When it comes to saving for retirement, most people think about 401(k)s, IRAs, and employer matches. But there’s another benefit tucked into the tax code that’s easy to miss—and surprisingly valuable: the Saver’s Credit.

If you’ve never heard of it, you’re not alone. Despite being around for years, the Saver’s Credit often flies under the radar. But for low- and moderate-income earners, it can offer a meaningful tax break—on top of the long-term benefits of contributing to a retirement account.

Let’s walk through what it is, how it works, and why 2025 might be the year more people start to benefit from it.

What Exactly Is the Saver’s Credit?

In simple terms, the Saver’s Credit (officially called the Retirement Savings Contributions Credit) is a tax credit for eligible individuals who contribute to a qualified retirement account—like a 401(k), traditional or Roth IRA, or a 403(b).

Unlike a tax deduction, which reduces the amount of income that’s taxed, a tax credit reduces your actual tax bill—dollar for dollar. That makes it far more powerful.

Here’s how it works: depending on your income and filing status, you could receive a credit equal to 10%, 20%, or even 50% of what you contribute to your retirement account in a given year. The maximum credit is $1,000 per person, or $2,000 for married couples filing jointly.

That’s a real incentive to put money into retirement savings—especially if you’re just getting started or contributing smaller amounts.

Who’s Eligible? Income Limits and Filing Status

To qualify, your income needs to fall below a certain threshold. These limits adjust each year based on inflation, and the IRS recently announced higher cutoffs for 2025, which means more people could qualify.

Here’s a breakdown of the income limits:

2024 Income Limits (for taxes filed in 2025)

  • Married filing jointly: up to $76,500
  • Head of household: up to $57,375
  • All others (including single filers): up to $38,250

2025 Income Limits (for taxes filed in 2026)

  • Married filing jointly: up to $79,000
  • Head of household: up to $59,250
  • All others: still $38,250

Even if you don’t typically owe much in taxes, this credit can help lower your bill—or wipe it out entirely. That’s especially useful for early-career workers, part-timers, or anyone going through a lower-income period.

How Much Can You Actually Get Back?

The percentage of your contribution that qualifies for the credit depends on your adjusted gross income (AGI) and your tax filing status. Here’s how it breaks down for the 2024 tax year:

Married Filing Jointly

  • 50% credit: AGI of $46,000 or less
  • 20% credit: AGI of $46,001 – $50,000
  • 10% credit: AGI of $50,001 – $76,500

Head of Household

  • 50% credit: AGI of $34,500 or less
  • 20% credit: AGI of $34,501 – $37,500
  • 10% credit: AGI of $37,501 – $57,375

Single or Other Filing Status

  • 50% credit: AGI of $23,000 or less
  • 20% credit: AGI of $23,001 – $25,000
  • 10% credit: AGI of $25,001 – $38,250

Let’s say you’re single, earn $22,000 in 2024, and contribute $2,000 to your IRA. You’d qualify for the 50% credit—and that means you’d get a $1,000 reduction on your tax bill. That’s in addition to any tax deduction or investment growth your IRA provides.

Why This Credit Matters—Especially Now

The Saver’s Credit isn’t new, but the expanded income limits in 2025 make it more accessible than ever. With inflation pushing wages higher, many people who didn’t qualify in the past might find themselves eligible next year.

It’s also one of the few tax benefits that directly supports long-term financial stability. It rewards those who take action to save—even in small amounts—and helps offset the short-term sacrifice of setting that money aside.

For example, a couple in their early 30s earning a combined $45,000 could get a $2,000 credit for saving toward retirement. That’s money they can use to pay off debt, boost emergency savings, or reinvest for the future.

A Few Quick Notes

  • The credit is nonrefundable, which means it can reduce your tax bill to zero, but it won’t generate a refund beyond that.
  • You must be 18 or older, can’t be a full-time student, and can’t be claimed as a dependent on someone else’s tax return.
  • Contributions must be made to qualified retirement plans—so check the eligibility of your account if you’re unsure.

Don’t Leave Free Money on the Table

Tax time isn’t most people’s favorite season—but it does present opportunities. If you’re saving for retirement and your income fits within the limits, the Saver’s Credit is a chance to earn back some of what you’re investing in your future.

And remember, it’s not just about the tax credit. That contribution is also growing—hopefully for decades—inside your retirement account. The credit just sweetens the deal.

So if you haven’t checked your eligibility before, now’s the time. A small contribution could lead to a big return—both now and later.