What Is the Savers Credit?

Updated for Tax Year 2017


OVERVIEW

The Savers Credit gives a special tax break to low- and moderate-income taxpayers who are saving for retirement.


Formerly called the Retirement Savings Contributions Credit, the Savers Credit gives a special tax break to low- and moderate-income taxpayers who are saving for retirement. This credit is in addition to the other tax benefits for saving in a retirement account. If you qualify, a Savers Credit can reduce or even eliminate your tax bill.

Unfortunately, many eligible taxpayers don't take advantage of this break because they don't know about it. Indeed, a recent survey* shows that only 12% of American workers with annual household incomes of less than $50,000 are aware of the Savers Credit.

How much could the Savers Credit cut from my tax bill?

Depending on your adjusted gross income and tax filing status, you can claim the credit for 50%, 20% or 10% of the first $2,000 you contribute during the year to a retirement account. Therefore, the maximum credit amounts that can be claimed are $1,000, $400 or $200.

The biggest credit amount a married couple filing jointly can claim together is $2,000. But if you and/or your spouse took a taxable distribution from your retirement account during the two years prior to the due date for filing your return (including extensions), that distribution reduces the size of the Savers Credit available to you.

The Savers Credit is a 'non-refundable' credit. That means this credit can reduce the tax you owe to zero, but it can't provide you with a tax refund.

Which retirement accounts qualify for the credit?

The Savers Credit can be claimed for your contributions to a 401k, 403(b), 457 plan, a Simple IRA or a SEP IRA. (You can’t claim your employer's contributions to these accounts, however.) Your contributions to a traditional IRA or a Roth IRA are also eligible for the Savers Credit.

Am I eligible?

To claim a Savers Credit, you must be age 18 or older and you cannot be a full-time student or be claimed as a dependent on someone else's tax return. Your retirement contribution must have been made during the tax year for which you are filing your return. And you must meet the income requirements.

In 2017, the maximum adjusted gross income for Savers Credit eligibility is $61,500 for a married couple filing jointly, $46,125 for a head of household, and $30,750 for all other taxpayers. The maximum credit you can claim phases out as your income increases.

2017 Adjusted Gross Income:

Credit Single Filer               Head of Household         Joint Filers
50% $18,500 or less $27,750 or less $37,000 or less
20% $18,501-$20,000 $27,751-$30,000 $37,001-$40,000
10% $20,001-$31,000 $30,001-$46,500 $40,001-$62,000

Examples:

John and Maria are married and file jointly. He’ll contribute $1,000 to his 401(k) plan this year. She’ll contribute $1,000 to an IRA. Their 2017 combined adjusted gross income is $33,500. Each of them is therefore eligible to claim a 50% credit for their contributions. Together, their credits are worth $1,000.

Christine files as a head of household. She’ll contribute $1,200 to her 403(b) plan this year. If her 2017 adjusted gross income is $28,000, she can claim a 20% Savers Credit for her contribution, worth $240.

How do I claim the Savers Credit?

To claim the credit, use Form 8880, "Credit for Qualified Retirement Savings Contributions."

Heads-up: You can only claim the Savers Credit if you use form 1040A, 1040 or 1040NR (not supported in TurboTax) to file your federal tax return. Although the IRS has included information about the Savers Credit in the instructions for Form 1040EZ, those instructions direct you to a different form. You can't claim it on Form 1040EZ.

Remember, when you use TurboTax to prepare your taxes, we’ll help you find all the deductions and credits you qualify for—you just need to answer simple, plain-English questions and let TurboTax handle the rest.

*Transamerica Center for Retirement Studies, 11th Annual Survey, conducted online within the United States by Harris Interactive on behalf of Transamerica Center for Retirement Studies between December 3, 2009, and January 18, 2010, among 3,598 full-time and part-time workers.

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $54.99*
Sign In

Looking for more information?

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


Security is built into everything we do
Here's how
* Important Offer Details and Disclosures
  • TURBOTAX ONLINE/MOBILE

  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Absolute Zero $0 federal (1040EZ/1040A) + $0 state offer only available with TurboTax Federal Free Edition; offer may change or end at any time without notice. Actual prices are determined at the time of print or e-file and are subject to change without notice. Savings and price comparisons based on anticipated price increase expected in March. Special discount offers may not be valid for mobile in-app purchases.
  • QuickBooks Self-Employed Offer with TurboTax Self-Employed: File your 2016 TurboTax Self-Employed return between 4/19/17 and 10/16/17 to receive your complimentary subscription to QuickBooks Self-Employed until 10/31/18. Activation by 12/31/17 required. Sign in to QuickBooks Self-Employed via mobile app or at https://selfemployed.intuit.com/turbotax; e-mail address used for activation and sign-in. Offer valid only for new QuickBooks Self-Employed customers. See QuickBooks.com for price comparison.
    • When you use TurboTax Self-Employed to file your 2017 taxes, you will have the option to renew your QuickBooks Self-Employed subscription. If you do not purchase TurboTax Self-Employed by 10/15/18, you will have the option of renewing your QuickBooks Self-Employed subscription by 10/31/18 for another year at the then-current annual subscription rate. You may cancel your subscription at any time from within the QuickBooks Self-Employed billing section.
  • Pays for itself (TurboTax Self-Employed): Estimates based on deductible business expenses calculated at the self-employment tax income rate (15%) for tax year 2016. Actual results will vary based on your tax situation.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice.
  • TurboTax Expert Help, Tax Advice and SmartLook: Included with Deluxe, Premier and Self-Employed (via phone or on-screen); not included with Federal Free Edition (but available for purchase with the Plus bundle). SmartLook on-screen help is available on a PC, laptop or the TurboTax mobile app. TurboTax experts provide general advice, customer service and product help; tax advice provided only by credentialed CPAs, enrolled agents and tax attorneys. Feature availability varies by device. State tax advice is free. Service, area of expertise, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice.
  • Tax Return Access, My Docs and My Analysis & Advice features: Access to all tax-related documents we have on file for you is available until you file your 2017 tax return or through 10/31/2018, whichever comes first. Terms and conditions may vary and are subject to change without notice.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2015 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.
  • CompleteCheck: Covered under the TurboTax accurate calculations and maximum refund guarantees.
  • #1 rated online tax prep provider: Based on independent comparison of the best online tax software by TopTenReviews.com March 13, 2017.
  • TURBOTAX CD/DOWNLOAD SOFTWARE

  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for e-filing state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase expected in March. Prices subject to change without notice.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. This benefit is available with TurboTax Federal products except TurboTax Business.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • About our credentialed tax experts: Live tax advice via phone is included with Premier and Home & Business; fees apply for Basic and Deluxe customers. State tax advice is free. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Not available for TurboTax Business customers.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2016 TurboTax products.
  • Data Import: Imports financial data from participating companies; may require a free Intuit online account. Quicken and QuickBooks import not available with TurboTax installed on a Mac. Imports from Quicken (2016 and higher) and QuickBooks Desktop (2012 and higher); both Windows only. Quicken import not available for TurboTax Business. Quicken products provided by Quicken Inc., Quicken import subject to change.