As the 2025 tax season approaches, the Internal Revenue Service (IRS) has released good news for those taxpayers who qualify for tax credits worth up to $2,000. The Internal Revenue Service anticipates receiving and processing refunds for tax year 2024 returns in late January.
Each year, the IRS gives many tax credits and deductions to help taxpayers reduce their tax payment or increase their refund. One of these benefits is the Saver’s Credit, which allows you to receive a credit of up to $2,000 for contributions to retirement funds.
The IRS Provides Tax Credits of up to $2,000 to Those Who Qualify
If you make qualified contributions to your employer’s retirement plan or individual retirement account (IRA), you may be entitled for a tax credit. Furthermore, the IRS notes that if you are the designated beneficiary, you may be eligible for a credit for contributions made to an Achieving an Enhanced Life Experience (ABLE) account. According to the Internal Revenue Service, you qualify for the Saver’s Credit if:
To participate, you must be at least 18 years old, not rely on others’ return, and not a student.
According to the IRS, the amount of this credit you receive is determined on your adjusted gross income as reported on Form 1040. The IRS specifies that the credit will be 10%, 20%, or 50% of the
- Contributions to traditional and Roth IRAs
- Contributions made via discretionary salary deferrals to a section 401(k), 403(b), governmental section 457(b), SARSEP, or SIMPLE plan
- Employee contributions made with post-tax earnings to a qualified retirement plan (including the Thrift Savings Plan) or a section 403(b) plan.
- Contributions for Section 501(c)(18)(D) plans
Contributions to an ABLE account if you are the intended beneficiary (in 2018)
Remember that the credit does not apply to rollover contributions, which is important to understand. Any recent withdrawals from an ABLE account, IRA, or retirement plan may reduce your qualifying contributions.
The credit has a maximum amount of $1,000 ($2,000 if married filing jointly), because the maximum donation amount that qualifies you for it is $2,000 ($4,000 for married couples filing jointly). To receive the Savers Credit, send Form 8880, Credit for Qualified Retirement Savings Contributions, together with your Form 1040.
How Much Did Taxpayers Earn With the Saver’s Credit in 2024?
According to IRS data, taxpayers earned the following contributions in 2024:
| Credit rate | Married filing jointly | Head of household | All other filers* |
| 50% of your contribution | Adjusted gross income lower than $46,000 | Adjusted gross income greater than $34,500 | Adjusted gross income lower than $23,000 |
| 20% of your contribution | $46,001- $50,000 | $34,501 – $37,500 | $23,001 – $25,000 |
| 10% of your contribution | $50,001 – $76,500 | $37,501 – $57,375 | $25,001 – $38,250 |
| 0% of your contribution | more than $76,500 | more than $57,375 | more than $38,250 |
Learn More About IRS Contribution Deadlines
IRA members have until April 15, 2024, the deadline for submitting their 2023 tax return, to open or contribute to an existing IRA for 2023. Traditional and Roth IRAs are both permitted.
People with employer-sponsored retirement plans still have time on their 2023 tax returns to make qualified retirement contributions and claim the Saver’s Credit. Contributions to employee retirement plans with elective deferrals must be submitted by December 31 to:
- 401k plans.
- 403(b) retirement plan for public school employees and certain tax-exempt organizations.
- Governmental 457 plans are specifically developed for state and local government employees.
- Thrift Savings Plan (TSP) for federal employees.
Remember that you are not eligible for the saver’s credit if your adjusted gross income exceeds any of the following thresholds:
- Married filing jointly: $76,500.
- Head of household earns $57,375.
- All other filing statuses total $38,250.
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