New Bill Would Let Dependent Students Claim Savers Credit and Match for Retirement Contributions

This bill, the "Expanded Student Savers Tax Credit Act," proposes a tweak to the tax code aimed directly at young people starting to save. It amends Internal Revenue Code Sections 25B(c)(2) and 6433(c)(2) to make full-time students eligible for the savers credit and the newer savers match, even if they are claimed as a dependent on someone else's tax return (like their parents'). The change to the savers credit would apply to retirement contributions made after the bill becomes law, while the savers match change would be retroactive, applying as if it were part of the SECURE 2.0 Act of 2022.

Opening the Door for Student Savers

So, what does this actually mean? Currently, if you're a full-time student and someone else claims you as a dependent, you're generally shut out from getting the savers credit – a tax break designed to help low-to-moderate income folks save for retirement. This bill removes that restriction specifically for full-time students. It recognizes that many students work part-time jobs and might want to start saving early, even if they still rely on parental support.

Real-World Impact: Getting a Boost for Early Savings

The practical effect is straightforward: a college student working a campus job or summer internship could put money into an IRA or a 401(k) (if offered) and potentially qualify for the savers credit (which reduces their tax bill) or the savers match (a government contribution to their retirement account, depending on income and final rules). For example, a student earning $15,000 who contributes $500 to a Roth IRA could see a direct benefit on their taxes or a matching contribution they wouldn't have qualified for previously because they were claimed as a dependent. This legislation aims to give young earners an earlier start on building long-term financial security by rewarding those initial saving habits.