The Saver's Bonus

Each year the federal government provides hundreds of billions of dollars in incentives for families to save and build wealth through the tax system. Low-income families, however, are not eligible for most of these tax incentives because they are poor. Low-income families, like any other household, need to save to gain economic mobility and financial stability. Research has also shown that despite their low incomes, poor families can and do save when presented with the right incentives and methods to do so.

The Saver's Bonus directly addresses this issue by using the federal tax system to provide a monetary incentive for low-income families to save. Low-income families would receive a dollar for dollar match for each dollar that they contribute to a designated savings product, up to a maximum of $500 a year. Families would apply for the Saver's Bonus at tax time on their federal income tax form. The bonus would then be deposited directly into the account--maximizing the opportunity to save for longer-term needs.

The Saver's Bonus matches the savings of low-income workers who save in IRAs, 401(k)s, 529s, Coverdells, Savings Bonds, and 6-month or longer Certificates of Deposit.

To learn more about The Saver's Bonus, please click here to read the two-page summary.

In addition, Reid Cramer has published several opinion pieces featuring the Saver's Bonus:

• Don't Spend Your Tax Rebate!, April 15, 2008; and
• What We Need Out of a Second Stimulus Package, October 22, 2008