Middle Class Tax Break: Saver's Credit

Saving for Retirement

Saver's Credit: A Retirement Tax Break for the Middle Class

Your retirement contributions could be the key to a lower tax bill.

Saving for retirement is even more rewarding if your earnings are low enough to qualify for the Saver's Tax Credit. Single filers with adjusted gross income of $30,500 or less may be eligible. Taxpayers married filing jointly must have an AGI of $61,000 or less.

See Also: IRS Audit Red Flags for Retirees

Fall within the income limits and you can claim a tax credit worth up to $1,000 for singles or $2,000 for joint filers. The credit is based on 10% to 50% of the amount you contribute to retirement accounts including 401(k)s, traditional IRAs and Roths. The lower your income, the higher the percentage you get back via the credit.

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Some people can’t claim the Saver’s Credit, regardless of income. Taxpayers under 18, full-time students and those claimed as dependents aren’t eligible. But if you do qualify, every dollar you claim is one dollar less you have to pay in taxes.

Check out 8 more tax breaks for the middle class.