Maximize your retirement contributions: Contributions to 401(k)s, IRAs, and other qualified retirement accounts can reduce your taxable income.
Consider tax-deferred investments: Investments in tax-deferred accounts such as annuities, municipal bonds, and life insurance can also reduce your taxable income.
Review your tax withholding. Make sure you’re not overpaying or underpaying taxes by reviewing your tax withholding and adjusting it as necessary.
Take advantage of tax credits. Tax credits, such as the child tax credit and the earned income tax credit, can reduce your tax liability.
Contribute to a Health Savings Account (HSA): Contributions to an HSA can reduce your taxable income and help pay for medical expenses tax-free.
Harvest tax losses: If you have investments that have lost value, you can sell them to offset gains and reduce your tax liability.
Donate to charity. Charitable donations are tax-deductible and can help reduce your taxable income.
Time your capital gains: If you have investments that have appreciated in value, consider selling them in a year when your tax rate is lower.
Take advantage of business deductions. If you’re self-employed or own a business, make sure to take advantage of deductions for business expenses.
Contribute to a 529 college savings plan: Contributions to a 529 plan can be tax-deductible and can grow tax-free, making it a great way to save for college.
Use a tax-advantaged savings account for healthcare: Consider using a Flexible Spending Account (FSA) or Health Reimbursement Account (HRA) to pay for healthcare expenses tax-free.
Consider a Roth IRA conversion: Converting a traditional IRA to a Roth IRA can help you avoid taxes in retirement.
Keep good records. Keep track of all your income and expenses throughout the year to ensure you’re claiming all the deductions and credits you’re entitled to.
Maximize your home office deduction: If you work from home, you may be eligible for a home office deduction that can reduce your taxable income.
Pay attention to state and local taxes. Some states have high income and property taxes, which can significantly impact your tax liability.
Plan for alternative minimum tax (AMT): The AMT is a parallel tax system that can significantly increase your tax liability, so make sure to plan accordingly.
Take advantage of education tax breaks. The American Opportunity Tax Credit and the Lifetime Learning Credit can help reduce your tax liability if you’re paying for education.
Consider a qualified small business stock (QSBS) investment: If you invest in QSBS, you may be eligible for a tax exclusion on any gains.
Delay income and accelerate deductions: If you expect your income to be lower next year, consider delaying income and accelerating deductions to reduce your tax liability.
Work with a tax professional. A tax professional can help you navigate the complexities of the tax code and identify strategies to reduce your tax liability.
Use tax-efficient investment strategies: consider investing in tax-efficient investments such as index funds and exchange-traded funds (ETFs) that have low turnover rates and minimize capital gains taxes.
Plan for estate and gift taxes. If you have a sizable estate, it’s important to plan for estate and gift taxes to minimize the tax burden on your heirs.
Consider a donor-advised fund: A donor-advised fund allows you to make charitable donations and receive an immediate tax deduction while retaining control over how the money is distributed.
Take advantage of energy tax credits. If you make energy-efficient improvements to your home or invest in renewable energy, you may be eligible for tax credits.
Contribute to a spousal IRA. If your spouse doesn’t have earned income, you can still contribute to a spousal IRA and reduce your taxable income.
Use a Health Reimbursement Arrangement (HRA): An HRA is an employer-funded account that can be used to pay for medical expenses tax-free.
Review your estate plan. Make sure your estate plan is up-to-date and takes advantage of tax-efficient strategies such as gifting and trusts.
Consider a health insurance premium tax credit: If you purchase health insurance through a government marketplace, you may be eligible for a tax credit to help cover the cost of premiums.
Take advantage of the home office deduction for employees. If you work from home as an employee, you may be eligible for a home office deduction.
Consider a Qualified Opportunity Zone (QOZ) investment: Investing in a QOZ can provide significant tax benefits for investors who hold their investment for a certain period of time.
Consider a conservation easement: Donating a conservation easement can provide significant tax benefits for property owners who want to preserve their land.
Use a tax-efficient giving strategy. Consider using tax-efficient giving strategies such as donating appreciated assets or setting up a charitable remainder trust.
Keep track of business expenses. If you’re a business owner, make sure to keep track of all your business expenses to take advantage of deductions.
Consider a cash balance pension plan: A cash balance pension plan can provide significant tax benefits for high-income earners.
Review your state residency. If you live in a high-tax state, consider changing your residency to a low-tax state to reduce your tax liability.
