The Saver’s Credit: Free Money for Modest Retirement Savers
The Retirement Savings Contributions Credit (Saver’s Credit) gives a 10–50% tax credit for IRA or 401k contributions to lower-income taxpayers. Single filer with $30,000 income contributing $2,000 to IRA: 50% credit = $1,000 tax credit. Many people in this income range don’t even know this credit exists.
2025 Saver’s Credit eligibility and rates
| Income (Single) | Income (MFJ) | Credit Rate | Max Credit |
|---|---|---|---|
| ≤$22,500 | ≤$45,000 | 50% | $1,000 single / $2,000 MFJ |
| $22,501–$24,500 | $45,001–$49,000 | 34% | $680 / $1,360 |
| $24,501–$37,750 | $49,001–$75,500 | 10% | $200 / $400 |
| Above $37,750 | Above $75,500 | 0% | No credit |
Dependent Care FSA: Tax-Free Childcare
Contribute up to $5,000 per year to a Dependent Care FSA through your employer for childcare expenses. At 22% marginal rate: $5,000 FSA saves $1,100 in federal taxes + $383 in FICA = $1,483 total savings. Childcare for a working family is often $10,000–$30,000/year — this doesn’t cover it all but meaningfully reduces the cost.
The American Opportunity Credit for College Students
Up to $2,500 credit for the first four years of higher education. 100% of first $2,000 in qualified expenses + 25% of next $2,000 = maximum $2,500 credit. 40% is refundable (up to $1,000 even if you owe no tax). Income phase-out: single $80,000–$90,000, MFJ $160,000–$180,000.
The EITC is one of the largest anti-poverty tax provisions, with maximum values up to $7,830 (3+ qualifying children, 2025). But the IRS estimates that approximately 25% of eligible taxpayers don’t claim it — often because they don’t know they qualify, or because filing seems too complex. Free tax preparation services (VITA) can help eligible taxpayers claim this credit.
Frequently Missed Deductions
Often-missed tax deductions and who qualifies
| Missed Deduction | Who Misses It | Approximate Value |
|---|---|---|
| Self-employed health insurance | Self-employed with marketplace plans | Full premium as above-line deduction |
| Educator expense ($300) | K-12 teachers | $300 regardless of itemizing |
| Alimony received (pre-2019 divorces) | Alimony payers | Deductible under pre-2019 agreements |
| Investment interest expense | Margin investors with interest charges | Net investment income limitation |
| Gambling losses | Gamblers who also had winnings | Can offset gambling winnings (if itemizing) |
| Energy-efficient home credits | Homeowners with solar/insulation/HVAC | Up to $3,200 (25C credit) |
Find Every Credit and Deduction You Qualify For
Enter your life situation and see all applicable credits and deductions — and exactly how much each saves.