A store sometimes offers a discount for buying clothing, food or other items. Likewise, the government gives discounts when you save for retirement if you are within a certain income range and meet other eligibility requirements.*
Called the Saver’s Tax Credit, this discount applies to the first $2,000 ($4,000 for married couples) you contribute to a retirement plan. See the table below to see if you qualify.
An example
Monica, a single adult, filing her 2018 taxes
- Annual salary: $25,000 a year
- Contribution to retirement plan: $1,500 ($29/week)
- Tax credit from IRS: 10% discount on her tax return
- Benefit: $150 kept in her pocket rather than paid in federal taxes
2018 income levels
| Joint Filers | Heads of Household | All other Filers | Credit Rate |
| $0 - $38,000 | $0 - $28,500 | $0 - $19,000 | 50% |
| $38,001 - $41,000 | $28,501 - $30,750 | $19,001 - $20,500 | 20% |
| $41,001 - $63,000 | $30,751 - $47,250 | $20,501 - $31,500 | 10% |
| Over $63,000 | Over $47,250 | Over $31,500 | 0% |
Source: IRS.gov
How to receive your tax credit
If you meet the income guidelines, take five minutes to fill out the Tax Form 8880, Credit for Qualified Retirement Savings Contributions. Then send this completed form with your regular tax forms when you file your taxes for 2018.Congratulations! You’re done.
Plan now
Save more in 2019 and take advantage of the tax credit in the future.
2019 income levels
| Joint Filers | Heads of Household | All other Filers | Credit Rate |
| $0 - $38,500 | $0 - $28,875 | $0 - $19,000 | 50% |
| $38,501 - $41,500 | $28,876 - $31,125 | $19,001 - $20,500 | 20% |
| $41,501 - $64,000 | $31,126 - $48,000 | $20,501 - $31,500 | 10% |
| Over $64,000 | Over $48,000 | Over $31,500 | 0% |
Source: IRS.gov