Retirement Saver’s Credit (future Saver’s Match)

In late December 2022, President Biden signed Secure Act 2.0, which made significant changes to IRAs, employer sponsored retirement plans, and other retirement plan rules.  One of the significant changes was targeted toward low-and middle-income savers by expanding the availability of what is called the Retirement Saver’s Credit.  Additionally, the current Retirement Saver’s Credit will transform into a Saver’s Match starting in calendar year 2027.

The Retirement Saver’s Credit allows low-and middle- income taxpayers to reduce their tax liability by claiming the credit on their tax return based on a percentage (10%, 20%, or 50%) of their retirement contributions up to $1,000 for single individuals ($2,000 for married filing joint couples).  The retirement plan contributions which the Retirement Saver’s Credit may be claimed on include a traditional IRA, Roth IRA, 401(k), and other employer retirement plans.

For 2023, single filers and married couples filing a separate return with adjusted gross income (AGI) of $36,500 or less are eligible for the credit. Married people filing a joint tax return must have an AGI of $73,000 or less, and head-of-household filers must have an AGI of $54,750 or less to qualify. The credit percentage phases out as the taxpayer’s AGI approaches the maximum for each filing status and can be found in the 2023 Retirement Saver’s Credit Table. Even if the taxpayer’s income is below the applicable limit, taxpayers won’t qualify for the credit if under 18 years of age, a full-time student, or can be claimed as a dependent on someone else’s tax return. The retirement saver’s credit is a nonrefundable credit limited to the overall tax liability on the taxpayer’s return.

Start typing and press Enter to search

Shopping Cart