Updated March 2026 | how to save money on taxes
These accounts reduce your taxable income dollar-for-dollar:
1. 401k/403b: Contribute up to $23,500 (2026). Every dollar you contribute reduces your taxable income by that amount. At 22% tax bracket, a $23,500 contribution saves $5,170 in taxes. Plus you get employer match (free money).
2. Traditional IRA: Deduct up to $7,000 ($8,000 if 50+). Tax savings of $1,540-$2,590 depending on bracket.
3. HSA (Health Savings Account): Triple tax advantage — tax-deductible contributions, tax-free growth, tax-free withdrawals for medical expenses. Individual: $4,300, Family: $8,550 in 2026. After 65, withdrawals for any purpose are taxed as income (like a Traditional IRA).
4. 529 Plan: Not federally deductible, but 34 states offer state tax deductions. Earnings grow tax-free for education expenses.
Total potential tax savings from maxing all accounts: $7,000-$12,000/year.
5. State and Local Tax (SALT) Deduction: Up to $10,000 for state/local income and property taxes. Must itemize.
6. Charitable Donations: Cash donations up to 60% of AGI. Donating appreciated stock avoids capital gains tax AND gives you a deduction.
7. Student Loan Interest: Deduct up to $2,500/year even without itemizing.
8. Home Office Deduction (Self-Employed): Deduct a portion of rent/mortgage, utilities, and internet based on dedicated office space.
9. Child Tax Credit: $2,000 per child under 17. This is a credit (reduces tax bill directly), not just a deduction.
10. Earned Income Tax Credit (EITC): Worth up to $7,830 for low-to-moderate income workers with 3+ children. Many eligible people do not claim it.
11. Tax-Loss Harvesting: Sell losing investments to offset capital gains. Up to $3,000 in losses can offset ordinary income per year. Remaining losses carry forward indefinitely.
12. Roth Conversion Ladder: Convert Traditional IRA to Roth in low-income years. Pay taxes now at a lower rate, then enjoy tax-free growth and withdrawals forever.
13. Bunch Deductions: Alternate between standard and itemized deductions by bunching charitable giving and medical expenses into alternating years.
14. Maximize Business Deductions (Self-Employed): Vehicle mileage ($0.67/mile in 2026), equipment, software, professional development, health insurance premiums, retirement contributions (SEP IRA up to $69,000).
15. Move to a No-Income-Tax State: The 9 states with no income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming) can save you thousands. On $100,000 income, moving from California to Texas saves approximately $9,300/year in state taxes.