How to Claim the Saver’s Credit

Low- and moderate-income workers who save for retirement in a 401(k) plan or individual retirement account could qualify for the saver’s credit. This retirement savings credit can be claimed in addition to any tax deduction you earn by contributing to a traditional retirement account.

Here’s how to learn about the saver’s credit and to see if you’re able to claim it on your 2025 tax return:

— Check the saver’s credit income requirements.

— Contribute to a retirement account that qualifies for the saver’s credit.

— Save enough to qualify for the saver’s credit.

— Meet the saver’s credit contribution deadline.

— Understand the benefits of a saver’s credit.

— Know that dependents and students are not eligible.

— Calculate your saver’s credit.

— Be aware of the upcoming saver’s match.

Check the Saver’s Credit Income Requirements

Individuals with an adjusted gross income of up to $39,500 in 2025 or $38,250 in 2024 could qualify for the saver’s credit if they contribute to a retirement account. “Many households that consider themselves middle income won’t qualify,” said Charles Thomas, a certified financial planner and founder of Intrepid Eagle Finance in Clover, South Carolina, in an email. “It’s still worth checking, just in case.”

Heads of household have a higher saver’s credit income threshold of $57,375 in 2024 or $59,250 in 2025. Married couples can earn as much as $76,500 in 2024 or $79,000 in 2025 and remain eligible for the saver’s credit.

Contribute to a Retirement Account That Qualifies for the Saver’s Credit

There are several types of retirement accounts that might qualify for the saver’s credit. Contributing to a 401(k) plan will often allow you to claim the saver’s credit. Other eligible workplace retirement accounts include 403(b) plans for employees of public schools, 457 plans for state or local government employees, SEP or SIMPLE plans, which smaller employers sometimes use, and the federal government’s Thrift Savings Plan.

But you don’t necessarily need a workplace retirement account to qualify for the credit. Contributions to a traditional IRA, Roth IRA or ABLE account in which you are the designated beneficiary could also make you eligible for the saver’s credit. “The contribution must be new money, that is, not a rollover from another existing account,” said Josh Zimmelman, managing director of Westwood Tax and Consulting in Rockville Centre, New York.

[What Are the IRA Contribution Limits for 2025?]

Save Enough to Qualify for the Full Saver’s Credit

“The saver’s credit is a tax credit put in place to encourage more Americans to save for retirement,” Thomas said. The saver’s credit can be claimed on retirement account contributions of up to $2,000 for individuals and $4,000 for couples. However, distributions from your retirement account might reduce the amount used to calculate the credit.

Meet the Saver’s Credit Contribution Deadline

Contributions to 401(k) plans and similar workplace retirement accounts that might qualify for the saver’s credit are typically due by the end of the calendar year. However, you have until the due date of your tax return in April to make an IRA contribution that counts toward the saver’s credit. That means retirement savers have until April 15, 2025, to make a traditional IRA or Roth IRA contribution that makes them eligible for the saver’s credit on their 2024 tax return.

Understand the Benefits of a Saver’s Credit

The maximum possible credit is $1,000 for an individual or $2,000 for a married couple. However, most people receive smaller credits. According to the IRS, other deductions and credits may significantly reduce that amount, with some taxpayers receiving nothing. The IRS estimates that the average saver’s credit was $191 per eligible return in tax year 2021.

Still, it is an amount that could be beneficial if you qualify. In addition to saving for retirement, you could get a tax credit.

[READ: 10 Ways to Reduce Taxes on Your Retirement Savings]

Know That Dependents and Students Are Not Eligible

People under age 18 or claimed as a dependent on someone else’s tax return are not eligible for the saver’s credit. Those enrolled as full-time students for five or more months during the calendar year cannot take the credit either.

Calculate Your Saver’s Credit

The saver’s credit is worth 10%, 20% or 50% of your retirement account contributions, and workers with the lowest income receive the biggest credit. For 2025, retirement savers with an adjusted gross income of $23,750 or less — or $47,500 for couples — are eligible for a saver’s credit equivalent to half of their retirement account contributions. Workers earning slightly more than those income cutoffs are eligible for a 20% saver’s credit. Investors earning between $25,501 and $39,500 — or $51,001 to $79,000 for couples– could get a saver’s credit worth 10% of their 401(k) or IRA deposit. The saver’s credit can be claimed in addition to the tax deduction for saving in a traditional retirement account.

While deductions lower the amount of income that is subject to a tax, a credit reduces the actual tax bill.

[How to Save in a 401(k) and IRA in the Same Year]

Be Aware of the Upcoming Saver’s Match

Beginning in 2027, the saver’s credit will be replaced with the saver’s match, a matching contribution deposited into the taxpayer’s IRA or retirement account. The match amount will be 50% of retirement account contributions up to $2,000 for low- and moderate-income taxpayers. “The match should be seen as a way to increase your retirement savings without any additional cost,” said Tammy Trenta, certified financial planner and founder of Family Financial in Los Angeles, in an email. “It is also important to note that the match is only available to those who make contributions to their retirement accounts in a calendar year.” You may want to make your contributions in the early months or before the holidays when expenses may rise.

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How to Claim the Saver’s Credit originally appeared on usnews.com

Update 01/27/25: This story was published at an earlier date and has been updated with new information.

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