Check out the cost-of-living adjustments for retirement plans and IRAs.
You may be able to take a tax credit for making eligible contributions to your IRA or employer-sponsored retirement plan. Also, you may be eligible for a credit for contributions to your Achieving a Better Life Experience (ABLE) account, if you’re the designated beneficiary.
You're eligible for the credit if you're:
You were a student if during any part of 5 calendar months of the tax year you:
A school includes technical, trade, and mechanical schools. It does not include on-the-job training courses, correspondence schools, or schools offering courses only through the Internet.
Depending on your adjusted gross income reported on your Form 1040 series return, the amount of the credit is 50%, 20% or 10% of:
Rollover contributions do not qualify for the credit. Also, your eligible contributions may be reduced by any recent distributions you received from a retirement plan or IRA, or from an ABLE account.
The maximum contribution amount that may qualify for the credit is $2,000 ($4,000 if married filing jointly), making the maximum credit $1,000 ($2,000 if married filing jointly). Use the chart below to calculate your credit.
Example: Jill, who works at a retail store, is married and earned $41,000 in 2021. Jill’s spouse was unemployed in 2021 and didn’t have any earnings. Jill contributed $2,000 to her IRA for 2021. After deducting her IRA contribution, the adjusted gross income shown on her joint return is $39,000. Jill may claim a 50% credit of $1,000 for her $2,000 IRA contribution on her 2021 tax return.
| Credit rate | Married filing jointly | Head of household | All other filers* |
|---|---|---|---|
| 50% of your contribution | AGI not more than $46,000 | AGI not more than $34,500 | AGI not more than $23,000 |
| 20% of your contribution | $46,001- $50,000 | $34,501 - $37,500 | $23,001 - $25,000 |
| 10% of your contribution | $50,001 - $76,500 | $37,501 - $57,375 | $25,001 - $38,250 |
| 0% of your contribution | more than $76,500 | more than $57,375 | more than $38,250 |
*Single, married filing separately, or qualifying widow(er)
| Credit rate | Married filing jointly | Head of household | All other filers* |
|---|---|---|---|
| 50% of your contribution | AGI not more than $43,500 | AGI not more than $32,625 | AGI not more than $21,750 |
| 20% of your contribution | $43,501- $47,500 | $32,626 - $35,625 | $21,751 - $23,750 |
| 10% of your contribution | $47,501 - $73,000 | $35,626 - $54,750 | $23,751 - $36,500 |
| 0% of your contribution | more than $73,000 | more than $54,750 | more than $36,500 |
*Single, married filing separately, or qualifying widow(er)
| Credit rate | Married filing jointly | Head of household | All other filers* |
|---|---|---|---|
| 50% of your contribution | AGI not more than $41,000 | AGI not more than $30,750 | AGI not more than $20,500 |
| 20% of your contribution | $41,001- $44,000 | $30,751 - $33,000 | $20,501 - $22,000 |
| 10% of your contribution | $44,001 - $68,000 | $33,001 - $51,000 | $22,001 - $34,000 |
| 0% of your contribution | more than $68,000 | more than $51,000 | more than $34,000 |
*Single, married filing separately, or qualifying widow(er)
| Credit rate | Married filing jointly | Head of household | All other filers* |
|---|---|---|---|
| 50% of your contribution | AGI not more than $39,500 | AGI not more than $29,625 | AGI not more than $19,750 |
| 20% of your contribution | $39,501 - $43,000 | $29,626 - $32,250 | $19,751 - $21,500 |
| 10% of your contribution | $43,001 - $66,000 | $32,251 - $49,500 | $21,501 - $33,000 |
| 0% of your contribution | more than $66,000 | more than $49,500 | more than $33,000 |
*Single, married filing separately, or qualifying widow(er)
| Credit rate | Married filing Jointly | Head of household | All other filers* |
|---|---|---|---|
| 50% of your contribution | AGI not more than $39,000 | AGI not more than $29,250 | AGI not more than $19,500 |
| 20% of your contribution | $39,001 - $42,500 | $29,251 - $31,875 | $19,501 - $21,250 |
| 10% of your contribution | $42,501 - $65,000 | $31,876 - $48,750 | $21,251 - $32,500 |
| 0% of your contribution | more than $65,000 | more than $48,750 | more than $32,500 |
*Single, married filing separately, or qualifying widow(er)
| Credit rate | Married filing jointly | Head of household | All other filers* |
|---|---|---|---|
| 50% of your contribution | AGI not more than $38,500 | AGI not more than $28,875 | AGI not more than $19,250 |
| 20% of your contribution | $38,501 - $41,500 | $28,876 - $31,125 | $19,251 - $20,750 |
| 10% of your contribution | $41,501 - $64,000 | $31,126 - $48,000 | $20,751 - $32,000 |
| 0% of your contribution | more than $64,000 | more than $48,000 | more than $32,000 |
*Single, married filing separately, or qualifying widow(er)