Low- and moderate-income taxpayers who save for retirement may be eligible for a tax credit in 2025 and beyond.
The Retirement Savings Contributions Credit, also known as the Saver’s Credit, helps taxpayers offset a portion of money voluntarily contribute to 401(k) plans, Individual Retirement Arrangements, and similar workplace retirement programs. The credit offsets the first $4,000 if married filing jointly and the first $2,000 for other tax filers.
Eligible taxpayers are at least 18 years old, are not a full-time student and are not claimed as a dependent on another person’s tax return. Heads of household can have an adjusted gross income of up to $57,375, singles and married individuals filing separately can have adjusted gross incomes of up to $38,250, and married couples filing jointly can have adjusted gross incomes of up to $76,500. The maximum credit is $2,000 for married couples and $1,000 for other filers.
Eligible persons with a disability who are the designated beneficiary of an Achieving a Better Life Experience (ABLE) account and contribute to that account also benefit from the credit.
Distributions from an ABLE account or retirement plan reduce the contribution amount used to figure the tax credit. Rollover contributions do not qualify.