Retirement savings: The Saver’s Credit explained

Retirement savings: The Saver’s Credit 

Key takeaways

The Retirement Savings Contribution Credit, or the Saver’s Credit for short, is a non-refundable tax credit that’s available to low- and moderate-income individuals and couples who save money via an eligible retirement plan.


Contributing to tax-advantaged retirement accounts is one of the best ways to save money on your taxes while also helping to build wealth for retirement. And depending on your income, you may be eligible for an additional tax credit that can further incentivize you to increase your retirement contributions while reducing your tax bill.  

Keep reading to learn more about this tax credit — known as the Saver’s Credit — including how much you could save and how to know if you’re eligible. 

What is the Saver’s Credit? 

The Saver’s Credit (officially titled the Retirement Savings Contributions Credit) is a tax credit offered by the federal government to certain taxpayers who make eligible contributions to an individual retirement account (IRA) or an employer-sponsored retirement plan like a 401(k). 

The purpose of the Saver’s Credit is to incentivize low and moderate-income workers to save for retirement. Because it can help save cash for these workers when they contribute to tax-advantaged retirement accounts, it makes it easier for them to do so while still leaving room in their budget for other financial priorities. 

Read more: Five reasons to take advantage of tax-deferred retirement savings plans 

The Saver’s Credit is a tax credit, not a deduction. A tax deduction works by reducing your taxable income (meaning the portion of your income that’s subject to taxation). And by reducing your taxable income, it also reduces your tax liability.  

Tax credits like the Saver’s Credit, on the other hand, directly reduce your tax liability. So, if you’re eligible for a $2,000 tax credit, your tax liability is $2,000 lower. That will either help reduce the amount you’ll owe in taxes or will increase the amount of your tax refund. 

However, the Saver’s Credit is a non-refundable tax credit. That means that it can only reduce your tax liability to zero. For example, if you’re eligible for a $1,000 tax credit and your tax liability for the year is $500, you can only get a credit of $500. This is in contrast to a refundable tax credit, like the Earned Income Tax Credit, that is a tax credit that you can get as a refund even if you don’t owe any tax.  

Read more: Tax credits: Everything you need to know 

A double benefit 

If you’re eligible for the Saver’s Credit, you’re getting two different tax benefits for your retirement contributions. First, you’ll get the Saver’s Credit, which reduces the amount you owe in taxes (or increases your refund). 

Additionally, as is normally the case with tax-advantaged retirement accounts, you’ll be able to deduct your contributions to non-roth accounts. This tax deduction reduces your taxable income by the amount you contributed to your retirement account, resulting in you owing less in income taxes. 

The amount you can contribute and deduct depends on several factors, including the type of account you contribute to and your annual income. For example, in 401(k) and 403(b) plans, you can contribute and deduct up to $23,000 in 2024.1 For IRAs, you can contribute and deduct up to $7,000. 

Read more: Spousal IRA: What it is & how it works 

How much is the Saver’s Credit 

The maximum possible Saver’s Credit is $1,000 for individuals and $2,000 for married couples filing jointly. However, the amount you can qualify for depends on your income and the amount you contribute to your tax-advantaged accounts. 

The IRS allows you to get a credit of either 50%, 20%, 10%, or 0% of your contributions, depending on your adjusted gross income (AGI). The table below shows the credit amount you may be eligible for based on your income for the 2023 tax year.2 

Credit Rate 

Married Filing Jointly 

Head of Household 

All Other Filers 

50% of your contribution 

$43,500 or less 

$32,625 or less 

$21,750 or less 

20% of your contribution 

$43,501 - $47,500 

$32,626 - $35,625 

$21,751 - $23,750 

10% of your contribution 

$47,501 - $73,000 

$35,626 - $54,750 

$23,751 - $36,500 

0% of your contribution  

More than $73,000 

More than $54,750 

More than $36,500 

For example, suppose you’re a single filer with an AGI of $20,000 or less. You’re eligible for a tax credit of 50% of your retirement contributions. So, if you contribute $2,000 to an IRA, you’ll get the maximum Saver’s Credit of $1,000. However, if your income was $25,000 and you contributed the same amount, your tax credit would only be $200. 

The maximum contribution that can qualify for the Saver’s Credit is $2,000 for individuals and $4,000 for married couples filing jointly. As a result, only those individuals eligible for the 50% credit rate would be able to get the full credit amount. 

How to claim the Saver’s Credit 

Before you can claim the Saver’s Credit, you’ll have to first make sure you’re eligible. To be eligible for the tax credit, you must meet the following requirements: 

  1. You’re age 18 or older 

  1. You're not claimed as a dependent on anyone else’s tax return 

  1. You’re not a student  

For purposes of this credit, a student is defined as: 

  1. Anyone enrolled as a full-time student at a school during any part of 5 calendar months in the tax year, or 
  2. Anyone who took a full-time, on-farm training course given by a school or a state, county, or local government agency during any part of 5 calendar months in the tax year 

If you’re eligible for the Saver’s Credit, you’ll claim it using Form 8880, Credit for Qualified Retirement Savings Contributions. You’ll complete the designated lines on this form and file it with your annual tax return, Form 1040 or 1040A. You can’t claim the Saver’s Credit when filing with IRS Form 1040EZ. 

Next steps for maximizing the Saver’s Credit 

The Saver’s Credit can be an excellent tool for helping low-and moderate-income workers save money for retirement while also earning a bit of that money back to use for other expenses. It helps incentivize and enable retirement savings among people who may not otherwise be able to save. 

This tax credit is just one piece of the puzzle in optimizing your finances. It’s important to take a holistic look at your tax situation to see if there are other ways to minimize your tax liability while also looking for ways to increase your investments. 

If you aren’t sure what steps to take, consider seeking professional guidance when filing your taxes and building your overall financial plan. 

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1 IRS, “401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000,” January 2024 

2 IRS, “Retirement Savings Contributions Credit (Saver’s Credit),” August 2023 


Courtney Burrell


Courtney Burrell is a Senior Financial Professional at Empower. She coaches clients to build successful wealth building habits from mindset to successful saving and investing. 

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