The difference between a tax deduction and this tax credit is exactly what makes the Saver’s Tax Credit such a great deal for the individuals and families who qualify. The Saver’s Tax Credit was instituted so that low- to moderate-income employees who contribute to their 401(k) or other qualified retirement plans could get a tax credit up to $1,000 (or $2,000 if filing jointly) to reduce federal income tax dollar for dollar.
