Saver’s Credit: What It Is and How It Works

Uncle Sam wants you to save for retirement — so much so that he offers a tax credit for doing so.

What is the saver’s credit?

The retirement savings contribution credit — the "saver’s credit" for short — is a nonrefundable tax credit worth up to $1,000 ($2,000 if married filing jointly) for mid- and low-income taxpayers who contribute to a retirement account.

What is the saver’s credit worth?

The saver's credit is worth up to $1,000 ($2,000 if married filing jointly). The value of the saver’s credit is calculated based on your contributions to a traditional or Roth IRA, 401(k), SIMPLE IRA, SARSEP, 403(b) plan, 457(b) plan, or an ABLE account. You may be eligible for 50%, 20% or 10% of the maximum contribution amount, depending on your filing status and adjusted gross income.

To qualify for the saver’s credit, the contribution must be new money; in other words, rollovers from an existing account — like a 401(k) rollover into an IRA — don't count^[0]

Keep in mind that a credit is not the same as a tax deduction — it’s better: While a tax deduction just reduces the amount of your income that's subject to taxes, a tax credit reduces your actual tax bill dollar-for-dollar.

Who can claim the saver’s credit?

You’re eligible for the saver’s credit if you are 18 or older, not a full-time student and not claimed as a dependent on another person’s tax return^[0]

But that doesn’t necessarily mean you get it: You must also make a retirement plan or an IRA contribution and fall under the maximum adjusted gross income (AGI) caps the IRS sets each year (more on this below).

» Not eligible? An IRA has tax perks of its own

2025 saver's credit limits

The adjusted gross income thresholds below apply to income earned in 2025, which is reported on tax returns filed in 2026.

Calculating the value of the saver's credit

Unlike many IRS rules, the math here is fairly simple: The credit is worth 50%, 20% or 10% of a maximum contribution of $2,000 (or a total of $4,000 if you're married filing jointly).

Let’s say you earn $19,000 as a single filer, and you contribute $1,000 to an eligible account. The value of your saver’s credit would be $500. If you contributed $5,000 to an eligible account, your credit would be worth $1,000, due to the cap.

If your contribution was made to a traditional IRA, 401(k) or other account that offers a tax deduction for contributions, your taxable income would also be reduced by the amount of your contribution.

» Learn more about tax-advantaged retirement accounts: Traditional IRA vs. Roth IRA

Secure 2.0 changes: Saver's match

Beginning in 2027, the saver's credit will be replaced with the "saver's match," a new program that does away with the tax credit in exchange for a matching federal retirement plan contribution. Under the new rules, people who contribute to a workplace retirement plan or an IRA can receive a match of 50% (up to $2,000) to be directly deposited into their retirement plan.

To be eligible for this benefit, taxpayers must make $71,000 or below (married filing jointly), $53,250 or below (head of household), and $35,000 or below (single and married filing separately). However, be aware that there are phase-outs leading up to those thresholds that will reduce the total value of the matching contribution. The higher your income is, the lower the value of your allowed matching contribution will be^[0]

» Learn more about what the Secure 2.0 Act means for your retirement

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