3648 / What is the saver's match and how can taxpayers claim it?
Editor's Note: The 2017 Tax Act modified the rules governing ABLE accounts to permit a contributing beneficiary to claim the saver's credit for tax years beginning after 2017 and before 2027. See Q 386 to Q 389.
Under the SECURE Act 2.0, the existing saver's credit has been replaced by a 50 percent matching contribution from the federal government (the match will be deposited into existing 401(k)s and IRAs). That matching contribution will be limited to 50 percent of contributions of up to $2,000 (meaning that the saver could receive up to $1,000 if they contribute at least $2,000 to their workplace retirement plan). Availability of the match will also be subject to phase out based on income levels. This change is effective as of 2027.
According to IRS guidance, qualifying individuals will attach a new Form 8880-A to their tax return, providing details about their income, filing status, retirement account contributions and retirement account distributions. Taxpayers will file this form with their 2027 tax return, during the first few months of 2028--meaning that qualifying individuals will receive their matching contributions for the 2027 tax year sometime in 2028.
The Saver's Credit
Prior to 2027, a saver's credit (formally known as the retirement savings contributions credit) allowed certain lower-income taxpayers to claim a nonrefundable credit for qualified retirement savings contributions.1 Qualified retirement savings contributions include contributions to Roth or traditional IRAs, as well as elective deferrals to a 401(k) plan ( Q 3752), an IRC Section 403(b) tax sheltered annuity ( Q 4030), an eligible Section 457 governmental plan ( Q 3584), a SIMPLE IRA ( Q 3706), and a salary reduction SEP ( Q 3705). Voluntary after-tax contributions to a qualified plan or Section 403(b) tax sheltered annuity were also eligible for the credit.2 The fact that contributions were made pursuant to a negative election (i.e., automatic enrollment) did not preclude a participant from claiming the saver's credit.3 Contributions made to an IRA that were withdrawn, together with the net income attributable to such contribution, on or before the due date (including extensions of time) for filing the federal income tax return of the contributing individual were not considered eligible contributions.4
To prevent churning (simply switching existing retirement funds from one account to another to qualify for the credit), the total of qualified retirement savings contributions was reduced by certain distributions received by the taxpayer during the prior two taxable years and the taxable year for which the credit was claimed, including the period up to the due date (plus extensions) for filing the federal income tax return for the current taxable year. Distributions received by the taxpayer's spouse during the same time period were also counted if the taxpayer and spouse filed jointly both for the year during which a distribution was made and the year for which the credit was taken.5
Corrective distributions of excess contributions and excess aggregate contributions (Q 3808), excess deferrals ( Q 3760), dividends paid on employer securities under Section 404(k) ( Q 3824), and loans treated as distributions ( Q 3949) were not taken into account.6
To be eligible to claim the credit, the taxpayer had to be at least 18 as of the end of the tax year, could not be claimed as a dependent on someone else's tax return, and could not be a full-time student. Full-time students include any individual who is enrolled in school during some part of each of five months during the year and is enrolled for the number of hours or courses the school considers to be full-time.7
The amount of the credit was limited to an applicable percentage of IRA contributions and elective deferrals up to $2,000.
The applicable percentages for 2025 were as follows:
ADJUSTED GROSS INCOME | ||||||
Joint return | Head of a household | All other cases | Applicable | |||
| Over | Not over | Over | Not over | Over | Not over | Percentage |
| 0 | $47,500 | 0 | $35,625 | 0 | $23,750 | 50% |
| 47,500 | 51,000 | 35,625 | 38,250 | 23,750 | 25,500 | 20% |
| 51,000 | 79,000 | 38,250 | 59,250 | 25,500 | 39,500 | 10% |
| 79,000 | 59,250 | 39,500 | 0% | |||
The applicable percentages for 2026 were as follows:8
ADJUSTED GROSS INCOME | ||||||
Joint return | Head of a household | All other cases | Applicable | |||
| Over | Not over | Over | Not over | Over | Not over | Percentage |
| 0 | $48,500 | 0 | $36,375 | 0 | $24,250 | 50% |
| 48,500 | 52,500 | 36,375 | 39,375 | 24,250 | 26,250 | 20% |
| 52,500 | 80,500 | 39,375 | 60,375 | 26,250 | 40,250 | 10% |
| 80,500 | 60,375 | 40,250 | 0% | |||
The income limits were indexed for inflation. For this purpose, adjusted gross income is calculated without regard to the exclusions for income derived from certain foreign sources or sources within United States possessions.9
Taxpayers had until their tax filing deadline to contribute to traditional and Roth IRAs and still claim the credit on the prior year's tax return.
The maximum credit that could be claimed was $1,000, or $2,000 for married taxpayers filing jointly. For married couples, contributions by or for either or both spouses mcould give rise to the credit.10
Example: Susan, who is married, earned $41,000 in 2025. Her husband did not have any earnings. During 2022, Susan contributed $1,200 to her IRA, which she deducted on her tax return, which reduced her adjusted gross income to $39,800. Susan is eligible to claim a 50 percent saver's credit, or $600.
1. IRC § 25B.
2. IRC § 25B(d)(1); Ann. 2001-106, 2001-44 IRB 416, A-5.
3. Ann. 2001-106, 2001-44 IRB 416.
4. Ann. 2001-106, 2001-44 IRB 416, A-5.
5. Ann. 2001-106 Q-4.
6. IRC § 25B(d)(2); Ann. 2001-106, above, A-4.
7. IRC § 25B(c); Ann. 2001-106, 2001-44 IRB 416, A-2.
8. Notice 2025-32.
9. IRC § 25B(b)(3).
10. Ann. 2001-106, 2001-44 IRB 416, A-9.