Retirement Savings Contribution Credit
The Retirement Savings Contribution Credit, also known as the Saver’s Credit, is a tax credit available to eligible taxpayers who make contributions to qualified retirement accounts, such as an IRA or a 401(k).
This credit is designed to incentivize low- to moderate-income individuals and families to save for retirement. The amount of the credit is based on the taxpayer’s adjusted gross income (AGI) and the total amount contributed to the retirement account, with the credit rate varying from 10% to 50% of contributions, depending on income levels.
For example, if a qualifying individual contributes $2,000 to their retirement account and is eligible for a 50% credit, they would receive a $1,000 tax credit, which directly reduces their tax liability.
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