Saver’s Credit
WHAT RETIREMENT SAVINGS VEHICLES ARE ELIGIBLE FOR THE TAX CREDIT?
WHO IS ELIGIBLE FOR THE TAX CREDIT?
HOW MUCH IS THE TAX CREDIT?
The maximum annual contribution eligible for the tax credit is $2,000, and the maximum credit rate is 50 percent of the amount contributed. This means that the maximum possible credit that a taxpayer could receive in one year is $1,000. However, not everyone who qualifies for the credit will be able to claim the full credit. The specific amount of your credit (if any) in any year will depend on three factors: your AGI for the year, your income tax filing status for the year, and the amount of your IRA or retirement plan contribution for the year. The following tables (for 2016 and 2017, respectively) provide the credit rates based on AGI and filing status:
2016
Joint Filers | Heads of Household | Single Filers | Credit Rate |
---|---|---|---|
$0-$37,000 | $0-$27,750 | $0-$18,500 | 50% of contribution (up to $2,000) |
$37,001-$40,000 | $27,751-$30,000 | $18,501-$20,000 | 20% |
$40,001-$61,500 | $30,001-$46,125 | $20,001-$30,750 | 10% |
Over $61,500 | Over $46,125 | Over $30,750 | 0% |
2017
Joint Filers | Heads of Household | Single Filers | Credit Rate |
---|---|---|---|
$0-$37,000 | $0-$27,750 | $0-$18,500 | 50% of contribution (up to $2,000) |
$37,001-$40,000 | $27,751-$30,000 | $18,501-$20,000 | 20% |
$40,001-$62,000 | $30,001-$46,125 | $20,001-$30,750 | 10% |
Over $62,000 | Over $46,500 | Over $31,000 | 0% |
Finally, be aware that the amount of any contribution eligible for the credit may be reduced by any taxable distributions that you and your spouse receive from any of the retirement savings vehicles mentioned previously (or from any other qualified retirement plan). This reduction applies to distributions received during the same tax year that the credit is claimed, the two tax years prior to the tax year that the credit is claimed, and during the period after the end of the tax year and prior to the due date for filing your tax return for the year. In the case of a Roth IRA, this rule applies to any distributions received, whether taxable or nontaxable.