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12 Tips for Lowering Your Tax Bill
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do not influence our editors’ opinions or ratings12 Tips for Lowering Your Tax Bill
Here are a dozen simple maneuvers that could slash what you owe to the IRS.
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Editor & Content Strategist
23 years of experience Expertise Taxes Small business Social Security and estate planning Home services RIATina Orem is an editor and content strategist at NerdWallet. Prior to becoming an editor and content strategist, she covered small business and taxes at NerdWallet. She has a degree in finance, as well as a master's degree in journalism and an MBA. Previously, she was a financial analyst and director of finance at public and private companies. Tina's work has appeared in a variety of local and national media outlets.
Tina Orem is an editor and content strategist at NerdWallet. Prior to becoming an editor and content strategist, she covered small business and taxes at NerdWallet. She has a degree in finance, as well as a master's degree in journalism and an MBA. Previously, she was a financial analyst and director of finance at public and private companies. Tina's work has appeared in a variety of local and national media outlets. Published in Editor & Content Strategist + more + more
Head of Content, New Verticals
11 years of experienceChris Hutchison helped build NerdWallet's editorial operation and has directed coverage across banking, investing, taxes and insurance. He now leads a team exploring new verticals. Before joining NerdWallet, he was an editor and programmer at ESPN and an editor at the San Jose Mercury News.
Chris Hutchison helped build NerdWallet's editorial operation and has directed coverage across banking, investing, taxes and insurance. He now leads a team exploring new verticals. Before joining NerdWallet, he was an editor and programmer at ESPN and an editor at the San Jose Mercury News. Head of Content, New Verticals + more + moreAn unexpected tax bill can ruin anybody's day. To help avoid that unpleasant surprise, here are 12 easy moves many people can make to cut their tax bills throughout 2026.
An unexpected tax bill can ruin anybody's day. To help avoid that unpleasant surprise, here are 12 easy moves many people can make to cut their tax bills throughout 2026.In some cases, you must itemize rather than take the standard deduction to use these strategies, but the extra effort may be worth it.
In some cases, you must itemize rather than take the standard deduction to use these strategies, but the extra effort may be worth it.1. Tweak your W-4
The W-4 is a form you fill out to tell your employer how much tax to withhold from each paycheck.
The W-4 is a form you fill out to tell your employer how much tax to withhold from each paycheck.If you’ve received a huge tax bill in the past and don’t want another surprise next year, raise your tax withholding amount so you owe less when it's time to file your tax return.
If you’ve received a huge tax bill in the past and don’t want another surprise next year, raise your tax withholding amount so you owe less when it's time to file your tax return.If you’ve previously received a big refund, do the opposite and reduce your withholding; otherwise, you could be needlessly living on less of your paycheck all year. You can change your W-4 at any time.
If you’ve previously received a big refund, do the opposite and reduce your withholding; otherwise, you could be needlessly living on less of your paycheck all year. You can change your W-4 at any time.2. Learn more about your 401(k)
Lower taxable income means lower taxes, and 401(k)s are a popular way to reduce tax bills. The IRS doesn’t tax what you divert directly from your paycheck into a 401(k).
Lower taxable income means lower taxes, and 401(k)s are a popular way to reduce tax bills. The IRS doesn’t tax what you divert directly from your paycheck into a 401(k).In 2026, you can contribute up to $24,500 to your 401(k). Those 50 and older can contribute an additional $8,000, while those ages 60 to 63 can contribute an extra $11,250. (Learn more about how the 401(k) contribution limits work.)
In 2026, you can contribute up to $24,500 to your 401(k). Those 50 and older can contribute an additional $8,000, while those ages 60 to 63 can contribute an extra $11,250. ( Learn more about how the 401(k) contribution limits work .)These retirement accounts are usually sponsored by employers, although self-employed people can open their own 401(k)s. And if your employer matches some or all of your contribution, you’ll get free money to boot.
