The Internal Revenue Service reminds low- and moderate-income workers that they can save for retirement now and possibly earn a special tax credit in 2022 and years ahead.

The Retirement Savings Contributions Credit, also known as the Saver’s Credit, helps offset part of the first $2,000 workers voluntarily contribute to Individual Retirement Arrangements, 401(k) plans and similar workplace retirement programs. The credit also helps any eligible person with a disability who is the designated beneficiary of an Achieving a Better Life Experience (ABLE) account, contribute to that account. For more information about ABLE accounts, see Publication 907, available on

The Saver’s Credit is available in addition to any other tax savings that apply.

Still time to take action

Eligible workers still have time to make qualifying retirement contributions and get the Saver’s Credit on their 2022 tax return. People have until April 18, 2023 – the due date for filing their 2022 return – to set up a new IRA or add money to an existing IRA for 2022. Both Roth and traditional IRAs qualify.

On the other hand, those participating in workplace retirement plans must take action by the end of 2022 for contributions to count for this year. This means elective deferrals (contributions) must be made by December 31 to a:

  • 401(k) plan.
  • 403(b) plan for employees of public schools and certain tax-exempt organizations.
  • Governmental 457 plan for state or local government employees.
  • Thrift Savings Plan (TSP) for federal employees.

Contributions to certain other workplace retirement plans also qualify. See the instructions to Form 8880 for details.

Employees unable to set aside money this year may want to schedule their 2023 contributions soon so their employer can begin withholding them in January.

Who qualifies

Income limits, based on a taxpayer’s adjusted gross income and marital or filing status, apply to the Saver’s Credit. But due to inflation, the limits will increase markedly in 2023.

As a result, the Saver’s Credit can be claimed by:

  • Married couples filing jointly with incomes up to $68,000 in 2022 or $73,000 in 2023.
  • Heads of household with incomes up to $51,000 in 2022 or $54,750 in 2023.
  • Married individuals filing separately and singles with incomes up to $34,000 in 2022 or $36,500 in 2023.

Like other tax credits, the Saver’s Credit can increase a taxpayer’s refund or reduce the tax owed. Though the maximum Saver’s Credit is $1,000 ($2,000 for married couples), the IRS cautioned that it is often much less and, due in part to the impact of other deductions and credits, may, in fact, be zero for some taxpayers.

A taxpayer’s credit amount is based on their filing status, adjusted gross income, tax liability and amount contributed to qualifying retirement programs or ABLE accounts. Form 8880 is used to claim the Saver’s Credit, and its instructions have details on figuring the credit correctly.

In tax year 2020, the most recent year for which complete figures are available, Saver’s Credits totaling more than $1.7 billion were claimed on about 9.4 million individual income tax returns. That’s an average of about $186 per eligible return.

The Saver’s Credit supplements other tax benefits available to people who set money aside for retirement. For example, most workers may deduct their contributions to a traditional IRA. Though Roth IRA contributions are not deductible, qualifying withdrawals, usually after retirement, are tax-free. Normally, contributions to 401(k) and similar workplace plans are not taxed until withdrawn.

Some restrictions apply

Other special rules that apply to the Saver’s Credit include:

  • Eligible taxpayers must be at least 18 years of age.
  • Anyone claimed as a dependent on someone else’s return cannot take the credit.
  • A student cannot take the credit. A person enrolled as a full-time student during any part of 5 calendar months during the year is considered a student.

Any distributions from a retirement plan or ABLE account reduce the contribution amount used to figure the credit. For 2022, this rule applies to distributions received after 2019 and before the due date, including extensions, of the 2022 return. Form 8880 and its instructions have details on making this computation.

To learn more about other ways to get ready for the tax season ahead, visit