Saver’s Tax Credit: What It Is And How To Claim

Saving for retirement isn’t easy, especially if you’re earning a low to moderate income. A tax credit, known as the saver’s credit, aims to incentivize people to save for retirement by providing a sweet tax break. It can lower the amount of taxes owed, and can result in a refund for some taxpayers.

Here’s how to claim the saver’s tax credit, and who is eligible.

What is the saver’s tax credit?

The Retirement Savings Contributions Credit, also referred to as the saver’s tax credit, is a tax incentive aimed at encouraging lower-income and middle-income individuals to contribute to retirement accounts.

The credit is available to those who contribute to an eligible retirement plan like a 401(k), SIMPLE IRA, ABLE account, SEP IRA, 403(b) or 457(b), or a traditional or Roth IRA.

The saver’s tax credit is worth up to $1,000 for single filers and $2,000 for married couples filing jointly. Depending on your adjusted gross income and filing status, you may receive a credit of 50 percent, 20 percent or 10 percent on your first $2,000 of retirement contributions (for single filers) or $4,000 (for married couples filing jointly).

The credit is different from a tax deduction. While a tax deduction reduces the amount of income that is subject to income tax, a tax credit provides a dollar-for-dollar reduction in the amount owed.

It’s important to note that rollover contributions don’t qualify, and if you’ve recently taken distributions from your retirement accounts, this could decrease the eligible contributions for the credit.

Who is eligible for the saver’s tax credit?

To qualify for the saver’s tax credit, you need to meet certain criteria. You must be:

• At least 18 years old
• Not listed as a dependent on another person’s tax return
• Not enrolled as a full-time student

Your adjusted gross income must also fall within certain limits.

In tax year 2025, the income cap is $79,000 when married filing jointly, $59,250 for heads of household and $39,500 for single and other filers.

Your income also determines whether you can claim a 50 percent credit, a 20 percent credit or a 10 percent credit.

The income limits for tax year 2025 are below:

Saver’s tax credit income limits for tax year 2025

As the chart shows, people with the lowest incomes benefit most from the saver’s credit.

Saver’s tax credit example

Laura earns $50,000 in tax year 2025 and is married filing jointly. Her husband was unemployed and made no income.

Each month, Laura contributes $100 to her 403(b) plan and $50 to her traditional IRA, for a total annual contribution of $1,800 between the two accounts. After deducting her retirement contributions, her income falls within the 20 percent limit for 2025. She can claim a saver’s credit of 20 percent, resulting in a $360 credit.

How to claim the saver’s tax credit

To start, you’ll need to open a retirement account if you don’t have one already. You can open one in minutes through some of the best online brokers or robo-advisors. Or you can start funneling some of your earnings into your workplace 401(k).

Next, you’ll need to make your deposit. A pro tip on contributions: The IRS permits taxpayers to make contributions to their individual retirement accounts up until April 15, 2026, and include those investments on their 2025 taxes.

Finally, taxpayers who meet the income limits and other eligibility criteria can use IRS Form 8880 to claim the credit. The form asks for your contributions and your spouse’s contributions, if applicable. The form then provides instructions on calculating your total credit, which you will add to line 4 of Form 1040.

Or, if you use tax software, the program should tell you if you qualify for the saver’s credit based on your AGI and filing status.

Bottom line

The saver’s tax credit allows lower-income earners to claim a credit on their tax return if they contribute to a retirement account. If you meet the eligibility requirements, it can be a valuable way to put some money back in your pocket while also saving for the future.