What is the maximum amount eligible for the Retirement Savings Contributions Credit?

The maximum amount eligible for the Retirement Savings Contributions Credit, commonly referred to as the Saver's Credit, is based on a percentage of contributions, which varies according to the taxpayer's income level. Specifically, eligible individuals may receive a credit of 50%, 20%, or 10% of their contributions to qualified retirement accounts, with the exact percentage determined by their adjusted gross income in relation to the federal poverty level.

This tiered structure incentivizes low- to moderate-income earners to save for retirement by offering more substantial credits as income decreases. The specifics of the credit ensure that those who might otherwise struggle to save for retirement receive greater support.

Other options mention different structures that do not align with the Saver's Credit criteria. The first choice suggests a 100% credit, which does not exist within the framework of this particular tax benefit. The third choice indicates a fixed amount, overlooking the income-adjusted nature of the credit. Lastly, the fourth option proposes a substantial 75% credit without income limitations, which contradicts the progressive design intended to assist those most in need while also promoting responsible retirement savings behavior.