Photo by Andrea Piacquadio
The Trump administration is proposing a new retirement vehicle. But if you already contribute to a savings plan for your golden years, you might be able to take advantage now of the existing Saver’s Credit.
Americans, on the whole, much prefer spending to saving. Still, lawmakers continue to look for ways to encourage us to stash more cash, particularly for our retirement years.
One popular way is to provide tax advantages for post-work savings. That’s happening again.
During last night’s longest-ever State of the Union address, Donald Trump floated the idea of creating new retirement benefit. Trump’s proposal would provide private sector workers the same type of retirement plan currently available to federal employees. Plus, Uncle Sam would add up to $1,000 per year to these accounts.
If that $1,000 amount sounds familiar, it’s the same level of federal help offered under the One Big Beautiful Bill Act’s new Trump Savings for young people. These accounts include a one-time federal contribution of one grand will go to accounts established for children born between 2025 and 2028.
The White House believes a similar $1,000 boost could help the nearly 54 million private sector workers who face a post-work shortfall. That’s how many full- and part-time employees don’t have access to workplace sponsored retirement benefits, according data analyzed by the Economic Innovation Group.
No one on either side of the political aisle is against helping workers save for retirement. Some, however, question the need for yet another mechanism. The existing retirement Saver’s Credit will morph into the Saver’s Match in 2027.
But for some, especially 47, more always is appealing.
So, while we wait for this latest retirement plan suggestion to evolve, here’s a look at the Saver’s Credit that could help you save some tax dollars on this filing season’s 2025 tax return.
Saver’s Credit benefit: This tax break was created to reward, and thereby encourage, people to put money into tax-favored retirement vehicles. Since it’s a tax credit, it provides a dollar-for-dollar offset of any tax owed.
That could be up to $1,000 for each individual retirement plan contributor, or a $2,000 credit for married couples who file jointly and each spouse contributes enough to a qualified workplace plan or IRA, traditional or Roth. Contributions to Achieving a Better Life Experience (ABLE) accounts count towards the tax credit, too.
But, depending on your adjusted gross income (AGI), you might not qualify for the full $1,000 or, if married and filing jointly, $2,000 tax benefit. The final credit amount ranges from 10 percent to 20 percent to the maximum 50 percent of individuals’ retirement contributions up to $2,000.
For 2025, those percentages apply to the following income ranges.
| 2025 Tax Year Saver’s Credit Amount | Single, married filing separately or qualifying widow/er | Married filing jointly | Head of household |
| 50% of contribution | AGI not more than $23,750 | AGI not more than $47,500 | AGI not more than $35,625 |
| 20% of contribution | $23,751 to $25,500 | $47,501 to $51,000 | $35,626 to $38,250 |
| 10% of contribution | $25,501 to $39,500 | $51,001 to $79,000 | $38,251 to $59,250 |
| No credit | $39,501 or more | $79,001 or more | $59,251 or more |
Dec. 31 marked the end of contributions to most workplace retirement plans. But you do have until this April 15 to make IRA contributions for the 2025 tax year and use that to claim the Saver’s Credit.
Also note that Saver’s Credit, also sometimes called the Retirement Savings Contributions Credit, is nonrefundable. So, if your tax liability is less than $1,000 (or $2,000 for joint filers), you lose any excess credit. But still, zeroing out what you owe the U.S. Treasury is always worthwhile.
You claim the credit by filing IRS Form 8880. The document’s second page has form instructions.
And if you’re interested in the Saver’s Credit for this 2026 tax year, you can check out the inflation adjustments to the income ranges in my inflation series post “Retirement plan contributions get inflation boost in 2026.”
Saver’s Match debuts next year: Under the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2022 (signed into law by President Joe Biden), the Saver’s Credit will be replaced by a new Saver’s Match that will be claimed on 2027 returns filed in 2028.
Instead of offsetting any tax you owe, the change means the federal money will be deposited directly into your retirement account.
Also starting with 2027 tax returns, Form 8880 will only be used to claim the Saver’s Credit for ABLE account contributions. A new separate form will be used to claim the Saver’s Match.
How and when will the Trump administration’s new retirement plan fit into the existing, and evolving, tax benefits for retirement savings? Those are the big questions that we must wait on the White House and Republican lawmakers to answer.
One idea being discussed is the automatic enrollment of workers in the new federal retirement savings accounts, and then providing the $1,000 federal match for eligible lower- and moderate-income workers. The accounts could move with the workers as they changed jobs.
But some financial and retirement experts point out that many workers on the lower end of the earnings scale don’t save for retirement simply because they need all their available income to meet current, not future, financial needs.
Maybe lawmakers should look into programs that help people earn more money, such as simplifying and expanding the Earned Income Tax Credit (EITC), so that they have enough to cover their here-and-now costs. Then they might be able to save for when they no longer have to work.
So, given all the various considerations and that Congress will need to be involved in the new plan’s creation, I suspect we’re going to have to wait a little longer than 47’s usual two-week window for details to be fleshed out and revealed.
