Teipen Logo

How Saver’s Credit helps low- and moderate-income taxpayers save more in 2024

Posted on March 18, 2024

If you (and if you are married, your spouse) are a low-to-moderate income earners, there is an IRS program you should know about.

The Retirement Savings Contributions Credit (also known as the Saver’s Credit), helps offset part of the first $2,000 you voluntarily contribute to your Individual Retirement Arrangements (IRAs), 401(k) plans and similar workplace retirement programs.

This credit also helps any eligible person with a disability who is the designated beneficiary of an Achieving a Better Life Experience (ABLE) account and makes a contribution to that account. (For more information about ABLE accounts, see Publication 907, Tax Highlights for Persons With Disabilities.)

The maximum Saver’s Credit is $1,000 ($2,000 for married couples), and can increase your tax refund or reduce the tax you owe, (but can be affected by other deductions and credits as well). Distributions from a retirement plan or ABLE account reduce the contribution amount used to figure the credit.

Contribution deadlines
Those with IRAs have until April 15, 2024 – the due date for filing their 2023 return – to set up a new IRA or add money to an existing IRA for 2023. Both Roth and traditional IRAs qualify.

Individuals with workplace retirement plans still have time to make qualifying retirement contributions and get the Saver’s Credit on their 2023 tax return. Elective deferrals (contributions) to workplace retirement plans must be made by December 31 to a:

  • 401(k) plan.
  • 403(b) plan for employees of public schools and certain tax-exempt organizations.
  • Governmental 457 plan for state or local government employees.
  • Thrift Savings Plan (TSP) for federal employees.

To find out how to file, go to IRS.gov and see Form 8880, Credit for Qualified Retirement Savings Contributions, for a list of qualifying workplace retirement plans and additional details.

Eligibility rules
To be eligible, you must be 18 years of age and older, not claimed as a dependent, and not be a full-time student. The Saver’s Credit has income limits based on a taxpayer’s adjusted gross income and their marital or filing status.

2023 income limits are:

  • Married couples filing jointly with adjusted gross incomes up to $73,000.
  • Heads of household with adjusted gross incomes up to $54,750.
  • Married individuals filing separately and singles with adjusted gross incomes up to $36,500.

Need more specifics? Ask our CPA team any questions you may have, or use the Interactive Tax Assistant tool for the Saver’s Credit on IRS.gov to determine your eligibility.