When it comes to the Saver’s Credit, there are three credit buckets you can fall into: 50%, 20%, or 10%. Use the eligibility chart below to run through how it works.
Let’s say you are a single person with an AGI of $19,000. You decide to contribute $2,500 to your Roth IRA (individual retirement account). The maximum contribution amount that the IRS will consider for credit purposes is $2,000. Because the income falls within the range for the “50% of your contribution” credit, the taxpayer is entitled to a $1,000 Saver’s Credit. A married couple can make up to $4,000 in eligible contributions that can lead to up to a $2,000 credit.
2021 Saver’s Credit Rate And AGI Eligibility By Filing Status
Credit |
Married Filing Jointly
(AGI) |
Head of Household
(AGI) |
All Other Filers
(AGI) |
50% of your contribution |
$0 to $39,500 |
$0 to $29,625 |
$0 to $19,750 |
20% of your contribution |
$39,501 to $43,000 |
$29,626 to $32,250 |
$19,751 to $21,500 |
10% of your contribution |
$43,001 to $66,000 |
$32,251 to $49,500 |
$21,501 to $33,000 |
Not available |
Over $66,000 |
Over $49,500 |
Over $33,000 |
Make The Most Of Retirement Accounts
The Roth IRA is used in the example above, but that’s not the only account that allows you to get your hands on the Saver’s Credit. If you plan to make contributions to the retirement accounts below, you’re another step closer to a tax break.
- Traditional or Roth IRA
- 401(k)
- 403(b) or governmental 457(b) plans
- ABLE
- Thrift Savings Plan
- SIMPLE IRA
- SEP-IRA
Source: SCNow