Nobody likes paying more taxes than they have to. The good news? There are completely legal ways to reduce your tax bill — and most people never take advantage of them. Here are 10 simple tips to get you started.
1. Contribute to a Traditional IRA
Every dollar you contribute to a Traditional IRA can reduce your taxable income. For 2024, that’s up to $7,000 — or $8,000 if you’re over 50.
2. Max Out Your 401(k)
If your employer offers a 401(k), contribute as much as you can — especially if they match contributions. The 2024 limit is $23,000. Every dollar reduces your taxable income.
3. Use a Health Savings Account (HSA)
If you have a high-deductible health plan, an HSA lets you contribute pre-tax dollars for medical expenses. It’s one of the only triple-tax-advantaged accounts available.
4. Claim All Your Deductions
Many people miss common deductions like:
- Student loan interest
- Home office expenses (if self-employed)
- Charitable donations
- Educator expenses
5. Contribute to a 529 Education Plan
If you have children, contributions to a 529 plan may be deductible on your state taxes and grow tax-free for education expenses.
6. Harvest Tax Losses
If you have investments that have lost value, selling them can offset gains elsewhere — reducing your capital gains tax.
7. File Your Taxes on Time
Late filing means penalties and interest. Even if you can’t pay, always file on time and work out a payment plan with the IRS.
8. Claim the Earned Income Tax Credit
If you earn under a certain threshold, you may qualify for the EITC — worth up to $7,430 in 2024 for families with three or more children.
9. Deduct Self-Employment Expenses
Freelancers and business owners can deduct: home office, internet, phone, travel, equipment, and more. Keep every receipt!
10. Work With a Tax Professional
A good tax advisor can find savings you’d never discover on your own. The cost of hiring one is often far less than what they save you.