What Is the Retirement Savings Contribution Credit?

The Retirement Savings Contribution Credit, often called the Saver’s Credit, lowers your federal income tax bill by up to $1,000 (or $2,000 for a married couple filing jointly) when you put money into a qualifying retirement account or ABLE account. The credit equals 50%, 20%, or 10% of what you contribute, and which rate you get depends on your adjusted gross income and filing status. Tax year 2026 is the last year the credit applies to retirement plan contributions before the SECURE 2.0 Act replaces it with a direct government match in 2027.¹

How Much the Credit Is Worth

The credit is a percentage of the first $2,000 you contribute during the year. A married couple filing jointly can count up to $2,000 per spouse, for a combined $4,000.¹ At the top tier, a single filer who contributes at least $2,000 gets a $1,000 credit; a couple contributing at least $4,000 gets $2,000.²

The credit is nonrefundable. It can bring your tax down to zero, but no lower. If the credit is larger than what you owe, the leftover is lost rather than refunded or carried forward. That’s the practical ceiling for filers with very low tax bills.

2026 Income Limits

Your adjusted gross income sets your credit rate. The IRS adjusts the thresholds each year for inflation. For tax year 2026:³

Married filing jointly:

50% credit: AGI of $48,500 or less
20% credit: AGI of $48,501 to $52,500
10% credit: AGI of $52,501 to $80,500

Head of household:

50% credit: AGI of $36,375 or less
20% credit: AGI of $36,376 to $39,375
10% credit: AGI of $39,376 to $60,375

Single, married filing separately, or qualifying surviving spouse:

50% credit: AGI of $24,250 or less
20% credit: AGI of $24,251 to $26,250
10% credit: AGI of $26,251 to $40,250

Earn a dollar more than the top figure for your filing status and the credit is zero. There’s no partial credit above those ceilings, and the jumps between tiers are cliffs, not slopes. A married couple at $48,500 gets 50%; at $48,501, the rate falls to 20%. Because a traditional retirement contribution lowers your AGI, adding to the account can sometimes push you into a higher credit tier.

Who Qualifies

Three personal tests apply on top of the income limits, and you have to meet all three:¹

You must be at least 18 by the end of the tax year.
You can’t have been a full-time student for any part of five months during the year. The months don’t have to be consecutive, and the standard is enrollment at a school with a regular teaching staff and curriculum.⁴
You can’t be someone another taxpayer is able to claim as a dependent, even if they choose not to.

Which Contributions Count

The credit covers contributions you make from your own money to:²

Traditional and Roth IRAs
401(k), 403(b), governmental 457(b), SARSEP, and SIMPLE plans
Voluntary after-tax employee contributions to a qualified plan, including the federal Thrift Savings Plan
ABLE (529A) accounts, when you are the designated beneficiary

Employer matching contributions don’t count. Only your own deferrals and contributions do. If you deduct a traditional IRA contribution on Schedule 1, you can still claim the Saver’s Credit on the same dollars, which is one of the few places the tax code lets a single contribution do two jobs.⁵

How Recent Withdrawals Can Shrink the Credit

The law keeps you from pulling money out of a retirement account and then contributing it back for a credit. Distributions during a testing period reduce the contributions you can count. That period covers the current tax year, the two prior tax years, and the stretch from year-end through your return’s due date, including extensions.¹ ABLE account distributions count too.²

For a 2026 credit, distributions from 2024 through roughly the extended October 2027 filing deadline are in scope. Take $1,500 from an IRA in 2025 and contribute $2,000 in 2026, and only $500 counts.

Several transactions are excluded from the reduction: rollovers, trustee-to-trustee transfers, Roth conversions, plan loans treated as distributions, returned excess contributions, and inherited-IRA distributions taken by a non-spouse beneficiary.⁵ A Roth conversion won’t cost you the credit.

How to Claim It

You claim the credit on IRS Form 8880. The form asks for your contributions, subtracts any testing-period distributions, and applies the percentage for your income and filing status.⁵ You’ll want your W-2 (Box 12 shows workplace plan deferrals) and any IRA contribution statements on hand.

The result from Form 8880 flows to Schedule 3, line 4, and from there into your Form 1040. Tax software handles this routing once you enter the numbers. On paper, attach both Form 8880 and Schedule 3 to your 1040. Because the credit is nonrefundable, any amount above your tax liability is not refunded and does not carry to the next year.

What Changes in 2027

The Saver’s Credit applies to retirement plan contributions only for tax years beginning before January 1, 2027.¹ Starting in 2027, Section 103 of the SECURE 2.0 Act replaces it with the Saver’s Match. Rather than reducing a tax bill, the federal government deposits a 50% match, up to $2,000 per couple, directly into your retirement account.⁶ The switch is designed to reach lower-income savers whose tax bills were too small to absorb the current credit.

If you qualify for the Saver’s Credit in 2026, this is the final year to take it as a credit on your return.

1
Office of the Law Revision Counsel. 26 USC 25B – Elective Deferrals and IRA Contributions by Certain Individuals
2
Internal Revenue Service. Retirement Savings Contributions Credit (Saver’s Credit)
3
Internal Revenue Service. Notice 2025-67 – 2026 Amounts Relating to Retirement Plans and IRAs
4
Internal Revenue Service. Full-Time Student
5
Internal Revenue Service. Form 8880 – Credit for Qualified Retirement Savings Contributions
6
Senate Committee on Finance. SECURE 2.0 Act of 2022 Section-by-Section Summary