Katelyn Washington
Saving for retirement is even more rewarding if you qualify for the Retirement Savings Contribution Credit, better known as the Saver's Credit. This tax break is designed to encourage people with low and middle incomes to begin building their retirement nest eggs. For those who qualify for the Saver's Credit, the lower your income, the higher the percentage of retirement plan contributions you get back on your tax return.
Who qualifies for the Saver's Credit?
For the 2023 tax year, single filers and married people filing a separate return with modified adjusted gross income (MAGI) of $36,500 or less may be eligible. Married couples filing jointly must have a modified AGI of $73,000 or less, while head-of-household filers must have a modified AGI of $54,750 or less.
However, some people can't claim the Saver's Credit, regardless of income. Taxpayers under 18 years of age, full-time students, and anyone claimed as a dependent on someone else's tax return aren't eligible. You're considered a full-time student for purposes of the credit if, during any part of five months of the year, you:
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
- Were enrolled as a full-time student at a school (including a technical, trade, or mechanical school); or
- Took a full-time on-farm training course offered by a school or a state, county, or local government agency.
How much is the Saver's Credit?
If your income falls within the credit limits, you can claim up to $1,000 for single filers or $2,000 for joint filers. The credit is based on 10%, 20%, or 50% of the first $2,000 ($4,000 for joint filers) you contribute to retirement accounts, including 401(k)s, traditional IRAs, and Roth IRAs (rollover contributions don't count).
The following table shows which percentage you would use for the 2023 tax year, depending on your income and filing status.
| Married Filing Jointly | Head-of-Household | Other Filing Statuses | Percentage of Contribution Allowed |
| AGI of $43,500 or less | AGI of $32,625 or less | AGI of $21,750 or less | 50% |
| AGI of $43,501 to $47,500 | AGI of $32,626 to $35,625 | AGI of $21,751 to $23,750 | 20% |
| AGI of $45,501 to $73,000 | AGI of $35,626 to $54,750 | AGI of $23,751 to $36,500 | 10% |
| AGI over $73,000 | AGI over $54,750 | AGI over $36,500 | 0% |
The Saver's Credit is a nonrefundable tax credit. That generally means the credit is only worth as much as the tax you owe.
In other words, the credit can't reduce your tax liability below $0 or generate a tax refund by itself. For example, if you owe $500 of tax before applying the credit, but you qualify for a $750 Saver's Credit, you won't owe any tax, but you won't be getting a refund for $250, either.
How to claim the Saver's Credit
To claim the Saver's Credit, you need to complete Form 8880 (Credit for Qualified Retirement Savings Contributions) to calculate the amount of your credit. You will then report the credit amount on your federal Form 1040. Make sure you attach Form 8880 when you file your return.
Related Content
-
ESPN to Acquire NFL Network and RedZone in Exchange for 10% Equity StakeESPN will take control of NFL Network and RedZone, while the NFL secures a 10% stake in ESPN — a move that could change how fans watch football.
-
Stocks Rally on Apple Strength: Stock Market TodayThe iPhone maker will boost its U.S. investment by $100 billion, which sent the Dow Jones stock soaring.
-
The Most Tax-Friendly State for Retirement in 2025: Here It IsRetirement Tax How do you retire ‘tax-free’? This state doesn’t tax retirement income, has a low median property tax bill, and even offers savings on gas. Are you ready for a move?
-
Tariff Stimulus Checks Coming? New Proposal Seeks Tax Rebates for U.S. WorkersTax Breaks A new GOP bill proposes to send $600 in tariff rebate checks to eligible taxpayers. Is there a catch?
-
Biggest Winners and Losers in Trump's New Tax PlanTax Law Trump’s mega tax overhaul, known as the ‘One Big Beautiful Bill,’ has distinct winners and losers. Which group do you fall into?
-
Five Ways Trump’s 2025 Tax Bill Could Boost Your Tax Refund (or Shrink It)Tax Refunds The tax code is changing again, and if you’re filing for 2025, Trump’s ‘big beautiful’ bill could mean a bigger refund, a smaller one or something in between next year. Here are five ways the new law could impact your bottom line.
-
New SALT Deduction Could Put Thousands Back in California Homeowners’ PocketsTax Breaks The federal state and local sales tax (SALT) deduction cap is higher this year, and could translate into bigger savings for Golden State homeowners.
-
Money for Your Kids? Three Ways Trump's ‘Big Beautiful Bill’ Impacts Your Child's FinancesTax Tips The Trump tax bill could help your child with future education and homebuying costs. Here’s how.
-
New Cap on Gambling Loss Deductions Begins Soon: What to Know NowTax Changes A gambling losses tax deduction cap in Trump’s “big beautiful bill” is causing an uproar. Here’s what you need to know.
-
Why Your Summer Budget Feels Tighter: Tariffs Push Up InflationTariffs Your summer holiday just got more expensive, and tariffs are partially to blame, economists say.
