2017 vs. 2018 Savers Tax Credit and Income Limits to Help Workers Save for Retirement

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[Updated with 2018 details per the IRS] The savers credit helps middle to lower income earners save for retirement by providing an offset to retirement plan (401k and IRA) contributions. But a lot of people don’t know about or take advantage of this little known credit, officially referred to by the IRS as the retirement savings contributions credit. The savers credit was made a permanent part of the tax code in 2006 and income limits are now adjusted annually to keep pace with inflation.


The savers credit works by offsetting part of the first $2,000 (singles) or $4,000 (married) – the maximum amount of credit – workers voluntarily contributions to tax advantaged retirement plans such as IRAs and employer sponsored workplace plans. Obviously one must be contributing to these plans to claim the savers credit. The credit is available in addition to any other tax savings that apply to the contributions.

The amount of the credit is 50%, 20% or 10% of your qualified retirement plan contributions up to the maximum credit of $2,000 ($4,000 if married filing jointly) depending on your adjusted gross income (reported on your Form 1040 or 1040A), which must fall below the following thresholds:

YearIncome (AGI) Thresholds by Filing Status To Claim Savers Credit
2018- Married couples filing jointly with incomes up to 63,000;
- Heads of Household with incomes up to $47,250; and
- Married individuals filing separately and singles with incomes up $31,500
2017- Married couples filing jointly with incomes up to 62,000;
- Heads of Household with incomes up to $46,500; and
- Married individuals filing separately and singles with incomes up $31,000
2016- Married couples filing jointly with incomes up to 61,500;
- Heads of Household with incomes up to $46,125; and
- Married individuals filing separately and singles with incomes up $30,750
2015- Married couples filing jointly with incomes up to 61,000;
- Heads of Household with incomes up to $45,750; and
- Married individuals filing separately and singles with incomes up $30,500
2014- Married couples filing jointly with incomes up to $60,000;
- Heads of Household with incomes up to $45,000; and
- Married individuals filing separately and singles with incomes up to $30,000

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One thing to note is that the savers credit is a refundable tax credit. Meaning that the actual credit amount you get back in your tax refund is offset against the taxes you owe.  If you don’t owe taxes then you won’t get the credit. Based on the most recent statistics the IRS reported that over $1.2 billion of saver’s credits was claimed with the average claimed averaging $205 for joint filers, $165 for heads of household and $127 for single filers

In addition to income thresholds and contributing to a qualified retirement plan, you have meet the following eligibility criteria: be 18 or older; are not a full-time student and are not being claimed as a dependent on another person’s tax return.


To claim the credit use form 8880 or any recommended tax software. Eligible taxpayers must also be at least 18 years of age and not be enrolled as a full-time student. You have until April 15 of the subsequent year to set up a new and/or add to an existing IRA and still get the savers credit. However, elective deferrals (contributions) must be made by the end of the calendar year to a 401(k), 457 or 403(b) plan or similar employer sponsored plan. See more on retirement plans in the 401K/IRA resource page.  For more on this credit see the official IRS page.

{ 3 comments… read them below or add one }

Dennis S December 21

Fran is correct. It is not a refundable credit. The line should be edited which says: “Meaning that you get the actual credit amount back in your tax refund…”

(2017 is our first year to take the credit, which completely wipes out our Federal tax liability. If it were a refundable credit we would get a $375 refund, in addition to taxes that were withheld.)

I’m glad to see that the credit is available for 2018. Anyone know what the income level is to get the full credit for a couple filing jointly? In 2017, if a couple has taxable income of less than 37,000 (and both contribute at least 2000 to tax-deductible accounts) then they get a $2000 credit toward their tax liability. I’m going with the hope that it increases to 38,000 for 2018. I was hoping the income thresholds for the 50%, 20% & 10% levels would be posted here.

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fran carroll January 4

*specifically line 11 of form 8880 Limitation based on tax liability.

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fran carroll January 4

“Meaning that you get the actual credit amount back in your tax refund or subtracts the value from the taxes you owe.” You might want to review form 8880 as this information is not correct. I have been taking this credit since its inception and the value of the tax credit is lowered to the amount of taxes owed. There is no additional refund if nothing is owed or the taxable amount is lower than the tax credit.

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