These retirement accounts are usually sponsored by employers, although self-employed people can open their own 401(k)s . And if your employer matches some or all of your contribution, you’ll get free money to boot.» MORE: Try our retirement calculator
» MORE: » MORE: Try our retirement calculator3. Look into an IRA
There are two major types of individual retirement accounts: Roth IRAs and traditional IRAs.
There are two major types of individual retirement accounts: Roth IRAs and traditional IRAs.You may be able to deduct contributions made to a traditional IRA, though how much you can deduct depends on whether you or your spouse is covered by a retirement plan at work and how much you make.
You may be able to deduct contributions made to a traditional IRA, though how much you can deduct depends on whether you or your spouse is covered by a retirement plan at work and how much you make.There are limits to how much you can put in an IRA, too. For 2026, the limit is $7,500 per year ($8,600 for people 50 and older). And note that the contribution limit is a combined limit. So, for example, you would hit the 2026 contribution limit if you put $4,000 into a traditional IRA and $3,500 into a Roth.
There are limits to how much you can put in an IRA, too. For 2026, the limit is $7,500 per year ($8,600 for people 50 and older). And note that the contribution limit is a combined limit. So, for example, you would hit the 2026 contribution limit if you put $4,000 into a traditional IRA and $3,500 into a Roth.Did you know ...
Did you know ... Did you know ...Most of the tips on this page won’t really pay off until you file your 2026 taxes in 2027. But if you’re looking for a way to potentially lower your tax bill this season, there’s still one move that could help: the IRA deduction.
Most of the tips on this page won’t really pay off until you file your 2026 taxes in 2027. But if you’re looking for a way to potentially lower your tax bill this season, there’s still one move that could help: the IRA deduction.Unlike a 401(k), you can contribute to an IRA for the previous tax year right up until the April tax filing deadline.
Unlike a 401(k), you can contribute to an IRA for the previous tax year right up until the April tax filing deadline.→ Read up on traditional IRA contribution limits and Roth IRA contribution limits.
→ Read up on → Read up on traditional IRA contribution limits and and Roth IRA contribution limits .4. Save for college
Setting aside money for a child's tuition can shave a few bucks off your tax bill, too. A popular option is to make contributions to a 529 plan, a savings account operated by a state or an educational institution.
Setting aside money for a child's tuition can shave a few bucks off your tax bill, too. A popular option is to make contributions to a 529 plan , a savings account operated by a state or an educational institution.You can’t deduct your contributions on your federal income taxes, but you might be able to on your state return if you’re putting money in your state’s 529 plan. Be aware that you may have to file a gift tax return if your contributions, plus any other gifts to a particular beneficiary, exceed $19,000 in 2026.
You can’t deduct your contributions on your federal income taxes, but you might be able to on your state return if you’re putting money in your state’s 529 plan. Be aware that you may have to file a gift tax return if your contributions, plus any other gifts to a particular beneficiary, exceed $19,000 in 2026.5. Fund your FSA
The IRS lets you funnel tax-free dollars directly from your paycheck into a flexible spending account (FSA) every year, so if your employer offers an FSA, you might want to take advantage of it to lower your tax bill.
The IRS lets you funnel tax-free dollars directly from your paycheck into a flexible spending account (FSA) every year, so if your employer offers an FSA, you might want to take advantage of it to lower your tax bill.You’ll have to use the money during the calendar year for medical and dental expenses, but you might also be able to use it for related everyday items such as bandages, prescriptions, and glasses or contacts for yourself and your qualified dependents. Some employers might let you carry money over to the next year.
You’ll have to use the money during the calendar year for medical and dental expenses, but you might also be able to use it for related everyday items such as bandages, prescriptions, and glasses or contacts for yourself and your qualified dependents. Some employers might let you carry money over to the next year.In 2026, the FSA contribution limit is $3,400, and rollovers are limited to $680
In 2026, the FSA contribution limit is $3,400, and rollovers are limited to $680 Internal Revenue Service. Rev. Proc. 2025-32. Accessed Jan 23, 2026. .6. Subsidize your dependent care FSA
This FSA, with a twist, is another handy way to reduce your tax bill if your employer offers it. What's covered can vary among employers, so check the details of your plan.
