You may qualify for the Saver’s Credit for contributions you make to an Individual Retirement Arrangement (IRA) for 2017 on or before April 17, 2018.
Unlike a deduction, a credit is a dollar-for-dollar reduction of your federal income tax liability, and this credit can reduce the amount you owe or increase your refund for taxes already paid.
Are you eligible for the credit? To claim the Saver’s Credit for 2017:
1. You must be age 18 or older,
2. You cannot be a full-time student,
3. You cannot be claimed as a dependent on another person’s return, and
4. Your adjusted gross income cannot be more than:
• $62,000 if your filing status is married filing jointly;
• $46,500 if your filing status is head of household; or
• $31,000 if your filing status is single, married filing separately or qualifying widow(er).
Are your 2017 contributions eligible for the credit? Eligible contributions include:
1. Contributions to a traditional or Roth IRA, and
2. Salary reduction contributions (including voluntary after-tax and designated Roth contributions) to your employer’s 401(k), SIMPLE IRA, SARSEP, 403(b), 501(c)(18) or governmental 457(b) plan.
Rollover contributions aren’t eligible for the Saver’s Credit. Your eligible contributions for the credit may be reduced by any recent distributions you received from an employer-sponsored retirement plan or an IRA. Amount of the credit The amount of the credit you can get is based on the contributions you make and your credit rate. Your credit rate can be as low as 10 percent or as high as 50 percent, depending on your income and your filing status. Use Form 8880, Credit for Qualified Retirement Savings Contributions, to calculate and claim your credit.
You may be able to take a tax credit for making eligible contributions to your IRA or employer-sponsored retirement plan.
Who’s eligible for the credit?
You’re eligible for the credit if you’re:
- Age 18 or older;
- Not a full-time student; and
- Not claimed as a dependent on another person’s return.
See the instructions for Form 8880, Credit for Qualified Retirement Savings Contributions, for the definition of a full-time student.
Amount of the credit
The amount of the credit is 50%, 20% or 10% of your retirement plan or IRA contributions up to $2,000 ($4,000 if married filing jointly), depending on your adjusted gross income (reported on your Form 1040 or 1040A). Use the chart below to calculate your credit.
*Single, married filing separately, or qualifying widow(er)
| 2018 Saver’s Credit | |||
|---|---|---|---|
| Credit Rate | Married Filing Jointly | Head of Household | All Other Filers* |
| 50% of your contribution | AGI not more than $38,000 | AGI not more than $28,500 | AGI not more than $19,000 |
| 20% of your contribution | $38,001 – $41,000 | $28,501 – $30,750 | $19,001 – $20,500 |
| 10% of your contribution | $41,001 – $63,000 | $30,751 – $47,250 | $20,501 – $31,500 |
| 0% of your contribution | more than $63,000 | more than $47,250 | more than $31,500 |
| 2017 Saver’s Credit | |||
|---|---|---|---|
| Credit Rate | Married Filing Jointly | Head of Household | All Other Filers* |
| 50% of your contribution | AGI not more than $37,000 | AGI not more than $27,750 | AGI not more than $18,500 |
| 20% of your contribution | $37,001 – $40,000 | $27,751 – $30,000 | $18,501 – $20,000 |
| 10% of your contribution | $40,001 – $62,000 | $30,001 – $46,500 | $20,001 – $31,000 |
| 0% of your contribution | more than $62,000 | more than $46,500 | more than $31,000 |
| 2016 Saver’s Credit | |||
|---|---|---|---|
| Credit Rate | Married Filing Jointly | Head of Household | All Other Filers* |
| 50% of your contribution | AGI not more than $37,000 | AGI not more than $27,750 | AGI not more than $18,500 |
| 20% of your contribution | $37,001 – $40,000 | $27,751 – $30,000 | $18,501 – $20,000 |
| 10% of your contribution | $40,001 – $61,500 | $30,001 – $46,125 | $20,001 – $30,750 |
| 0% of your contribution | more than $61,500 | more than $46,125 | more than $30,750 |
| 2015 Saver’s Credit | |||
|---|---|---|---|
| Credit Rate | Married Filing Jointly | Head of Household | All Other Filers* |
| 50% of your contribution | AGI not more than $36,500 | AGI not more than $27,375 | AGI not more than $18,250 |
| 20% of your contribution | $36,501 – $39,500 | $27,376 – $29,625 | $18,251 – $19,750 |
| 10% of your contribution | $39,501 – $61,000 | $29,626 – $45,750 | $19,751 – $30,500 |
| 0% of your contribution | more than $61,000 | more than $45,750 | more than $30,500 |
Retirement savings eligible for the credit
The Saver’s Credit can be taken for your contributions to a traditional or Roth IRA; your 401(k), SIMPLE IRA, SARSEP, 403(b), 501(c)(18) or governmental 457(b) plan; and your voluntary after-tax employee contributions to your qualified retirement and 403(b) plans.
Rollover contributions (money that you moved from another retirement plan or IRA) aren’t eligible for the Saver’s Credit. Also, your eligible contributions may be reduced by any recent distributions you received from a retirement plan or IRA.
Example: Jill, who works at a retail store, is married and earned $37,000 in 2017. Jill’s husband was unemployed in 2017 and didn’t have any earnings. Jill contributed $1,000 to her IRA in 2017. After deducting her IRA contribution, the adjusted gross income shown on her joint return is $36,000. Jill may claim a 50% credit, $500, for her $1,000 IRA contribution.
Additional resources
- Individual Retirement Arrangements (IRAs)
- Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)
- Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)
- Form 8880, Credit for Qualified Retirement Savings Contributions