Why the “Saver’s Credit” may be worth looking into

January 10, 2024

Retirement Savings Contributions Credit, better known as Saver’s Credit, was developed to encourage workers with low and moderate incomes to save for retirement. Few taxpayers actually take advantage of the program, however, with only 5.7% claiming the credit, according to the latest statistics.1

This could be a missed opportunity. The Saver’s Credit can reduce an individual’s federal income tax bill by up to $1,000 or $2,000, depending on whether they file an individual or joint return.2 

In a nutshell, the tax credit is not a deduction or refund. It can reduce the employee’s and employer’s tax liability dollar-for-dollar.3

Employee tax credit:

  • Available to participants in a 401(k), 403(b), 457(b), SEP, SIMPLE IRA, IRA or Roth IRA2
  • Maximum $2,000 personal tax credit2 
  • Participant income is less than $76,500 to qualify (depending on how they file)6

Employer tax credit:

  • Available for 401(k), SEP, SIMPLE IRAs and other qualified plans3
  • Maximum $5,000 plan sponsor tax credit for employers with 100 employees or less3 
  • Tax credit covers 50% of the plan costs, including installation, administrative fees and costs to educate employees within a certain threshold3 
  • Valid for the first three years a plan is offered3

Want to take a deeper dive? Continue reading to better understand the potential tax benefits of the Saver's Credit. The 2024 IRS income limits, used to determine an individual's eligibility, can help guide those conversations along with a few other important considerations outlined in this article.4

What types of contributions qualify for the Saver’s Credit?

The first step toward becoming eligible for the credit is saving money in a retirement account.

When it comes to a retirement plan, participants may be able to claim the tax credit for elective salary deferral contributions to a 401(k), 403(b) or governmental 457(b) plan. It may also apply to an employee’s voluntary after-tax contributions made to a qualified retirement plan (including the Thrift Savings Plan) or 403(b) plan. Rollover contributions, however, do not qualify for the credit.2 

How much is the Saver’s Credit worth?

The Saver’s Credit is worth 10%, 20% or 50% of the retirement plan contribution amount in a given year, depending on the investor’s income. (More on that in a minute.) The maximum possible individual contribution is $2,000 or, for married couples filing a joint return, $4,000.2

That means the maximum amount of the Saver’s Credit itself is $1,000 or $2,000, depending on a person’s tax-filing status. And that comes right off the top of their tax bill.2

Remember, while a tax deduction only lowers taxable income, a tax credit lowers the amount of taxes owed—or can potentially increase a tax refund.5

What are the income limits for the Saver’s Credit?

The Saver’s Credit is for taxpayers with low to moderate incomes. To be eligible, their adjusted gross income (AGI) must remain under a certain threshold.

For 2024, individuals may be eligible for the Saver’s Credit if their annual gross income (AGI) falls into the following brackets:6

Credit rate

Married filing jointly

Head of household

All other filers*

50% of your contribution

Not more than $46,000 

Not more than $34,500

Not more than $23,000 

20% of your contribution

$46,001 – $50,000

$34,501 – $37,500

$23,001 – $25,000

10% of your contribution

$50,001 – $76,500 

$37,501 – $57,375

$25,001 – $38,250

*Single, married filing separately, or qualifying widow(er)

What might an example of a tax credit look like? Let’s say a plan participant’s AGI is $30,000 in 2024, and their tax filing status is single. If they contribute $2,000 to an eligible account for 2024, the Saver’s Credit would be worth 10% of that contribution. That’s $200 off their tax bill!

Who is eligible for the Saver’s Credit?

There are a few other stipulations for the Saver’s Credit that individuals should know about. Notably, individuals must be 18 or older to be eligible for the credit, not a student and not claimed as a dependent on someone else’s tax return. Also, if someone withdraws or recently withdrew savings from a retirement plan, IRA or ABLE account, their eligible contributions may be reduced.2

Help your retirement plan participants and investors determine their eligibility so they can decide whether they want to take advantage of the Saver’ Credit. Learn more about the other provisions and restrictions on the IRS Saver’s Credit webpage.


1Congressional Research Service. The Retirement Savings Contribution Credit and the Saver’s Match. 2023, December 15

2Internal Revenue Service. Retirement Savings Contributions Credit (Saver’s Credit). 2023, August 29

3Internal Revenue Service. Retirement Plans Startup Costs Tax Credit. 2023, July 28 

4Internal Revenue Service. 401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000. 2023, November 1

5Internal Revenue Service. Credits and Deductions for Individuals. 2023, November 1

6Internal Revenue Service. 2024 Limitations Adjusted as Provided in Section 415(d), etc.. Accessed 2023, December 18