Celebrating Over 19 Years of Excellent Service
Call Today : (866) 639-0066
Call Today :
(866) 639-0066
Celebrating Over 14 Years of Excellent Service

What is Saver’s Credit?

Saver’s credit is a non-refundable tax credit that allows eligible taxpayers who are saving for retirement to enjoy tax breaks apart from the tax deductions they may receive from contributions to their employer-sponsored plans or individual retirement accounts (IRAs).

If you qualify for a saver’s tax credit, you can reduce or eliminate your tax bill, ultimately bolstering your savings potential. However, not many eligible taxpayers take advantage of this tax break simply because they are unaware of it.

Key Takeaways

  • Eligible taxpayers who make contributions to their traditional and/or Roth IRA or an employer-sponsored plan can take advantage of the saver’s credit.
  • The credit amount depends on many factors, such as tax filing status, an individual’s retirement plan contributions, and adjusted gross income (AGI).
  • Individuals under age 18, full-time students, or anyone who is claimed to be a dependent by another taxpayer are not eligible for the saver’s credit.

What is the saver’s credit?

The saver’s credit is a non-refundable tax credit that allows eligible taxpayers who contribute to a retirement savings plan(s) to reduce or eliminate their overall tax amount owed.

Although the saver’s credit reduces or eliminates the tax you owe, it can’t provide you with a tax refund.

Who is eligible for saver’s credit?

You’re eligible for the saver’s credit if you meet the following criteria:

  • You are 18 or older.
  • You are not a full-time student.
  • You are not claimed as a dependent on another person’s tax return.
  • You must make contributions to a retirement plan or IRA account.
  • You should fall under maximum adjusted gross income (AGI) limits set by the IRS each year. If your AGI is above these income thresholds, you aren’t eligible for the saver’s credit:
Filing Status Income Threshold in 2021 Income Threshold in 2022
Married joint filer $66,000 $68,000
Head of household filer $49,500 $51,000
Single filing status $33,000 $34,000

How much could the saver’s credit cut from my tax bill?
The maximum credit you can claim on your contributions decreases as your income increases.

2021 Adjusted Gross Income:

Credit Married Joint Filers Head of Household Single/Other Filers
50% Up to $39,500 Up to $30,750 Up to $20,500
20% $39,501–$43,000 $30, 751 –$33,000 $20,501–$22,000
10% $43,001–$66,000 $33,001–$51,000 $22,001–$34,000
0% More than $68,000 More than $51,000 More than $ 34,000
2022 Adjusted Gross Income:

Credit Married Joint Filers Head of Household Single/Other Filers
50% Up to $41,000 Up to $29,625 Up to $19,750
20% $41,001–$44,000 $29,626–$32,250 $19,751–$21,500
10% $43,001–$66,000 $32,251–$49,500 $21,501–$33,000
0% $44,001–$68,000 More than $49,500 More than $33,000


Peter and Jane are married and file their returns jointly. Peter contributes $1000 to his 401(k), and Jane contributes $1000 to her IRA. Their combined adjusted gross income for 2022 is $38,000. Therefore, both Peter and Jane are eligible to claim 50% credit for the contributions they make to their respective retirement plans. Their non-refundable tax credit $1,000 (50% of $1,000 x 2 = $1,000).

Which retirement accounts qualify for the saver’s credit?

You can claim the saver’s credit if you are making a contribution to any of the following retirement accounts:

Effect of the Saver’s Credit

When you claim your saver’s credit on your contribution to a retirement plan, you can reduce your tax burden in two ways:

  • The contribution to the plan in itself qualifies as a tax deduction.
  • The saver’s credit reduces the actual tax you owe, dollar for dollar.


Jane, a married customer service executive, earned $35,000 in 2021. She contributed $1,000 to her IRA, but her unemployed husband had zero earnings. After subtracting Jane’s IRA contribution, the AGI on her jointly filed return is $34,000. This makes Jane eligible for claiming a 50% credit of $500 for her IRA contribution of $1000.

How to claim the saver’s credit?

Use Form 8880 (Credit for Qualified Retirement Savings Contributions) and attach it to your 1040, 1040A, or 1040NR when you file your tax return to claim the saver’s credit.

When are retirement savings not eligible?

Retirement savings are not eligible for the saver’s credit in the following situations:

  • If your contributions to a retirement account exceed the allowable limit, the money has to be divested from the account within a certain time frame. This portion of the divested money is not eligible for the saver’s credit.
  • If you change jobs and roll your money from one retirement account into another, this contribution is not eligible for the saver’s credit.

Key Takeaway

The saver’s credit can boost your retirement savings potential. If you qualify for the saver’s credit and don’t take advantage of this opportunity, you are losing out on a simple way to add significant value to your retirement fund.