to a $1,000 tax credit, while those married and filing jointly may qualify for up to $2,000.

What is the retirement saver's credit?

In the face of a nationwide retirement crisis, federal and state governments have increasingly encouraged employees to contribute a percentage of their paycheck to a retirement plan. Many states require employers to offer a state-provided or employer-sponsored retirement plan, like a 401(k), 403(b), SIMPLE 401(k) or SIMPLE IRA. While no nationwide mandate requires employers to offer retirement plans, the federal government offers tax credits to qualifying employees who contribute money to an employer-sponsored plan or individual retirement account (IRA). 

The saver’s credit (retirement savings contributions credit) is a tax credit offered by the IRS to help low- and moderate-income workers offset short-term financial losses when funding a retirement account. The saver’s credit can reduce what you pay in taxes by up to $1,000 ($2,000 if married filing jointly). The saver’s credit reduces your tax bill with a credit of up to 50% of the qualifying amount you contribute to an eligible retirement account, up to $2,000 ($4,000 if married and filing jointly). Employer contributions do not qualify for the credit.

What’s the difference between a tax deduction and a tax credit? 

A tax deduction reduces the amount of your taxable income or adjusted gross income (AGI), which might put you in a lower tax bracket. A tax credit, however, reduces the taxes you owe by reducing your tax bill itself. 

Who qualifies for the saver's credit? 

There are restrictions on eligibility for the saver’s credit, including a cap on your adjusted gross income, since the credit is designed to help primarily low- and moderate-income individuals.

To receive the credit, you must be 18 years or older, and your 2023 adjusted gross income must be less than:

  • $73,000 if married filing jointly

  • $54,750 if filing as head of household

  • $36,500 for all other taxpayers

Additionally, those taking the saver’s credit cannot be full-time students for five months or more, or considered as a dependent for tax purposes.

Which retirement accounts qualify for the credit?

The saver’s credit can be claimed for contributions or elective salary deferrals to a:

  • 401k

  • 403(b)

  • 457

  • Simple IRA



  • Traditional or Roth IRA

  • 501(c)(18)(D) plan, or

  • ABLE account for which you are the designated beneficiary

Remember, for the purposes of the tax credit, any contributions your employer makes do not count. 

What is the saver’s credit worth?

Those contributing to eligible retirement accounts may be eligible for 10%, 20%, or 50% of the eligible contribution amount. The percentage depends on your filing status and your adjusted gross income. The lower your adjusted gross income (the amount on which you’re taxed), the higher your tax credit. 

The maximum amount that may qualify for the credit is $2,000 for those filing as individuals and $4,000 for those married and filing jointly, meaning the maximum tax credit for individuals is $1,000, and for married couples filing jointly $2,000.

Saver’s credit rates for tax year 2024

Credit rateMarried filing jointlyHead of householdAll other filers*
50% of your contributionAGI not more than $46,000AGI of no more than $34,500AGI of no more than $23,000
20% of your contribution$46,001 -$50,000$34,501 - $37,500$23,001 - $25,000
10% of your contribution$50,001 - $76,500$37,501 - $57,375$25,001 - $38,250
0% of your contributionMore than $76,500More than $57,375More than $38,250

*Single, married filing separately, or qualifying widow(er)

It’s important to note that if you contribute to your retirement account and deduct it from your AGI, the reduction in your AGI may mean you can claim a larger credit. For example, if you’re married and filing jointly with a total combined salary of $46,000, and your total retirement account contributions amount to $4,000, your AGI is reduced to $42,000. That means that when you’re calculating the saver’s credit, you qualify for the 50% credit, lowering your tax bill by $2,000.

However, the saver’s tax credit is nonrefundable, so if your credit is more than your tax bill, you won’t get a refund. In other words, say your tax bill is $500 and you qualify for a credit of $1,000, you won’t pay anything in taxes, but you won’t get a refund for the other $500, either.

Example: You earn $24,000 in 2023 and contribute $2,000 to your 401(k). After deducting your contribution, your adjusted gross income is $22,000. As a single filer, you can then claim a 20% credit of $400 for your $2,000 contribution on your tax return.

How to claim the tax credit

To claim the saver’s tax credit when filing your return, complete IRS Form 8880 (Credit for Qualified Retirement Savings Contributions), enter the amount of the credit from Form 8880 on your Form 1040 or 1040A, and submit Form 8880 along with your tax return.

The government provides several tax advantages to employees who contribute to a 401(k) plan. 

Trenton Reed is the Manager of Content Strategy at Human Interest. He has nearly a decade of experience writing for Fortune 500 and SMB companies across finance, technology, and other verticals.