This federal retirement program will deposit up to $1,000 per year into your savings account: Check out if you qualify
The Saver’s Credit helps low-and-middle-income workers boost retirement savings. Here are the details on the credit’s value and eligibility requirements.
The federal government offers a tax credit to workers with private retirement savings accounts, such as a 401(k), IRA, or employer-sponsored retirement plan. The Saver’s Credit aims to incentivize workers to allocate funds to these accounts to boost their retirement savings by matching up to a certain amount of the funds saved by the account holder. The value of the credit phases out as the annual gross income of a worker increases and varies depending on the filing status of the worker. Based on the income limits that can be found below, the credit aims to support low and middle-income workers.
Eligibility of the Saver’s Credit
Eligibility for the credit is quite simple.
According to the IRS, one must be 18 or older, cannot be claimed as a dependent, or be a student.
Though the IRS states that “school includes technical, trade, and mechanical schools,” they are clear that “on-the-job training courses, correspondence schools, or schools offering courses only through the Internet,” do not.
A look at the value of the credit for 202
50 percent of your contribution
- Married filing jointly: AGI not more than $46,000
- Head of household: AGI not more than $34,500
- All other filers: AGI not more than $23,000
20% of your contribution
- Married filing jointly: $46,001- $50,000
- Head of household: $34,501 - $37,500
- All other filers: $23,001 - $25,000
10% of your contribution
- Married filing jointly: $50,001 - $76,500
- Head of household: $37,501 - $57,375
- All other filers: $25,001 - $38,250
0% of your contribution
- Married filing jointly: more than $76,500
- Head of household: more than $57,375
- All other filers: more than $38,250
This year, for single filers, the cut-off to claim 50 percent of their contribution is $23,000. Imagine a worker who makes $18,000 a year and manages to allocate $2,000 towards their IRA. The worker would be able to deduct those contributions from her taxable income, meaning they would only be taxed on the $16,000 they made in 2024. Additionally, the IRS would directly deposit $1,000 into her retirement account, increasing her contributions to $3,000 for the year.
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