Top Tax Burden Reduction Strategies

Use this guide to explore key tax reduction strategies that can help individuals, families, and business owners legally minimize their tax burden and keep more of what they earn.

1. Maximize Retirement ContributionsContributing to retirement accounts reduces your current taxable income. Consider the following options:- 401(k), 403(b), TSP: $23,000 limit (+$7,500 catch-up if age 50+); contributions reduce taxable income- Traditional IRA: $7,000 limit (+$1,000 if age 50+); tax-deductible depending on income- SEP IRA / Solo 401(k): Up to $69,000; ideal for the self-employedNote: Roth accounts offer tax-free withdrawals in retirement.
2. Contribute to an HSA (Health Savings Account)HSAs offer a triple tax advantage for those with high-deductible health plans:- Contributions are tax-deductible- Growth is tax-free- Withdrawals for medical expenses are tax-free2025 Limits: $4,300 individual / $8,600 family (+$1,000 if age 55+)
3. Take Advantage of Tax Deductions and CreditsCommon deductions include:- Mortgage interest- Property taxes- State/local taxes (up to $10,000 SALT cap)- Student loan interest- Charitable contributions- Business expensesValuable credits include:- Child Tax Credit- Earned Income Tax Credit- American Opportunity Credit- Saver’s Credit- Energy-Efficient Home Credits
4. Use Tax-Advantaged Accounts for Education- 529 Plans: Tax-free growth and withdrawals for qualified education expenses- Coverdell ESA: Grows tax-free for education, limited to $2,000/year
5. Harvest Tax Losses- Offset capital gains by selling underperforming investments- Deduct up to $3,000 in net capital losses against ordinary income annually
6. Income Shifting and Family Strategies- Hire children in a family business to shift income to a lower tax bracket- Gift assets using the annual exclusion ($18,000 per recipient in 2025)- Use family trusts for estate or income planning
7. Start a Business or Side Hustle- Write off business expenses: travel, supplies, equipment- Deduct health insurance if self-employed- Use the home office deduction if eligible
8. Strategic Charitable Giving- Bunch donations to exceed the standard deduction- Donate appreciated assets to avoid capital gains- Use Donor-Advised Funds for planned giving
9. Plan for Timing of Income and Expenses- Defer income to a lower-tax year if possible- Accelerate deductions (charitable giving, property tax payments)- Self-employed? Prepay expenses or defer client billing
10. Work with a Tax Professional- Tax laws are complex and change frequently- CPAs can help with legal entity structuring, audit protection, and advanced strategies- Personalized guidance ensures maximum tax efficiency