This FSA, with a twist, is another handy way to reduce your tax bill if your employer offers it. What's covered can vary among employers, so check the details of your plan.The IRS will allow for an exclusion of up to $5,000 of your pay that you have your employer divert to a dependent care FSA account, which means you’ll avoid paying taxes on that money
The IRS will allow for an exclusion of up to $5,000 of your pay that you have your employer divert to a dependent care FSA account, which means you’ll avoid paying taxes on that money Internal Revenue Service. Topic No. 602, Child and Dependent Care Credit. Accessed Jan 23, 2026. . That can be a huge win for parents of young kids, because before- and after-school care, day care, preschool and day camps usually are allowed uses. Elder care may be included, too. AD Get reliable back tax relief with our team of A+ rated tax professionals Trusted & Top-Rated Nationwide — 4.9★ Google rating. Learn moreon Priority Tax Relief's website
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7. Fund your HSA
If you have a high-deductible health care plan, you may be able to lighten your tax load by contributing to a health savings account (HSA), which is a tax-exempt account you can use to pay medical expenses.
If you have a high-deductible health care plan, you may be able to lighten your tax load by contributing to a health savings account (HSA), which is a tax-exempt account you can use to pay medical expenses.Contributions to HSAs are tax-deductible, and the withdrawals are tax-free, too, so long as you use them for qualified medical expenses. Your employer may offer an HSA, but you can also start your own account at a bank or another financial institution.
Contributions to HSAs are tax-deductible, and the withdrawals are tax-free, too, so long as you use them for qualified medical expenses. Your employer may offer an HSA, but you can also start your own account at a bank or another financial institution.In 2026, the HSA contribution limit is $8,750 for families and $4,400 for self-coverage. If you're 55 or older, you can contribute an extra $1,000.
In 2026, the HSA contribution limit is $8,750 for families and $4,400 for self-coverage. If you're 55 or older, you can contribute an extra $1,000.8. See if you’re eligible for the earned income tax credit (EITC)
The rules can get complex, but if you think you'll earn less than $70,224 in 2026, the earned income tax credit might be worth looking into. Depending on your income, marital status and how many children you have, you might qualify for a tax credit of up to $8,231 for taxes filed in 2027.
The rules can get complex, but if you think you'll earn less than $70,224 in 2026, the earned income tax credit might be worth looking into. Depending on your income, marital status and how many children you have, you might qualify for a tax credit of up to $8,231 for taxes filed in 2027.A tax credit is a dollar-for-dollar reduction in your actual tax bill — as opposed to a tax deduction, which simply reduces how much of your income gets taxed. It’s truly found money because if a credit reduces your tax bill below zero, the IRS might refund some or all of the money to you, depending on the credit.
A tax credit is a dollar-for-dollar reduction in your actual tax bill — as opposed to a tax deduction, which simply reduces how much of your income gets taxed. It’s truly found money because if a credit reduces your tax bill below zero, the IRS might refund some or all of the money to you, depending on the credit.Planning for this tax season?
Planning for this tax season? Planning for this tax season?Our article about the earned income tax credit also includes 2025 income limits and credit amounts, which apply to the taxes you file in April of 2026.
Our article about the earned income tax credit also includes 2025 income limits and credit amounts, which apply to the taxes you file in April of 2026.9. Give it away
Charitable contributions are deductible, and they don’t even have to be in cash. If you’ve donated clothes, food, old sporting gear or household items, for example, those things can lower your tax bill if they went to a bona fide charity and you got a receipt.
Charitable contributions are deductible, and they don’t even have to be in cash. If you’ve donated clothes, food, old sporting gear or household items, for example, those things can lower your tax bill if they went to a bona fide charity and you got a receipt.You may be able to deduct 20% to 60% of your adjusted gross income for charitable donations, but this is if you itemize versus taking the standard deduction.
