Taxes are inevitable, but you can lessen the burden with a few clever maneuvers. These four “tax hacks” can all save you money when you file in 2025 by reducing your taxable income, maximizing deductions, and harnessing tax-deferred growth. Here’s how to retain more of your labor-earned celluloid.
1. Offset Gains with Tax-Loss Harvesting
Did you have a great year in the stock market? Tax-loss harvesting can help. “If you’ve had a profitable sale of stocks, you can offset it by selling investments that are down,” says Paul T. Joseph, an attorney and CPA with Joseph & Joseph Tax & Payroll in Michigan. This strategy lowers your taxable income by offsetting wins with losses—especially useful for an investor trying to lessen the blow when it comes to taxes.
2. Retirement Contributions: Max Out
That’s because boosting your retirement savings isn’t just smart now for the future—it’s a tax-saver now. Maxing out your 401(k) ($23,500 in 2025) or traditional IRA ($7,000 in 2024 and 2025) reduces the taxable amount of your income. “You can make an IRA contribution until April 15, 2025 for the 2024 tax year,” Joseph adds. Follow your 2024 contributions, fill up to the maximum, and see your tax bill diminish.
3. Fund a Health Savings Account (HSA)
So the Health Savings Account (HSA), which is a triple whammy, in that your contributions are pretax dollars, your earnings are tax-free, and your withdrawals for medical expenses are tax-free. The catch? You require a high-deductible health plan. “HSA contributions lower your taxable income, allowing you to save on taxes and future health expenses,” says Joseph. It’s a useful method of saving on your bill while getting ready for medical needs.
4. 529 Plan Education Savings
Planning for education? A 529 plan allows for tax-deferred growth and tax-free withdrawal for qualified expenses, such as college or K-12 expenses. “Most states allow for deductions based on 529 contributions, so it can be a great way to save for kids or grandkids,” Joseph advises. This is a twofer—pay less in taxes today and put away for their future.
The Bottom Line
These four hacks can move the needle in 2025. Offset gains in stocks with tax-loss harvesting, maximize contributions to retirement accounts, fund an HSA plan if eligible, and save for education in a 529 plan. Every move lowers your taxable income or increases deductions, meaning more money stays in your pocket. Begin now to reduce your tax liability prior to Tax Day, April 15, 2025.
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