There is good news for some taxpayers who qualify for tax credits that will reach up to $2,000 as the 2025 tax season quickly approaches. The Internal Revenue Service (IRS) made the announcement.
Tax refunds for the year 2024 should arrive and be processed by the Internal Revenue Service by the end of January. Every year, the IRS gives people a number of tax credits and deductions to help them lower their tax bill or get a bigger tax refund. One of these benefits is the Saver’s Credit, which is a tax credit for up to $2,000 put into a retirement account.
The IRS offers tax credits of up to $2,000 for those who qualify
You might be able to get a tax credit if you put money into an employer-sponsored retirement plan or an individual retirement account (IRA). Additionally, the IRS says that if you are the designated beneficiary, you may be able to get a tax break for money that was put into an ABLE account. If any of the following apply, the IRS says you can get the saver’s credit:
- You must be at least eighteen years old,
- not be dependent on the return of anyone else, and not be a student.
The IRS says that the amount of this credit you get is based on your Form 1040’s adjusted gross income. It is said by the IRS that the credit will be 10%, 20%, or 50% of the
- Contributions to traditional or Roth IRAs
- Contributions made through optional salary deferrals to a section 401(k), 403(b), governmental section 457(b), SARSEP, or SIMPLE plan
- Employee contributions made with after-tax remuneration to a qualified retirement plan (including the Thrift Savings Plan) or a section 403(b) plan.
- Contributions to Section 501(c)(18)(D) plans
- Contributions to an ABLE account if you are the intended beneficiary (as of 2018)
A good thing to remember is that the credit does not apply to rollover contributions. You may not be able to make as many contributions if you recently took money out of an ABLE account, an IRA, or a retirement plan.
The most you can get from the credit is $1,000 ($2,000 if you are married and filing jointly), since the most you can contribute to get it is $2,000 ($4,000 if you are married and filing jointly). Along with your Form 1040, you must also send in Form 8880, Credit for Qualified Retirement Savings Contributions, in order to get the Savers Credit.
How much did taxpayers earn in the saver’s credit in 2024?
According to data from the Internal Revenue Service (IRS), taxpayers made the following amounts in 2024:
| Credit rate | Married filing jointly | Head of household | All other filers* |
| 50% of your contribution | Adjusted gross income lower than $46,000 | Adjusted gross income greater than $34,500 | Adjusted gross income lower than $23,000 |
| 20% of your contribution | $46,001- $50,000 | $34,501 – $37,500 | $23,001 – $25,000 |
| 10% of your contribution | $50,001 – $76,500 | $37,501 – $57,375 | $25,001 – $38,250 |
| 0% of your contribution | more than $76,500 | more than $57,375 | more than $38,250 |
Learn more about the contribution deadlines from the IRS
IRA owners have until April 15, 2024, which is also the last day to file their 2023 taxes, to open a new IRA or add money to an existing one for 2023. You can have both a traditional and a Roth IRA.
People with employer-sponsored retirement plans can still make eligible contributions to their 2023 tax returns and get the Saver’s Credit. If you choose to defer your contributions to an employer retirement plan, they need to be made by December 31 in order to:
- 401(k) plans.
- 403(b) plan for public school employees and certain tax-exempt organizations.
- Governmental 457 plans are designed for state and local government employees.
- Thrift Savings Plan (TSP) for federal employees.
Remember that you can not get the saver’s credit if any of these amounts are higher than your adjusted gross income:
- Married filing jointly: $76,500.
- Head of household: $57,375.
- All other filing statuses: $38,250.