Smart Tax Strategies to Keep More of Your Money

The contrast between successful tax planning and wishing for the best come tax season can be thousands of dollars annually. This book presents real-world, legal ways to reduce your tax liability and retain more of your hard-earned cash in your pocket.

Understanding Tax Planning Fundamentals

The Three-Pronged Approach

Effective tax planning works on three levels:

• Reduction: Lowering your overall taxable income

• Deferral: Postponing taxes to future years

• Conversion: Transforming highly-taxed income into lower-taxed forms

Tax Planning vs. Tax Evasion

• Tax planning uses legal methods to minimize taxes within the law's framework

• Tax evasion involves illegal concealment or misrepresentation

• All strategies in this guide are legal tax planning techniques

6 tax tips that could save you money

1. Maximize Tax-Advantaged Accounts

Using tax-advantaged accounts allows you to grow your wealth while minimizing taxes.

• Retirement Accounts: Contribute to 401(k), IRA, or Roth IRA to get tax benefits.

• Health Savings Account (HSA): Triple tax benefits—contributions are tax-deductible, grow tax-free, and can be withdrawn tax-free for medical expenses.

• 529 College Savings Plan: Contributions grow tax-free and can be withdrawn tax-free for education expenses.

2. Take Advantage of Tax Deductions

Tax deductions decrease your tax basis, decreasing the amount of taxes you pay.

• Standard Deduction: The IRS provides a standard deduction that lowers your tax basis automatically.

• Itemized Deductions: If your cost is higher than the standard deduction, you can itemize expenses like:

  • Mortgage interest

  • Medical costs

  • Charitable gifts

  • State and local taxes (SALT deduction)

3. Max out on your retirement plan

Consider maximizing your contributions to your 401(k), IRA or other qualified retirement plan to the highest contribution level. Not only does this provide the potential for growing your retirement funds, but it will also likely reduce your taxable income. In 2025, the IRS increased the 401(k) contribution limit to $23,500, and the IRA contribution limit is still $7000.2 You can find more information on contribution limits in our guide.

If you'll be 50 or older at some point during the calendar year, you can take advantage of "catch-up" contributions, Navani recommends. (Under the SECURE ACT 2.0, participants in qualified retirement plans who are 60 through 63 years old in 2025 can contribute even more to 401(k)s – $11,250 or 150% of the regular catch-up amount, whichever is larger, as allowed by the terms of the retirement plan). If allowed under the provisions of the retirement plan, you tend to have up to the end of the calendar year in which to make a contribution to a 401(k) plan and by April 15 of the next year in which to make an IRA contribution for the prior calendar year.

4. Look for tax-aware investing strategies

Investing some of your earnings in investments not typically subject to federal income taxation, like tax-free municipal bonds, may reduce your tax bill. "Depending on when during the year you buy municipal bonds, you will or won't get any interest income for that year," says Navani. "But within the first complete calendar year after you buy, you'll experience the benefit of the tax-free interest."

Remember that if your modified adjusted gross income is $200,000 or more, you're liable for a 3.8% Net Investment Income Tax on either your net investment income or the difference between your modified adjusted gross income and the $200,000 statutory limit, whichever is less. Exclusions are certain. (Consult your tax advisor.) The limit is $250,000 for joint filers who are married or for eligible widows or widowers with a dependent child, and $125,000 for married couples filing separately.

5. Cover healthcare costs efficiently

One of the most tax-favored methods to pay for medical bills is a Health Savings Account (HSA). It has three primary tax advantages:

• Tax-deductible donations – Lowers your taxable income.

• Tax-free growth – Your money increases without being taxed.

• Tax-free withdrawals – The money can be withdrawn tax-free for eligible medical expenses.

6. Hire a Pro (or Educate Yourself)

A tax advisor or CPA can help you find tax-saving opportunities that you might miss. They can also help with complex tax situations, such as owning a business or multiple income streams.

Conclusion

Taxes don’t have to drain you — smart strategies keep more money where it belongs: with you.

Disclaimer: The information in this article is for educational and informational purposes only and does not constitute tax, financial, or legal advice. Tax strategies and examples are general suggestions and may not apply to every individual’s situation, as tax laws, income levels, and eligibility for credits or deductions vary. Tax regulations can change, and outcomes are not guaranteed. Readers should consult a qualified tax professional or financial advisor before implementing any strategies mentioned. The author and publisher are not responsible for any financial losses, tax penalties, or damages resulting from the use of this content.