8.8 Other Credits (Saver's, Premium Tax)
Key Takeaways
- Saver's Credit (Form 8880) — for 2025, AGI thresholds are $39,500 Single/MFS / $59,250 HoH / $79,000 MFJ; max credit $1,000 per person ($2,000 MFJ). Replaced by the Saver's Match starting 2027 (SECURE 2.0)
- Adoption Credit (Form 8839) — 2025 max $17,280 per child, MAGI phase-out $259,190–$299,190; OBBBA made up to $5,000 REFUNDABLE for the first time starting 2025
- Premium Tax Credit (Form 8962) — 2025 is the LAST year of the ARPA/IRA enhanced subsidies (no 400% FPL cliff, 8.5% premium cap); without legislation, 2026 reverts to the pre-ARPA 400% FPL cliff
- Foreign Tax Credit (Form 1116) — Form 1116 not required if foreign taxes ≤ $300 ($600 MFJ) and all foreign income is passive on a payee statement; unused FTC has 1-year carryback and 10-year carryforward
- OBBBA terminations to track: §30D New EV credit and §45W Commercial Clean Vehicle credit end Sept 30, 2025; §25C Energy Efficient Home Improvement and §25D Residential Clean Energy credits end Dec 31, 2025
Overview of Other Tax Credits (2025)
Beyond the major credits already covered, several individual credits are heavily tested on the EA SEE. The One Big Beautiful Bill Act (OBBBA, signed July 4, 2025) made several major changes effective for 2025:
- Adoption Credit — first time partially refundable up to $5,000 per child
- §30D New Clean Vehicle Credit and §45W Commercial Clean Vehicle Credit — terminated for vehicles acquired after September 30, 2025
- §25C Energy Efficient Home Improvement Credit — terminated for property placed in service after December 31, 2025
- §25D Residential Clean Energy Credit — terminated for property placed in service after December 31, 2025
The Premium Tax Credit's ARPA/IRA enhanced subsidies (no 400% FPL cliff and 8.5% premium cap) are scheduled to expire at the end of 2025, reverting to the pre-ARPA 400% FPL cliff in 2026 absent further legislation.
Saver's Credit (Retirement Savings Contributions Credit) — 2025
The Saver's Credit rewards low-to-moderate-income taxpayers for retirement contributions. It is claimed on Form 8880.
2025 AGI Limits and Rates
| Credit Rate | Single / MFS | Head of Household | Married Filing Jointly |
|---|---|---|---|
| 50% | AGI ≤ $23,750 | AGI ≤ $35,625 | AGI ≤ $47,500 |
| 20% | $23,751 – $25,750 | $35,626 – $38,625 | $47,501 – $51,500 |
| 10% | $25,751 – $39,500 | $38,626 – $59,250 | $51,501 – $79,000 |
| 0% | Over $39,500 | Over $59,250 | Over $79,000 |
Maximum Credit Amounts
- Maximum contribution eligible: $2,000 per person ($4,000 MFJ)
- Maximum credit: $1,000 per person ($2,000 MFJ) at the 50% rate
Eligibility — All Required
- Age 18 or older at year-end
- Not a full-time student (5+ months)
- Not claimed as a dependent on another return
- Made qualifying contributions to an eligible plan (IRA, 401(k), 403(b), 457(b), SIMPLE, SEP, SARSEP, ABLE account)
Qualified Contributions
| Plan Type | Eligible? |
|---|---|
| Traditional IRA | Yes |
| Roth IRA | Yes |
| 401(k), 403(b), 457(b) | Yes |
| SIMPLE IRA | Yes |
| SARSEP | Yes |
| ABLE account (designated beneficiary) | Yes |
| Rollover contributions | No |
EA Exam Tip: The Saver's Credit is nonrefundable. Under SECURE 2.0, the Saver's Credit is replaced by a Saver's Match (federal match deposited into the retirement account) starting tax year 2027 — for 2025 and 2026 the credit still applies as described above.
Premium Tax Credit (PTC) — 2025
The PTC subsidizes Marketplace health insurance and is reconciled on Form 8962.
