Handbook / Retirement accounts

Saver's Credit for 2026: a tax credit for retirement saving

Tax-year note: Tax information on this page applies to the 2026 tax year (returns filed in 2027), from IRS pages checked in November 2026. Figures and dates are labelled with their tax year where they appear. Check current IRS pages before you rely on them.

In the early years of self-employment, income can be modest and saving for retirement feels like a luxury. The Saver's Credit, officially the Retirement Savings Contributions Credit, rewards low- and moderate-income savers with a tax credit on top of any deduction or tax-free growth the account already offers. This guide covers the 2026 tax year, using IRS pages checked in November 2026.

The 2026 income limits

The IRS announced that the Saver's Credit income limits for 2026 are:

• $80,500 for married couples filing jointly, up from $79,000 for 2025
• $60,375 for heads of household, up from $59,250
• $40,250 for singles and married individuals filing separately, up from $39,500

These are adjusted gross income limits. Above them, no credit is available. Within them, the credit rate depends on where your income falls.

Who is eligible

According to the IRS, you are eligible if you are:

• 18 or older
• not claimed as a dependent on another person's return
• not a student

You count as a student if, during any part of 5 calendar months of the year, you were enrolled full time at a school or took a full-time on-farm training course. The IRS notes that schools include technical, trade and mechanical schools, but not on-the-job training courses, correspondence schools or schools offering courses only through the Internet.

How much the credit is worth

Depending on your adjusted gross income, the credit is 50%, 20% or 10% of eligible contributions. The IRS says the maximum contribution that may qualify is $2,000 per person, or $4,000 if married filing jointly, so the maximum credit is $1,000, or $2,000 for married couples filing jointly. The IRS publishes a chart showing which rate applies at each income level; check the current chart when you file.

Eligible contributions

The IRS lists eligible contributions, including:

• contributions to a traditional or Roth IRA
• elective salary deferrals to a 401(k), 403(b), governmental 457(b), SARSEP or SIMPLE plan
• voluntary after-tax employee contributions to a qualified retirement plan or 403(b) plan
• contributions to a 501(c)(18)(D) plan
• contributions to an ABLE account for which you are the designated beneficiary

Rollover contributions do not qualify.

For self-employed people, the most common options are an IRA or elective deferrals to a solo 401(k). The IRS list does not mention SEP IRA employer contributions, so check Form 8880 instructions before relying on them.

Distributions reduce the credit

The IRS notes your eligible contributions may be reduced by recent distributions from a retirement plan, IRA or ABLE account. If you took money out recently, check the Form 8880 instructions for the look-back period.

Self-employment and adjusted gross income

Your adjusted gross income includes net profit from your business, after the deduction for half of self-employment tax and other adjustments. Deductible contributions, such as to a traditional IRA, can lower AGI, which may move you into a higher credit rate. A Roth IRA contribution does not lower AGI, but still counts for the credit.

How to claim it

Claim the credit on Form 8880, Credit for Qualified Retirement Savings Contributions, and attach it to your return. Tax software usually asks whether you made eligible contributions.

Timing

IRA contributions for a tax year can generally be made up to the tax filing deadline for that year, which gives you time to decide once you know your income. Elective deferrals to a solo 401(k) have their own timing rules; see the SEP IRA vs solo 401(k) guide.

A simple example

A single self-employed person with 2026 adjusted gross income within the limit contributes $2,000 to a Roth IRA. If their income falls in the 20% band, the credit is $400. In the 50% band, it would be $1,000.

Check your eligibility each year

Self-employed income can change a lot from year to year. Check the current income limits before filing, and remember that the IRS adjusts them for inflation.

Combining with other benefits

The credit comes on top of any deduction or tax-free growth the account provides, so an eligible contribution can bring more than one tax benefit in the same year.

For 2026, the Saver's Credit is available below $80,500 for joint filers, $60,375 for heads of household and $40,250 for other filers; it is 50%, 20% or 10% of up to $2,000 of eligible contributions per person, claimed on Form 8880.