2022-2023 Savers Tax Credit and Income Limits to Help Workers Save for Retirement

[Updated with latest details per the IRS] The savers credit helps middle to lower income earners save for retirement by providing a tax credit offset to retirement plan (401k and IRA) contributions.

But a lot of people don’t know about or take advantage of this little known credit, officially referred to by the IRS as the retirement savings contributions credit.

How does the Retirement Savers Credit work?

The retirement savings contribution or savers credit was made a permanent part of the tax code in 2006 and is now adjusted annually to keep pace with inflation. You can see recent changes and qualification limits in the table below.

The credit is available in addition to any other tax savings that apply to qualified retirement plan contributions.

The savers credit works by offsetting part of the first $2,000 (singles) or $4,000 (married) workers voluntarily contributions to tax advantaged retirement plans such as IRAs and employer sponsored workplace plans. 

Up to 50% of the contribution can be claimed as a credit making the maximum credit $1,000 or $2,000 if married filing jointly.

The amount of the credit is either 50%, 20% or 10% of your qualified retirement plan contributions up to the maximum credit amount. The percentage (%) threshold is based on your adjusted gross income (AGI).

Example: Marcus is married worker and his AGI (on tax form 1040) was $42,000 last year. His wife is a stay-at-home mon and does not work. Marcus contributed $2,000 to his IRA. After deducting his IRA contribution, the adjusted gross income shown on his joint return was $40,000.

Based on the latest thresholds Marcus and as a married joint filer, he can claim a 50% savers credit of $1,000 (maximum) for his $2,000 IRA contribution on his 2021 tax return.

Based on the most recent statistics the IRS reported that over $1.2 billion of saver’s credits were claimed with the average claimed averaging $205 for joint filers, $165 for heads of household and $127 for single filers

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2022 Saver’s Credit Income Qualification (2023 Filings)

Credit RateMarried Filing JointlyHead of HouseholdAll Other Filers*
50% of your contributionAGI not more than $41,000AGI not more than $30,750AGI not more than $20,500
20% of your contribution$41,001 – $44,000$30,751 – $33,000$20,501 – $22,000
10% of your contribution$44,001 – $68,000$33,001 – $51,000$22,001 – $34,000
0% of your contributionmore than $68,000more than $51,000more than $34,000
2022 retirement savings contributions credit. Source : IRS

The 0% contribution rate shows the income levels above which the credit is no longer available. So for 2022, you cannot take this credit if your AGI (Line 11 on your 1040 form) is more than $34,000 (single), $51,000 (H-o-H) or $68,000 (married filer).

2023 Saver’s Credit Income Qualification (2024 Filings)

Credit RateMarried Filing JointlyHead of HouseholdAll Other Filers*
50% of your contributionAGI not more than $43,500AGI not more than $32,625AGI not more than $21,750
20% of your contribution$43,501 – $47,500$32,626 – $35,625$21,751 – $23,750
10% of your contribution$47,501 – $73,000 $35,626 – $54,750$23,751 – $36,500
0% of your contributionmore than $73,000more than $54,750more than 36,500
2023 retirement savings contributions credit. Source : IRS

In addition to income thresholds above and contributing to a qualified retirement plan, you have meet the following eligibility criteria: be 18 or older; are not a full-time student and are not being claimed as a dependent on another person’s tax return.

Claiming the credit on Your tax return

To claim the credit use form 8880, Credit for Qualified Retirement Savings Contributions, or any recommended tax software package.

You have until the April tax deadline of the subsequent year to set up a new and/or add to an existing IRA and still get the savers credit. E.g. you have until April 18, 2023 to set up a new IRA or add money to an existing IRA for 2022 and claim the savers credit.

However, elective deferrals (contributions) must be made by the end of the calendar year to a 401(k), 457 or 403(b) plan or similar employer sponsored plan. Rollover contributions do not qualify for the credit.

You can claim the full savers credit (if eligible) in addition to other ones like the earned income and child tax credits.

What if I don’t owe taxes?

One thing to note is that the savers credit is a non-refundable tax credit. Meaning that the actual credit amount you get back in your tax refund is offset against the taxes you owe.  If you don’t owe taxes then you won’t get the credit via a larger refund.

See more on retirement plans in the 401K/IRA resource page.  For more on this credit see the official IRS page.

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4 thoughts on “2022-2023 Savers Tax Credit and Income Limits to Help Workers Save for Retirement”

  1. Question: In 2019, I took a small Roth Distribution (Roth was in place over 5 yrs). I was surprised that yr when CPA told me that because of the Roth distribution I was disqualified from receiving a Savers Tax Credit. Even worse he told me for 2020 & 2021 I ALSO did NOT qualify to take the credit because of the 2019 Roth Distribution. My AGI was within the range that I would qualify and I have not taken any other Roth Roth distribution.

    I have scanned the IRS website. & Internet about this & can find nothing about it. My CPA said it was in the Tax Reform act passed by the Trump Administration when Speaker Ryan was in office (2017?).

    My CPA says his software still comes back in 2020 & 2021 (& I presume forever into the future) that my 2019 Roth distribution disqualifies taking the Savers Tax credit. This seems very unfair to me, and I question that it is true. Does anyone know about this “loophole”

  2. Fran is correct. It is not a refundable credit. The line should be edited which says: “Meaning that you get the actual credit amount back in your tax refund…”

    (2017 is our first year to take the credit, which completely wipes out our Federal tax liability. If it were a refundable credit we would get a $375 refund, in addition to taxes that were withheld.)

    I’m glad to see that the credit is available for 2018. Anyone know what the income level is to get the full credit for a couple filing jointly? In 2017, if a couple has taxable income of less than 37,000 (and both contribute at least 2000 to tax-deductible accounts) then they get a $2000 credit toward their tax liability. I’m going with the hope that it increases to 38,000 for 2018. I was hoping the income thresholds for the 50%, 20% & 10% levels would be posted here.

  3. “Meaning that you get the actual credit amount back in your tax refund or subtracts the value from the taxes you owe.” You might want to review form 8880 as this information is not correct. I have been taking this credit since its inception and the value of the tax credit is lowered to the amount of taxes owed. There is no additional refund if nothing is owed or the taxable amount is lower than the tax credit.


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