What is the Saver's Tax Credit? Do I qualify?

March, 04 2025 by Karen Thomas-Brandt, EA

What is the Saver’s Tax Credit?

The Saver’s Tax Credit, or Saver’s Credit for short, is a nonrefundable credit available to qualifying taxpayers who make eligible contributions to an IRA, qualified employer retirement plan, or ABLE account.
 

Do I qualify?

To claim the Saver’s Credit, a few requirements must be met by the taxpayer:

• Age 18 or older as of the end of the tax year;
• Not a full-time student;
• Not claimed as a dependent on another taxpayer’s tax return.

Additionally, there are income limits, which are adjusted annually. For 2024, the income limits are that a taxpayer’s Modified Adjusted Gross Income (MAGI) must be less than:
 

• $76,500 if filing status is married filing jointly;
• $57,375 if filing status is head of household
• $38,250 if filing status is single, married filing separately, or qualifying surviving spouse.

MAGI for the Saver’s Credit eligibility includes foreign earned income, foreign housing costs, income for bona fide residents of American Samoa, and income from Puerto Rico.
 

How much is the Saver’s Tax Credit?

Depending on the modified adjusted gross income reported on your Form 1040, the amount of your credit will be 50%, 20%, or 10% of your contribution to a qualifying account. The maximum contribution amount that may qualify for the credit is $2,000 ($4,000 if married filing jointly). Remember, IRA contributions for 2024 can be made until April 15, 2025, and contributions to an employer plan must be made by December 31, 2024.
 

What is a qualifying account?

For the 2024 tax year, the Saver’s Credit is available to qualifying taxpayers who contribute to the following types of accounts:

• Traditional or Roth IRA (including SIMPLE IRA);
• 401(k) (including SIMPLE 401(k) plan);
• 403(b) plan;
• 457 plan;
• SEP plan;
• 501(c)(18) plan;
• ABLE account if the contributor is the beneficiary.

Eligible contributions do not include the employer contributions a self-employed individual makes to a SOLO 401(k), SIMPLE 401(k), SIMPLE IRA, or SEP plan. Additionally, eligible contributions may be reduced by any recent distributions the taxpayer received from an IRA, retirement plan, or ABLE account.

Let’s look at an example.

Mary, who files single, contributed $6,000 to her 401(k) plan through her employer in 2024. Mary also took a $4,500 distribution from her traditional IRA account to pay off some bills that had been piling up. Mary’s MAGI is $30,000 for 2024. Mary is not a full-time student and is 60 years old. Mary is not claimed as a dependent on another taxpayer’s return. For 2024, Mary’s saver’s credit is calculated as follows:

• $6,000 (contribution) - $4,500 (distribution) = $1,500 (net contribution for saver’s credit)
•  
• $1,500 * 10% (Mary’s allowable credit percent, based on her MAGI for 2024) = $150 (Mary’s saver’s credit for 2024)

Is there anything else I should know about the Saver’s Credit?

As part of the Secure 2.0 Act of 2022, starting in 2027, the Saver’s Credit will be replaced by the Saver’s Match. The Saver’s Match is a refundable contribution from the federal government that matches a portion of a taxpayer’s contribution to their qualifying retirement account, which includes traditional IRAs, 401(k)s, and 403(b)s. The match amount depends on the taxpayer’s income and filing status and will be deposited directly into the taxpayer’s retirement plan. Under this plan, the maximum contribution is $1,000 per taxpayer ($2,000 for married filing joint returns). For more information on this program, click here.