Week 18: How can I reduce my taxable income?

Reducing your taxable income isn’t about dodging taxes — it’s about using the tax code to your advantage. Here are some smart, legal strategies to consider:

Contribute to Tax-Advantaged Retirement Accounts

• Traditional 401(k), 403(b), or IRA: Contributions reduce your taxable income now, while your investments grow tax-deferred.

• SEP IRA or Solo 401(k): Great options if you're self-employed.

Fund a Health Savings Account (HSA)

If you have a high-deductible health plan, you can contribute pre-tax money to an HSA — and use it tax-free for medical expenses.

• 2025 limits: $4,300 for individuals, $8,550 for families (+$1,000 catch-up for age 55+).

Use Education-Related Tax Benefits

• 529 Plan Contributions: Some states offer a tax deduction or credit.

• Lifetime Learning Credit and American Opportunity Credit: Help reduce taxes for qualifying tuition expenses.

Take Advantage of Itemized Deductions

• Mortgage interest, property taxes, charitable contributions, and medical expenses (over a certain threshold) can all reduce taxable income if you itemize instead of taking the standard deduction.

Harvest Tax Losses

Selling investments at a loss to offset capital gains (and up to $3,000 of ordinary income) is called tax-loss harvesting — a powerful move in taxable brokerage accounts.

Claim Tax Credits

Credits don’t just reduce taxable income — they reduce actual tax owed. Popular ones include:

• Child Tax Credit

• Earned Income Tax Credit

• Saver’s Credit (for retirement contributions)

Need a referral or want to discuss your tax planning strategy? I’m happy to help.