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Savvy Living

Savvy Senior

What Is the Retirement Saver's Credit and How Does It Work?

Can you explain how the retirement saver’s tax credit works? My spouse and I are looking for ways to boost our retirement savings beyond our 401(k)s.

If your income is low to moderate and you participate in your employer-sponsored retirement plan or an IRA, the Retirement Savings Contribution Credit (Saver’s Credit) is a frequently overlooked tool that can help boost your retirement savings. Here is how it works.

If you contribute to a retirement-savings account like a traditional or Roth IRA, 401(k), 403(b), 457, Thrift Savings Plan, Simplified Employee Pension or SIMPLE plan, the Saver’s Credit allows you to claim 10%, 20% or 50% of your contribution of up to $4,000 per year for married taxpayers filing jointly or $2,000 for individual taxpayers.

Keep in mind that a tax credit is not the same as a tax deduction. While a tax deduction merely decreases the portion of your income that is subject to taxes, a tax credit directly lowers your tax liability on a dollar-for-dollar basis and is therefore more advantageous.

To qualify, you must be at least 18 years old, not enrolled as a full-time student and not claimed as a dependent on another individual’s tax return. To qualify, adjusted gross income (AGI) in 2023 must be $73,000 or less for a married couple filing jointly, $54,750 or less if filing as head of household or $36,500 or less if you are a single filer. These income limits are adjusted annually to keep up pace with inflation.

To receive a credit for 50% of your contribution, you will need to have an income below $43,500 for married couples filing jointly, $32,625 if you are filing as head of household and $21,750 if you are a single filer in 2023.

The 20% credit rate applies to married couples earning between $43,501 to $47,500. For head of household filers, it is $32,626 to $35,625 and for individuals it is $21,751 to $23,750.

The 10% rate is for married couples with an adjusted gross income between $47,501 and $73,000. For head of household filers, it is $35,626 to $54,750 and for individuals it is between $23,751 and $36,500.

For example, say that you and your spouse earned $75,000 in 2023. Over the course of the year, you contributed $4,000 to your employer’s 401(k) plan. After deducting your 401(k) contribution, your adjusted gross income (AGI) on your joint return is now $71,000. Since your AGI puts you in the 10% credit bracket, and you have contributed the $4,000 maximum that can be considered for the credit and you are entitled to a $400 Saver’s Credit on your tax return.

It is important to note that the Saver’s Credit is an additional benefit on top of any other tax benefits you get for your retirement contributions. In the previous example, not only would you be entitled to the $400 credit, but you would also be able to exclude the $4,000 401(k) contribution from your taxable income. Therefore, if you are in the 12% tax bracket, this translates to $480 in savings, for a total estimated savings of $880.

How to Claim

To claim the Saver’s Credit, you will need to fill out Form 8880 ( and attach it to Form 1040 or 1040NR when you file your tax return.

For more information on the Saver’s Credit, see IRS Publication 590-A “Contributions to Individual Retirement Arrangements” (

The IRS also offers an online assessment to help you determine if you qualify for the Saver’s Credit. To access it go to and click on “Do I Qualify for the Retirement Savings Contributions Credit?” under the “Credits” tab. Please consult a tax professional for personalized guidance.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

Published December 22, 2023
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