Form 8880: What Is It & How to Qualify for the Saver's Credit

The federal government offers tax credits as a way to encourage people to spend money on things that are considered to be for the greater good, such as aiding the economy or the environment. The Saver’s Credit, also known as the Retirement Savings Contributions Credit, encourages people to save for retirement – presumably so they won’t create a financial drain on society in their elder years.

The credit rewards low- and moderate-income workers for making contributions to their employer-sponsored retirement plans or to IRAs, individual retirement arrangements. Yet it’s rarely claimed, perhaps because many taxpayers don’t even know it exists.

Who’s Eligible?

You can claim the Saver’s Credit if you’re at least ​18 years old​ and you’re not claimed as a dependent on anyone else’s tax return. You also can’t be a full-time student. You must claim the credit in the same tax year that you made contributions to your retirement account.

What Accounts and Contributions Qualify?

Unfortunately, not every type of plan will qualify you for the Saver’s Credit, but a good many do. Rules for rollovers and distributions apply as well.

  • Your retirement account can be either a traditional IRA or a Roth IRA. It can also be a ​401(k)​, ​403(b)​, ​501(c)(18)​ or a ​457 plan​. SIMPLE IRAs, SEP plans and Thrift Savings Plans are qualified retirement plans too.
  • Rollover contributions when you move funds from one plan to another don’t count toward the credit.
  • You can’t claim the credit for contributions made by your employer.
  • You must subtract these amounts from your contributions if you’ve taken any distributions from your plan in the two years prior to the due date for your tax return. This timeline includes any extensions you might request. You can only base the amount of your credit on the balance. Thrift Savings Plans are an exception to this rule.

How Much Is the Saver’s Credit?

The Saver’s Credit works out to ​50, 20​ or ​10 percent​ of the first ​$2,000​ of your qualified retirement savings contributions, or ​$4,000​ if you're married filing jointly. The exact percentage you can claim depends on your adjusted gross income and your tax filing status.

For example, a single taxpayer would be limited to 10 percent with an AGI of more than ​$22,001​ as of the ​2022 tax year​. This increases to 20 percent if your AGI falls ​between $20,501 and $22,000​, and to 50 percent on an AGI of ​$20,500 or less​. The ability to claim the credit is eliminated entirely when you reach certain AGI thresholds. The thresholds for your 2022 earnings are:

  • $68,000​ for married taxpayers who file jointly (up from ​$66,000​ in tax year ​2021​)
  • $51,000​ for those who qualify as head of household (up from ​$49,500​ in ​2021​)
  • $34,000​ for all other taxpayers (up from ​$33,000​ in ​2021​)

The most anyone can possibly claim for the 2021 tax year (the return you'll file in 2022) is a percentage of ​$2,000,​ or ​$4,000​ if you were married and you file a joint return. So the maximum credit would be ​$1,000, $400​ or ​$200​ if you’re a single person (50, 20 or 10 percent), or ​$2,000, $800​ or ​$400​ if you’re married filing jointly.

You Can "Double Dip"

The government really wants you to save for retirement, so you can also take an above-the-line tax deduction for your qualifying contributions in addition to claiming the Saver’s Credit. This means you can both exclude your contributions from the income you’ll pay tax on, and the same contributions also count toward making you eligible for the tax credit.

That’s generous indeed, an almost unheard-of gift from the Internal Revenue Service. Bear in mind that this doesn't apply to Roth contributions, which aren't eligible for a tax deduction in the first place.

How to Calculate the Credit

The IRS publishes a chart online that you can use to determine your percentage based on your filing status and your AGI. Those who are married filing jointly have the highest, most generous AGI limits, followed by heads of household and finally all other taxpayers. The AGI limits are indexed for inflation, so they’re adjusted annually, usually increasing slightly from year to year.

You can find your AGI on ​line 11​ of your 2021 Form 1040 tax return. This isn't the same place it was located on previous years' tax returns because the IRS has revised the 1040 three times since 2018. Line 11 applies only to the 2021 return you'll file in 2022.


  • The Saver's Credit is geared toward low- and moderate-income taxpayers, so you won't qualify for it if you earn too much.

An Example of the Calculations

Let’s say that you made ​$2,000​ in qualifying contributions to your IRA in 2021. Your AGI is ​$30,000​. You could claim a Saver’s Credit for just ​10 percent​ of your contributions, or ​$200​, if you file as single, married filing separately or as a qualifying widow(er).

But you could claim ​20 percent​, or a ​$400​ tax credit if you’re head of household with an AGI of ​$30,000.​ And if you’re married and file a joint return? You’d qualify for the ​50 percent​ credit at this income, or ​$1,000​.

Of course, this is ​after​ you subtract any distributions you took in the last two years from that ​$2,000​ in contributions.

A New Advantage – ABLE Accounts

Designated beneficiaries of Achieving a Better Life Experience accounts have been able to claim this tax credit for any contributions they make to their own accounts since 2018. Others making contributions don’t qualify, however, and funds that are rolled over from other ABLE accounts or from a Qualified Tuition Plan don’t count either.

The rule about reducing your contributions by the amount of any distributions you took applies to ABLE accounts as well.

How to Claim the Credit – Form 8880

Now that you’ve determined that you qualify, how do you claim the Saver’s Credit? You must complete IRS Form 8880 and submit it with your tax return. This tax form also includes a breakdown of the appropriate percentages to apply based on your filing status and your AGI so you can – and must – complete ​box 9​ of the form to calculate the exact amount of your credit.

You can then transfer the credit amount to ​line 4​ of ​Schedule 3​ of the 2020 Form 1040, or Form 1040NR if you’re a nonresident alien.

It’s Not a Refundable Credit

Unfortunately, the Saver’s Credit isn’t one of the few refundable tax credits that are offered by the IRS. This means that although it can erase any tax debt you owe when you complete your return, the IRS won’t be sending you a check if there’s anything left over.

Maybe you've completed your tax return only to realize that you owe the IRS $200 because you didn’t have enough tax withheld from your paychecks all year. Not a problem. Your $200 Saver’s Credit will wipe out your tax debt if you’re that single taxpayer with an AGI of $30,000. Now you owe nothing.

It would wipe out your $200 tax debt, but the remaining $200 balance more or less vaporizes if you’re the head of household filer who’s eligible for a $400 credit. The IRS effectively keeps that $200 balance.