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Credit is Non-Refundable, Offsets Minimum Tax

The credit is non-refundable and offsets alternative minimum tax liability as well as regular tax liability.

Example – Eric and Heather are married, both age 25, and filing a joint return. Eric contributed $3,000 through his 401(k) plan at work, and Heather contributed $500 to her IRA account. Their modified AGI for 2025 was $48,000. The credit is computed as follows:
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Eric's 401(k) contribution was $3,000, but only the first $2,000 can be used	$2,000
Heather's IRA contribution was $500, so it can all be used	$500
Total Qualifying contributions	$2,500
Credit percentage for a Jt AGI of $48,000 from the table	x .20
*Saver's credit*	*$500*

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Credit is Non-Refundable, Offsets Minimum Tax

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