Most Workers Don’t Know This Retirement Tax Credit Exists

Most Workers Don’t Know This Retirement Tax Credit Exists
Photo by FS Stock /

Tax season is now underway. But as in years past, millions of taxpayers are probably still missing out on the chance to slash their tax bill by as much as $4,000 simply because they overlook a little-known federal tax credit.

It’s called the Retirement Savings Contributions Credit, aka the Saver’s Credit.

If you’re eligible for it, this credit is worth as much as 10% to 50% of your retirement account contributions, according to the IRS. The maximum dollar amount of the credit is $2,000 — or $4,000 for married people filing joint tax returns.

And yet, only 38% of workers are aware of this credit, according to a recent survey from the nonprofit Transamerica Center for Retirement Studies.

Your eligibility for the credit depends largely on your income.

To be eligible for the Saver’s Credit for tax year 2019 — which is the tax return due in April — you must:

  • Be an adult who is not a full-time student and not claimed as a dependent on someone else’s tax return.
  • Have an adjusted gross income (found on your tax return) of no more than $65,000 if your tax-filing status is married filing jointly, $48,750 if your status is head of household and $31,500 for all other taxpayers.
  • Contribute to an eligible retirement plan (listed below).

The percentage of your retirement contributions that are eligible for the Saver’s Credit also depends on your income and tax filing status. Click the IRS link above for a breakdown.

Contributions to the following types of retirement plans are eligible for the Saver’s Credit:

  • Traditional IRA
  • Roth IRA
  • 401(k)
  • 501(c)(18)
  • Governmental 457(b) plan
  • 403(b) — voluntary after-tax employee contributions

For more tax breaks you might be overlooking, check out “Did You Miss These 7 Credits and Deductions?

Retire on your own terms with help from this course

The Only Retirement Guide You'll Ever Need gives you the knowledge you need to retire on your own terms. Sure, you can pay a financial adviser, but this online course gives you total control to create a customized retirement plan around the things that matter to you -- without the fees you can expect from financial firms and advisers.

You'll get expert, personalized advice. You'll have access to the latest tools. You'll have ongoing support. And when you've completed the course, you'll be ready to approach your retirement with confidence and with peace of mind.

It's time to plan the best years of your life. Let's get started.

Read Next

The 12 Most — and Least — Reliable Appliance Makers
The 12 Most — and Least — Reliable Appliance Makers

How many of these brand names do you know?

9 Free Things That Used to Cost Us Money
9 Free Things That Used to Cost Us Money

Not everything is getting more expensive.

Half of All Retirees Say They Fear This
Half of All Retirees Say They Fear This

Chances are good that you share this fear. Here’s a way to overcome it.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started


Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.