How the PTC Works
Based on household income as a percentage of the Federal Poverty Level (FPL) for the applicable family size.
| 2025 FPL (48 Contiguous States) | Amount |
|---|---|
| 1 person | $15,650 |
| 2 people | $21,150 |
| 3 people | $26,650 |
| 4 people | $32,150 |
| Each additional person | Add $5,500 |
(2024 FPL figures are used to determine 2025 PTC; the 2025 FPL figures shown will be used for 2026 PTC.)
Income Eligibility (2025 — Last Year of Enhanced Subsidies)
Under the ARPA/IRA enhanced subsidy rules, in effect through tax year 2025:
- Minimum: Household income at least 100% of FPL
- No 400% FPL cliff: Eligibility continues above 400% FPL
- Premium cap: Taxpayer pays no more than 8.5% of household income for the benchmark silver plan
Important: These enhanced subsidies expire at the end of 2025. OBBBA did NOT extend them. For 2026, absent new legislation, the PTC reverts to the pre-ARPA 400% FPL cliff and the steeper applicable-percentage schedule.
Advance Payments vs. Reconciliation
- Advance Payment: Paid directly to insurer monthly, reducing premiums
- At Filing: Claim full credit on return
Anyone who received advance payments MUST file Form 8962 to reconcile. If advance > actual, repay excess (subject to caps); if actual > advance, additional refundable credit.
Key PTC Rules
| Rule | Details |
|---|---|
| Coverage | Must be enrolled through the Marketplace |
| Filing | Anyone with advance payments must file a return + Form 8962 |
| MFS restriction | Generally cannot claim; exception for domestic-abuse or abandonment cases |
| Other coverage | Disqualified if eligible for employer affordable coverage, Medicaid, Medicare, CHIP, TRICARE |
Foreign Tax Credit — 2025
The FTC prevents double taxation when U.S. taxpayers pay income taxes to a foreign country. Claimed on Form 1116 (or directly on Schedule 3 under the de minimis exception).
De Minimis Exception (No Form 1116 Required)
You may claim the FTC without filing Form 1116 if ALL of these apply:
- Foreign taxes are $300 or less ($600 if MFJ)
- All foreign income is passive (dividends, interest, royalties)
- Foreign taxes appear on a payee statement (e.g., Form 1099)
- The election is made on the return
Credit Limitation
FTC Limit = U.S. Tax × (Foreign-Source Taxable Income / Worldwide Taxable Income)
Carryback and Carryforward
Unused FTC: 1-year carryback and 10-year carryforward.
EA Exam Tip: The FTC is generally more beneficial than the foreign-tax-paid itemized deduction because credits reduce tax dollar-for-dollar while deductions only reduce taxable income.
Adoption Credit — 2025 (OBBBA — Partially Refundable for First Time)
For 2025, the Adoption Credit is claimed on Form 8839.
2025 Adoption Credit Limits
| Limit Type | 2025 Amount |
|---|---|
| Maximum credit per child | $17,280 |
| NEW — Refundable portion (OBBBA) | Up to $5,000 refundable starting tax year 2025 |
| Phase-out begins (MAGI) | $259,190 |
| Phase-out complete (MAGI) | $299,190 |
| Employer-provided adoption assistance exclusion | $17,280 |
NEW — OBBBA Refundability
OBBBA made up to $5,000 of the Adoption Credit refundable for the first time, starting with the 2025 tax year. The non-refundable portion of the credit (up to $17,280 − $5,000 = $12,280) continues to be available with the existing 5-year carryforward for unused amounts. The refundable portion has no carryforward (it's already refundable).
Credit Characteristics
- Partially refundable up to $5,000 (new — OBBBA)
- Remaining nonrefundable portion carries forward 5 years
- Special-needs adoption: Can claim the maximum credit even with no actual expenses
Qualified Adoption Expenses
- Reasonable adoption fees
- Court costs and attorney fees
- Travel expenses (including meals and lodging)
- Other expenses directly related to the legal adoption
Not Qualified: Adopting a spouse's child, surrogate parenting arrangements, expenses reimbursed under an employer program, or expenses paid with grants from federal/state programs.
Residential Clean Energy Credit (§25D) — TERMINATING December 31, 2025
The §25D credit is claimed on Form 5695, Part I. OBBBA terminates this credit for property placed in service after December 31, 2025 (originally scheduled to phase down through 2034).
