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Take Advantage of the Saver's Credit for 401(k) Plan Contributions

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  • Lectura de 6 minutos
  • Last Updated: 12/08/2022
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If you contribute to a company-sponsored retirement plan, you may be able to claim a "Saver's Credit”. Read more about how it can help you get the most out of your 401(k).

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Also known as the retirement savings contribution credit, the Savers Credit encourages lower-income employees to save for retirement by giving them a tax credit based on a percentage of their contribution. It can apply to 401(k) plans, IRAs, and other retirement plans. Because it is additional to other tax-deferrals and deductions, it can help you get the most out of your retirement plan.

What are the income limits?

 As of this writing, income requirements are as follows:

  • Single, married filing separately, or qualifying widow, with income up to $36,500
  • Head of household with income up to $54,750
  • Married filing jointly with income up to $73,000

Save up to $1,000 (or $2,000 for joint filing)

If you make contributions to a qualified IRA, 401(k), or certain other retirement plans, you may be able to take a credit of up to $1,000, or $2,000 if filing jointly. Depending on your adjusted gross income (AGI) and filing status, the Savers Credit rate may be 10%, 20%, or 50% of your contribution.

For example, a single taxpayer whose AGI is $25,000 and makes a $2,000 contribution to their 401(k) plan will have a credit rate of 10%, or a $200 savings on their tax bill.

In another example, a married couple with a joint income of $30,000 can each contribute $1,000 to their respective retirement plans – for a total contribution of $2,000. They will qualify for a 50% tax credit and reduce their tax bill by $1,000.

To determine how much your Savers Credit may be, refer to the IRS chart below.

2023 Savers Credit

Credit Rate

Married Filing Jointly

Head of Household

All Other Filers*

50% of your contribution

AGI not more than $43,500

AGI not more than $32,625

AGI 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 contribution

more than $73,000

more than $54,750

more than $36,500

Source: IRS.gov

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

Who Qualifies for the Savers Credit?

To be eligible for the Savers Credit you must have been born before January 2, 1993, cannot have been a full-time student during the calendar year, and cannot be claimed as a dependent on another person’s return.

How do I apply?

You can apply for the credit using Form 8880, Credit for Qualified Retirement Savings Contributions, or when using most electronic tax-filing services. For more information, visit the IRS website or contact your tax professional.

Stay up to date with Paychex retirement services.

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* Este contenido es solo para fines educativos, no tiene por objeto proporcionar asesoría jurídica específica y no debe utilizarse en sustitución de la asesoría jurídica de un abogado u otro profesional calificado. Es posible que la información no refleje los cambios más recientes en la legislación, la cual podrá modificarse sin previo aviso y no se garantiza que esté completa, correcta o actualizada.