If you elect to save for your retirement in a 401(k) or 403(b) plan in 2023, you may be eligible to claim a special tax credit of up to $1,000 ($2,000 for married couples) on your 2023 income tax return.
To qualify for the Saver’s Credit, you must:
- be 18 years of age or older
- not be a full-time student
- not be claimed as a dependent on someone else’s tax return
- make contributions to a qualified IRA, 401(k) or other eligible retirement plan
In addition, you must meet one of the following financial criteria:
- File your taxes singly and earned $36,500 or less in 2023
- File your taxes as head of household and earned $54,750 or less in 2023
- File your taxes jointly and had a combined income of $73,000 or less in 2023
The tax credit ranges from 10% to 50% of each dollar you contributed, up to the first $2,000 you put into your 401(k) or 403(b). That’s between $200 and $1,000 directly off the income taxes you pay!
If you and your spouse both contribute to a 401(k)/403(b) plan, you may both be eligible to receive a credit. The amount of your tax credit depends on the amount of your adjusted gross income (AGI) and the filing status you indicate on your tax return, as shown in the following chart:
2023 Saver’s Credit Guidelines
| AGI for Single Filers | for Head of Household | for Married Filing Jointly | Saver’s Credit |
|---|---|---|---|
| $0 to $21,750 | $0 to $32,625 | $0 to $43,500 | 50% of the first $2,000 deferred ($4,000 if Married filing jointly) |
| $21,751 to $23,750 | $32,626 to $35,625 | $43,501 to $47,500 | 20% of the first $2,000 deferred ($4,000 if Married filing jointly) |
| $23,751 to $36,500 | $35,626 to $54,750 | $47,501 to $73,000 | 10% of the first $2,000 deferred ($4,000 if Married filing jointly) |
| more than $36,500 | more than $54,750 | more than $73,000 | credit not available |
More information on the Saver’s Credit is available on the IRS website: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit
Be sure to consult a tax professional to determine whether you qualify and how to take advantage of the Saver’s Credit because there are limitations you should be aware of.