2025 Credit Rate (Final Year)
| Year Property Placed in Service | Credit Rate |
|---|---|
| 2022 – 2025 | 30% |
| 2026 and later | Terminated by OBBBA |
Qualified Clean Energy Property (2025)
- Solar electric (photovoltaic) systems
- Solar water heating systems
- Wind energy systems (small residential)
- Geothermal heat pumps
- Fuel cells (up to $500 per 0.5 kW)
- Battery storage technology (3 kWh or greater)
Key Rules
- No dollar cap on the credit
- Primary or secondary residence (not rentals)
- New property only
- Nonrefundable with unlimited carryforward of unused credit
- Must reduce by utility rebates and subsidies
EA Exam Tip: Labor and installation costs qualify. Structural items like roof trusses do not qualify.
Energy Efficient Home Improvement Credit (§25C) — TERMINATING December 31, 2025
The §25C credit (claimed on Form 5695, Part II) provides an annual credit up to $1,200/year (with $2,000 limit for heat pumps and biomass stoves). OBBBA terminates the credit for property placed in service after December 31, 2025. Track placed-in-service dates carefully on 2025 returns.
Clean Vehicle Credits — Major OBBBA Terminations in 2025
§30D New Clean Vehicle Credit — TERMINATING September 30, 2025
For new EVs acquired on or before September 30, 2025:
| Requirement | Limit |
|---|---|
| Maximum credit | $7,500 |
| Vehicle MSRP limit | $80,000 (SUVs/trucks) or $55,000 (other vehicles) |
| MAGI limit (Single) | $150,000 |
| MAGI limit (HoH) | $225,000 |
| MAGI limit (MFJ) | $300,000 |
Structure: $3,750 for critical-mineral requirements + $3,750 for battery-component requirements.
Point-of-Sale Transfer: Buyers can transfer the credit to the dealer for an immediate price reduction.
OBBBA: The §30D credit is terminated for vehicles acquired after September 30, 2025. No credit is available for vehicles acquired Oct 1, 2025 onward, regardless of when delivered.
§45W Commercial Clean Vehicle Credit — TERMINATING September 30, 2025
The §45W credit (up to $7,500 for vehicles ≤ 14,000 lbs; up to $40,000 for larger vehicles) used by businesses and tax-exempts likewise terminates for vehicles acquired after September 30, 2025.
§25E Used Clean Vehicle Credit (Form 8936)
Used Clean Vehicle Credit: lesser of $4,000 or 30% of sale price; vehicle price limit $25,000; vehicle at least 2 model years old; MAGI limits $75,000 Single / $112,500 HoH / $150,000 MFJ; purchased from a registered dealer. Used credit dates align with the §30D termination — verify acquisition timing on 2025 returns.
EA Exam Tips for Other Credits (2025)
- Saver's Credit 2025 AGI ceilings: $39,500 Single / $59,250 HoH / $79,000 MFJ
- Adoption Credit is now partially refundable up to $5,000 (NEW — OBBBA, starting 2025)
- Foreign Tax Credit — Form 1116 not required at $300 / $600 thresholds with passive income
- PTC — 2025 is the LAST year of the ARPA/IRA enhanced subsidies and 8.5% premium cap
- §30D & §45W Clean Vehicle Credits terminate Sept 30, 2025
- §25C & §25D Residential Energy Credits terminate Dec 31, 2025
- Saver's Match replaces the Saver's Credit starting 2027 (SECURE 2.0)
- Forms to know: 8880 (Saver's), 8962 (PTC), 1116 (FTC), 8839 (Adoption), 5695 (Energy), 8936 (Clean Vehicles)
For 2025, a married couple filing jointly has AGI of $48,000 and contributes $4,000 to their Roth IRAs ($2,000 each). What is their Saver's Credit?
A taxpayer purchased 2025 health insurance through the Marketplace and received advance Premium Tax Credit payments throughout the year. When filing their return, they discover their actual income was higher than estimated. What is the consequence?
A single taxpayer with MAGI of $270,000 finalizes an adoption in 2025, paying $20,000 in qualified adoption expenses. What is their Adoption Credit, and what portion is refundable?