1) Max Out Retirement Contributions
- 401(k), 403(b), or TSP: Contribute up to $23,500 (or $31,000 if age 50+).
- Traditional IRA: Deduct up to $7,000 ($8,000 if 50+), subject to income limits.
- Lowers taxable income and grows tax deferred.
2) Use a Health Savings Account (HSA)
- If you have a high-deductible plan:
- Contribute up to $4,300 (individual) / $8,600 (family).
- Add $1,000 catch-up if 55+.
- Triple tax benefit: Tax deductible, tax-deferred growth, withdrawals tax-free for qualified medical costs.
3) Take Advantage of FSAs (Flexible Spending Account)
- Contribute up to $3,300 pre-tax for healthcare.
- Dependent Care FSA: Up to $5,000 per household for child/dependent care expenses.
4) Claim All Available Tax Credits
- These directly reduce your tax bill:
- Child Tax Credit
- Earned Income Tax Credit (EITC)
- American Opportunity Tax Credit (college students)
- Lifetime Learning Credit
- Clean Vehicle and Energy Credits
5) Harvest Investment Losses
- Sell investments at a loss to offset capital gains.
- You can deduct up to $3,000 in net capital losses against other income annually.
- Unused losses carry forward to future tax years.
6) Contribute to a 529 Education Savings Plan
- Grows tax-free for qualified education expenses.
- Many states offer deductions or credits for contributions, even if the federal government doesn’t.
7) Donate to Charity Strategically
- Itemize deductions to claim charitable donations.
- Consider donating appreciated stock to avoid capital gains and get a full deduction.
- Use a Donor-Advised Fund (DAF) for larger or strategic giving.
8) Deduct Mortgage Interest and Property Taxes
- If itemizing, deduct interest on mortgages (up to $750,000 loan amount) for mortgages taken out after December 16, 2017.
- Also deduct state and local taxes (SALT), up to $10,000 total.
9) Use the Standard Deduction if It’s Higher than Itemizing
- For 2025:
- Single: $15,000
- Married filing jointly: $30,000
- Choose the greater of itemized or standard to reduce taxable income.
10) Defer Income or Accelerate Expenses (Self-Employed)
- Push income into the next tax year and pay business expenses now.
- Claim deductions for:
- Home office
- Business use of car
- Supplies, equipment, and travel
11) Hire Your Children If You Own a Business
- Pay your child a reasonable wage for legitimate work.
- Their income may be tax-free up to the standard deduction.
- You deduct the wages from your business income.
12) Work with a Tax Pro or Use Advanced Tax Software
- A CPA or enrolled agent can:
- Catch deductions you may miss.
- Help with tax-loss harvesting, income shifting, or Roth conversions.
- Keep you compliant and avoid red flags.
Tip: Start tax planning now before year-end to take advantage of the savings!
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