How To Claim The Saver’s Credit

Is your annual income classified as “low” or “middle?” Do you use a 401(k) or another type of individual retirement vehicle to save for the future? Then you may be eligible for the saver’s credit. This benefit is reserved for retirement savers and can be claimed on top of any other tax breaks you qualify for using a traditional retirement account. 

This benefit can be beneficial for low- and middle-income workers. If you qualify for the saver’s credit, you shouldn’t let it go to waste. US News My Money explains how to claim the saver’s credit.

See If You Meet The Income Requirements

If your adjusted gross income for 2021 falls below $33,000 and you contribute to a traditional retirement account, you may be eligible for the saver’s credit.

“Many workers who did not meet the saver’s credit’s income eligibility limits in recent years may now be eligible, because their annual income has dropped as a result of unemployment, furloughs and/or reductions in pay,” Catherine Collinson, president of the Transamerica Center for Retirement Studies (TCRS), a nonprofit group dedicated to helping Americans reach financial security in retirement, told US News My Money.

If you file as the head of household, the income threshold for 2021 will increase to $49,500. Spouses filing jointly can earn up to $66,000 in 2021 and still qualify for the saver’s credit.

Contribute To An Eligible Retirement Account

Eligible saver’s credit retirement accounts include:


  • 401(k)s
  • 403(b)s
  • 457 plans
  • SEP or SIMPLE plans
  • Thrift Savings Plans


But as US News My Money explains, you can still earn the saver’s credit even if you don’t have an employer-sponsored retirement account, which includes:


  • Traditional IRAs
  • Roth IRAs
  • ABLE accounts where you are the beneficiary 


Meet The Contribution Requirements

Individuals who contribute up to $2,000 or spouses who save $4,000 can claim the saver’s credit. Keep in mind that distributions could lower the total used to determine the amount of the benefit.

Meet The Contribution Deadline

Generally, you must make your contributions to any qualifying workplace retirement plan eligible for the saver’s credit before the end of the calendar year. But if you have an IRA, you will have until the April deadline to complete your contributions and qualify for the benefit. So if you want to claim the saver’s credit when you file your 2021 taxes, make sure you make your IRA contributions before April 18, 2022.

Don’t Expect A Big Saver’s Credit

According to Mark Steber, Jackson Hewitt Tax Service’s chief tax information officer, you can use the saver’s credit to either lower your income taxes or increase your refund. “The saver’s credit is better than a deduction. It’s reduced tax liability or money back on your tax return.”

The most you can earn from the saver’s credit is $1,000 as a single filer or $2,000 if you and your spouse file together. However, the amount is typically much smaller. According to a TCRS study of IRS data, the average taxpayer received a $187 credit in 2018. In addition, the IRS states, “It is often much less and, due in part to the impact of other deductions and credits, may, in fact, be zero for some taxpayers.”

Many people are unaware of the tax benefits they could receive by claiming this benefit. A 2020 TCRS poll found that nearly 43% of workers don’t know about the saver’s credit. 

Dependents And Students Cannot Receive The Saver’s Credit

Minors 18 and younger and anyone claimed as a dependent are ineligible for this benefit. Additionally, full-time students (those enrolled in courses at least five months out of the year) are also exempt from the saver’s credit. But if you enrolled in online classes or on-the-job training, you may be able to earn this benefit.

Determine Your Benefit Amount

The saver’s credit is either 10%, 20%, or 50% of your contribution amount. Generally, lower-income workers receive the largest benefits. Individuals who have an adjusted gross income under $19,750 or married couples earning $39,500 in 2021 will qualify for a credit equal to half of their contribution amounts. If your income falls marginally above these thresholds, you will be eligible for a 20% credit. 

Savers with an adjusted gross income of $21,500 to $33,000 ($43,000 to $66,000 for spouses) could receive a benefit worth 10% of their retirement savings contributions. You can claim this benefit on top of other tax deductions you earn as a retirement saver.

“There are only a limited number of instances in the tax law that let you double time,” Barbara Weltman, attorney and author of J.K. Lasser’s 1001 Deductions and Tax Breaks 2021, told US News My Money. “You are getting the deduction for the IRA contribution, and you may get a tax credit as well.”


  • Brandon, Emily. “How to Claim the Saver’s Credit.” U.S. News & World Report, U.S. News & World Report, 21 Dec. 2020,


Ian Schindler