What are the rates for the Saver's Credit based on filing status and modified AGI?

The Saver's Credit, also known as the Retirement Savings Contributions Credit, is designed to incentivize low- to moderate-income individuals to save for retirement by providing a tax credit based on contributions to retirement accounts. The rates for the Saver's Credit are associated with the taxpayer's filing status and modified adjusted gross income (AGI).

The correct set of rates for the Saver’s Credit is 10%, 20%, or 50%. This means that the percentage of the credit a taxpayer can claim varies depending on their income level and filing status. For example, the highest credit rate of 50% is available to the lowest-income individuals, with the percentage decreasing as income increases. The rates effectively encourage savings as income thresholds increase.

Understanding these percentages is crucial for tax preparers, as clients may be eligible for different credit amounts based on their specific financial situations and contributions to qualified retirement plans. Being aware of how modified AGI affects eligibility and the credit rate allows tax preparers to advise clients accurately and maximize their tax benefits.