Smart Tax Moves You Can Make Now to Reduce What You Owe Later
Tax planning doesn’t have to be complicated. In fact, a few well‑timed decisions throughout the year can meaningfully reduce your tax bill—both today and in the future. Whether you’re a high‑earning professional, someone with equity compensation, or simply trying to be more intentional with your finances, these strategies can help you keep more of what you earn.
Here are three practical tax‑planning moves worth considering now.
1. Time Your Income Strategically
Not all income hits your tax return the same way—or at the same time. With a little planning, you can influence when income shows up, which can help you stay in a lower bracket or avoid phaseouts.
A few examples:
- Delay or accelerate bonuses (if possible) depending on whether this year or next year will be lower‑income for you.
- Manage equity compensation events—like exercising stock options or selling vested shares—so they fall in tax years that work in your favor.
- Harvest investment losses to offset gains, which can reduce your taxable income in high‑income years.
The goal isn’t to avoid income—it’s to recognize it in the most tax‑efficient year possible.
2. Maximize Deductions You Already Have Access To
Many taxpayers leave money on the table simply by not taking full advantage of deductions available to them.
A few places to look:
- Retirement contributions: Max out 401(k), 403(b), or IRA contributions if you’re eligible. These can reduce taxable income today while helping you build long‑term wealth.
- Health Savings Accounts (HSAs): If you have a high‑deductible health plan, HSAs offer a rare triple tax benefit—deductible contributions, tax‑free growth, and tax‑free withdrawals for qualified medical expenses.
- Charitable giving: Donor‑advised funds allow you to “bunch” multiple years of giving into one tax year, creating a larger deduction when you need it most.
- Mortgage interest, State and Local Taxes (SALT), and other itemized deductions: If you’re close to the standard deduction threshold, strategic timing of these expenses can push you into itemizing for greater tax savings.
Small adjustments here can add up quickly.
3. Coordinate Tax‑Aware Investments
Your investment strategy and your tax strategy should work together—not against each other.
A few ways to align them:
- Asset location: Place tax‑efficient investments (like Muni bonds, index funds or ETFs) in taxable accounts and tax‑inefficient assets (like High-yield Roth bonds or actively managed funds) in retirement accounts.
- Tax‑loss harvesting: Selling investments at a loss to offset gains can reduce your tax bill and help rebalance your portfolio at the same time.
- Long‑term capital gains: Holding investments for more than one year can significantly reduce the tax rate on gains.
- Roth Conversion: leverage low-income retirement years to time Roth Conversion to reduce RMDs
- Tax‑efficient withdrawal strategies: For retirees or those approaching retirement, coordinating withdrawals across taxable, tax‑deferred, and tax‑free accounts can help minimize lifetime taxes.
A tax‑aware investment plan doesn’t just reduce taxes—it can improve your after‑tax returns over time.
Bringing It All Together
Tax planning isn’t a once‑a‑year activity. The most effective strategies are the ones you revisit periodically—especially when your income, investments, or life circumstances change.
For help applying these ideas to your own situation contact your financial advisor/tax professional or contact us to build a plan that fits your goals.