Here are some of the best ways to save on taxes:

Maximize Tax-Advantaged Accounts

One of the most effective strategies is to maximize contributions to tax-advantaged retirement accounts:

• Contribute the maximum allowed to your 401(k) or similar employer-sponsored retirement plan. For 2024, you can contribute up to $23,000, plus an additional $7,500 if you're 50 or older15.

• Contribute to a traditional IRA. The 2024 limit is $7,000, plus an additional $1,000 catch-up contribution for those 50 and older3.

• If eligible, contribute to a Health Savings Account (HSA). The 2024 limit is $4,150 for individuals and $8,300 for families, with an extra $1,000 allowed for those 55 and older35.

These contributions reduce your taxable income for the year, potentially lowering your tax bracket.

Consider Tax-Efficient Investments

For taxable accounts, focus on tax-efficient investments like:

• Index funds and ETFs, which tend to have lower turnover and generate fewer capital gains distributions2.
• Municipal bonds, whose interest is generally exempt from federal taxes and potentially state taxes if issued in your state of residence5.

Use Tax-Loss Harvesting

Strategically sell investments that have declined in value to offset capital gains and potentially reduce your taxable income. You can offset up to $3,000 of ordinary income per year with capital losses, and carry forward any excess losses to future tax years34.

Optimize Charitable Giving

If you itemize deductions, consider:

• Donating appreciated long-term investments directly to charity to avoid capital gains taxes and potentially deduct the full fair market value4.
• If you're 73 or older, making qualified charitable distributions (QCDs) from your IRA to satisfy required minimum distributions (RMDs) without increasing your taxable income4.

Plan for Long-Term Capital Gains

Hold investments for more than a year before selling to qualify for lower long-term capital gains tax rates. In lower-income years, you may even be able to realize some gains at the 0% rate5.

Utilize Tax Credits

Take advantage of available tax credits, which provide a dollar-for-dollar reduction in your tax bill. Common credits include the Child Tax Credit, American Opportunity Credit for education expenses, and various energy-efficiency credits5.

Consider a Roth Conversion

In years when your income is lower, consider converting some traditional IRA funds to a Roth IRA. While you'll pay taxes on the converted amount now, future withdrawals will be tax-free, potentially saving you money in the long run if you expect to be in a higher tax bracket in retirement3.

Timing Income and Deductions

If possible, time your income and deductions strategically. For example, you might defer income to the next year if you expect to be in a lower tax bracket, or accelerate deductions into the current year if you expect to be in a higher bracket1.

Remember, tax laws are complex and change frequently. It's always advisable to consult with a qualified tax professional or financial advisor to develop a tax strategy tailored to your specific situation.