The Saver’s Credit is a tax credit up to $1,000 for voluntary contributions made to personal retirement accounts such as IRAs, and 401(k) plans. The Credit benefits low-income individuals by crediting up to 50% of personal retirement savings and thereby lowering the individual’s tax liability. For example a jointly filing married couple making less that $30,000 receives a 50% credit on an amount contributed to retirement savings up to $2,000. The Saver’s Credit was due to sunset at the end of 2006.
The Pension Protection Act of 2006 made the Saver’s Credit permanent.
Read Section 812 of The Pension Protection Act of 2006 [PDF] Public Law 109-280
To learn more about the Saver’s Credit read the Aspen Institute’s report [PDF], and the Congressional Research Service Report on the Savers Credit [PDF].< Back