8 Ways to Lower Your Taxes

Nobody likes paying more in taxes than they have to. The good news is that there are several strategies that can help you keep more of your money, and most of them don’t require anything fancy.

The key is thinking about taxes before it’s time to file. When you wait until the last minute, you miss out on opportunities that were available earlier in the year. But when you plan ahead, you give yourself room to make moves that could lower your bill.

Here are eight strategies worth looking into.

1. Think About Taxes All Year, Not Just in April

Most people only think about taxes when it’s time to file. By then, the year is already over and your options are limited.

A better approach is to check in on your tax situation at least twice a year.

Early in the year, take a look at what tax bracket you’re likely to fall into. This gives you time to take advantage of strategies like increasing retirement contributions or timing charitable donations.

Late in the year, review where you stand before December 31. You might find that you still have room to add more to a pre-tax 401(k), make a charitable gift, or take other steps that could reduce what you owe.

The earlier you start planning, the more choices you’ll have.

2. Put Money Into Retirement Accounts

Contributing to retirement accounts is one of the most common and effective ways to lower your tax bill. Depending on the type of account, your contributions can reduce your taxable income right now.

Traditional 401(k) – The money goes in before taxes are taken out of your paycheck. That means every dollar you contribute lowers the income the IRS taxes you on. If you’re close to the edge of a higher tax bracket, this can be especially helpful.¹

Traditional IRA – Depending on your income and whether you have a retirement plan at work, your contributions may be tax-deductible. That means you could lower your taxable income while saving for the future at the same time.

Roth IRA – Roth contributions don’t give you a tax break today because they’re made with money you’ve already paid taxes on. The benefit comes later. Your money grows tax-free, and withdrawals in retirement can also be tax-free if you follow the rules.

3. Use a Health Savings Account (HSA)

If you have a high-deductible health insurance plan, you may be able to open and contribute to a Health Savings Account, or HSA.

HSAs come with what’s sometimes called a “triple tax benefit.”² Your contributions are made with pre-tax dollars, which lowers your taxable income. The money inside the account grows without being taxed. And when you take money out for qualified medical expenses, those withdrawals are tax-free too.

Very few accounts offer all three of those benefits. If you’re eligible, putting more money into an HSA is one of the simplest ways to lower your taxes while also preparing for future healthcare costs.

4. Make a Qualified Charitable Distribution (QCD) If You’re Over 70½

If you’re 70½ or older and want to give money to charity, a Qualified Charitable Distribution, or QCD, is worth considering.

A QCD lets you send money directly from your IRA to a qualified charity. The donation doesn’t count as part of your adjusted gross income (AGI), which means it doesn’t raise your taxes the way a normal IRA withdrawal would.

This works whether you take the standard deduction or itemize. And if you’re required to take a minimum distribution from your IRA (called an RMD), the QCD can count toward that requirement. So you satisfy your RMD and support a cause you care about, all without increasing your taxable income.

5. Get the Most Out of Itemized Deductions

Every taxpayer gets a choice when filing their return. You can take the standard deduction (a fixed dollar amount set by the IRS) or you can itemize your deductions, which means listing out specific expenses that qualify for a tax break.

For most people, the standard deduction is the better deal. But if your deductible expenses add up to more than the standard amount, itemizing could save you more.

Common itemized deductions include qualified charitable donations, unreimbursed medical and dental expenses that exceed 7.5% of your adjusted gross income, and mortgage interest.³

One strategy that can help is called “bunching.” This means timing certain expenses, like charitable gifts⁴ or medical procedures, so they land in the same tax year. That can push your total deductions above the standard deduction threshold in one year, while you take the standard deduction the next. Over a two-year period, this approach can result in more total tax savings.

6. Check for Tax Credits You Might Qualify For

Tax credits are different from deductions. A deduction lowers the amount of income that gets taxed. A credit directly reduces the amount of tax you owe, dollar for dollar. That makes credits especially valuable.

The credits available can change from year to year as laws are updated. For example, new legislation like the One Big Beautiful Bill Act may introduce or modify credits that taxpayers can claim. It’s a good idea to review what’s available each year so you don’t leave money on the table.

7. Use Tax-Loss Harvesting to Offset Gains

If some of your investments dropped in value, you might be able to turn that bad news into a small silver lining. A strategy called tax-loss harvesting lets you sell investments that lost money and use those losses to offset the taxes you’d owe on investment gains.

For example, if you made $5,000 on one investment and lost $3,000 on another, selling the losing investment lets you reduce your taxable gains to $2,000.

This strategy has specific rules you need to follow (like the wash-sale rule, which prevents you from immediately buying back the same investment). Because of the complexity, it’s a good idea to talk to a financial professional before trying it on your own.

8. Consider Tax-Gain Harvesting in Low-Income Years

Tax-gain harvesting is the flip side of tax-loss harvesting. Instead of selling losers, you sell winners, but you do it in a year when your income is unusually low.

Why would you do this? Because if you’re in a lower tax bracket, the tax rate on your investment gains will also be lower. In some cases, if your income is low enough, you may pay 0% on long-term capital gains.

The idea is to lock in gains now at a low rate rather than waiting and potentially paying a higher rate later. Like tax-loss harvesting, this gets complicated quickly, so working with a professional can help you figure out if it makes sense for your situation.

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¹ Tax benefits for retirement account contributions depend on the account type, your income, and your filing status. Consult a tax professional for guidance specific to your situation.

² HSA eligibility requires enrollment in a qualifying high-deductible health plan. Contribution limits and rules apply.

³ Mortgage interest deductions are subject to limits. See IRS guidelines for current rules.

⁴ Charitable contribution deductions are subject to IRS limits and require documentation.