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Maybe you don’t see a way to save for retirement. Because you’re just getting by today, tomorrow may seem distant.
The Social Security Administration estimates a 65-year-old woman lives, on average, to age 86½. That means a retirement of 20 years or more may be likely.
There is a way to get started. The saver’s credit, formally known as the retirement savings contributions credit, is a nonrefundable federal tax incentive for low- and moderate-income taxpayers.
The saver’s credit is a 10%, 20%, or 50% tax deduction on annual contributions to retirement plans like your State of Michigan 401(k) or 457 Plans. The maximum credit is $1,000 for single filers and $2,000 for married couples filing jointly.
Eligibility requirements
You may be eligible for the saver’s credit if you’re age 18 or older and contributed to your State of Michigan 401(k) or 457 Plans. You must also meet income requirements, not be enrolled as a full-time student, and not be claimed as a dependent on another person’s tax return.
First, determine your adjusted gross income (AGI), which is all your income minus adjustments.
You’re eligible for the saver’s credit if you’re a:
- Single tax filer with AGI of $33,000 or less in 2021; $34,000 or less in 2022.
- Head of household filer with AGI of $49,500 or less in 2021; $51,000 or less in 2022.
- Married couple filing jointly with AGI of $66,000 or less in 2021; $68,000 or less in 2022.
For more information, check out our Saver’s credit tax basics publication and visit the ORS Women & Retirement website.
Make financial planning your next small step towards retirement.
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