An IRA tax credit is a credit provided to a lower income earning tax payer for making a ROTH IRA contributions. The amount of the credit can range from 10, 20 or 50% up to $2,000 of your contribution. The percentage of the credit that you are entitled to is based on your annual adjusted gross income. This number can be found at the top of the second page of your 1040 tax return. For example a single filer with an adjusted gross income of $17,000 or less can claim a 50% credit on the first $2000 worth of contributions. This is a $1,000 tax credit! Remember a tax credit is different than a tax deduction. A credit is a dollar for dollar reduction of your tax liability, a tax deduction reduces your taxable income by the amount of the deduction and therefore reduces your tax liability.