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The Saver’s Credit: 2023 Rules and Income Limits


Financial experts recommend saving for retirement. According to one rule of thumb, you should have twice your salary saved by the time you’re 40, and eight times your salary by the time you’re 65. Unfortunately, the average American paces well behind that recommendation, and half of all Americans have no retirement savings at all. To incentivize low- and moderate-income Americans to save more, the U.S. government created the Saver’s Credit. This credit provides a tax deduction for some of your IRA or ABLE account contributions, as long your income falls below a certain threshold.

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What’s the Saver’s Credit, and How Much Is It Worth?

The federal government created the Saver’s Credit (originally the Retirement Savings Contributions Credit) in the early 2000s. It’s already possible to deduct contributions that you make to a traditional IRA, but this credit provides an even greater incentive. In particular, it is designed to help low- and moderate-income individuals save for retirement.

The Saver’s Credit is worth a percentage of your contributions; the percentage is either 10%, 20% or 50%. Which percentage tier you fall into depends on your filing status and adjusted gross income (AGI). The credit is worth up to $1,000 ($2,000 if filing jointly).

For instance, if you’re a single filer and your income qualifies you for the 50% credit tier and you contribute $1,000 to an IRA, you will be eligible to claim a credit of $500. You can achieve the maximum credit by contributing $2,000, which will get you a credit of $1,000. (That’s the maximum credit, so contributions of more than $2,000 will still get you a $1,000 credit). The math is generally quite simple for the Saver’s Credit. You don’t need additional worksheets or calculators, as with some other credits.

Remember that tax credits are not the same as deductions; while a deduction effectively lowers your tax bill by first reducing your taxable income, a credit directly reduces the amount of tax you owe. Another thing to note is that the Saver’s Credit is not refundable. So if the credit pushes your tax liability (how much you owe in taxes for the year) below zero, you will not get a refund for the difference. You will simply have no tax liability.

2023 Saver’s Credit: Eligibility Income Tiers

SmartAsset: 2023 Saver's Credit Rules and Income Limits

The income thresholds for the credit change each year to keep pace with inflation. You can find the income limits for the current tax year in the table below. The “Single” column refers to filers who are single, married filing separately and qualifying widows and widowers.

2023 Saver’s Credit Income Limits

Credit AmountSingleHead of HouseholdJoint Filers
50% of contributionAGI of $21,750 or lessAGI of $32,625 or lessAGI of $43,500 or less
20% of contribution$21,751 – $23,750$32,626 – $35,625$43,501 – $47,500
10% of contribution$23,751 – $36,500$35,626 – $54,750$47,501 – $73,000
0% of contributionmore than $36,500more than $54,750more than $73,000

Besides falling into one of these income tiers, you’ll also need to meet the following requirements to qualify for the credit:

  1. You are age 18 or older.
  2. You’re not a full-time student.
  3. No one claims you as a dependent on their return.

You also need to make contributions to either a traditional IRA, Roth IRA, SIMPLE IRA, SARSEP, 401(k), 403(b), 501(c)(18), 457(b) plan or ABLE account. Rollover contributions do not qualify.

How to Claim the Saver’s Credit

To claim the Saver’s Credit use IRS Form 8880, “Credit for Qualified Retirement Savings Contributions.” It’s a one-page form that you can print out a copy of from the IRS website, complete it and mail it to the service. Alternatively, you can file it electronically.

Among other things you’ll need to know three key figures:

  • Annual total contributions to traditional IRA, Roth IRA and ABLE account
  • Total elective deferrals to any qualified employer plan, such as a 401(k)
  • Adjusted gross income since that determines the percentage of the credit you can claim

Keep in mind that IRAs also have a contribution limit. The limit for 2023 is $6,500 (up from $6,000 in 2022). You can also contribute an extra $1,000 if you are 50 or older. So if you’re looking to get the full Saver’s Credit, you do not need to make the maximum contribution to a retirement account. Making a contribution of just $4,000 could get you the full credit. Still, the other benefits of maxing out the IRA limit – tax savings and retirement readiness – make it a good idea if you can afford it. ABLE accounts have a contribution limit of $17,000 in 2023.

Bottom Line

SmartAsset: 2023 Saver's Credit Rules and Income Limits

The Saver’s Credit is a great way for low- and moderate-income individuals or couples to save for retirement while also saving money on their taxes. The credit is worth a maximum of $1,000 ($2,000 if you file jointly) and there are three tiers of the credit. Filers at the lowest income level qualify to receive a credit worth up to 50% of their contributions to a retirement account. As your income increases, the credit for which you qualify decreases.

Saving More for Retirement

  • Ready to start saving for retirement? You can open an IRA at one of these online brokerages and start saving and investing today. And if you’re unsure how to invest, start by figuring out your risk tolerance and target asset allocation.
  • Navigating investment options and different varieties of retirement accounts can get confusing. That’s why many choose to work with a financial advisor who can manage their money and investments on their behalf. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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