You may be able to deduct 20% to 60% of your adjusted gross income for charitable donations, but this is if you itemize versus taking the standard deduction .Many tax software programs include modules that estimate the value of each item you donate, so make a list before you drop off that big bag of stuff at Goodwill — it can add up to big deductions.
Many tax software programs include modules that estimate the value of each item you donate, so make a list before you drop off that big bag of stuff at Goodwill — it can add up to big deductions.» MORE: See our top picks for tax software this year
» MORE: » MORE: See our top picks for tax software this year10. Keep a file of your medical expenses
If you’ve been in the hospital or had other costly medical or dental care, keep those receipts. You can deduct qualified medical expenses that are more than 7.5% of your adjusted gross income.
If you’ve been in the hospital or had other costly medical or dental care, keep those receipts. You can deduct qualified medical expenses that are more than 7.5% of your adjusted gross income .So, for example, if your adjusted gross income is $40,000, anything beyond the first $3,000 of your medical bills — 7.5% of your AGI — could be deductible. If you rang up $10,000 in medical bills, $7,000 of it could be deductible.
So, for example, if your adjusted gross income is $40,000, anything beyond the first $3,000 of your medical bills — 7.5% of your AGI — could be deductible. If you rang up $10,000 in medical bills, $7,000 of it could be deductible.» MORE: How the medical expense deduction works
» MORE: » MORE: How the medical expense deduction works AD Get reliable back tax relief with our team of A+ rated tax professionals Trusted & Top-Rated Nationwide — 4.9★ Google rating. Learn moreon Priority Tax Relief's website
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11. Consider selling stocks weighing down your portfolio
Knowing you’re getting a tax deduction might make it a little easier to unload some of those bad stock picks that have been weighing down your portfolio.
Knowing you’re getting a tax deduction might make it a little easier to unload some of those bad stock picks that have been weighing down your portfolio.You can deduct losses on stock sales, which can offset any taxable capital gains you might have. The limit on that offset is $3,000, or $1,500 for married couples filing separately.
You can deduct losses on stock sales, which can offset any taxable capital gains you might have. The limit on that offset is $3,000, or $1,500 for married couples filing separately.One other note: If you decide to buy back your stock within 30 days, the IRS can take back your deduction.
One other note: If you decide to buy back your stock within 30 days, the IRS can take back your deduction.» MORE: How tax-loss harvesting works
» MORE: » MORE: How tax-loss harvesting works12. Get the timing right
From a tax perspective, there’s a huge difference between doing something by Dec. 31 and doing it a day later.
From a tax perspective, there’s a huge difference between doing something by Dec. 31 and doing it a day later.If you know an upcoming expense is going to be tax-deductible, think about whether you can pay for it this year rather than next year. For example, if you had made your January 2026 mortgage payment in December 2025, that could have given you an extra month’s worth of mortgage interest to deduct on your 2025 tax return.
If you know an upcoming expense is going to be tax-deductible, think about whether you can pay for it this year rather than next year. For example, if you had made your January 2026 mortgage payment in December 2025, that could have given you an extra month’s worth of mortgage interest to deduct on your 2025 tax return.Similarly, if you know you’re near the threshold for the medical expense deduction, moving that root canal up might make the pain more bearable if the cost suddenly becomes deductible, too.
Similarly, if you know you’re near the threshold for the medical expense deduction, moving that root canal up might make the pain more bearable if the cost suddenly becomes deductible, too.» Dive deeper: 7 tax strategies to know
» Dive deeper: » Dive deeper: 7 tax strategies to knowON THIS PAGE
1. Tweak your W-4 2. Learn more about your 401(k) 3. Look into an IRA 4. Save for college 5. Fund your FSA 6. Subsidize your dependent care FSA 7. Fund your HSA 8. See if you’re eligible for the earned income tax credit (EITC) 9. Give it away 10. Keep a file of your medical expenses 11. Consider selling stocks weighing down your portfolio 12. Get the timing rightON THIS PAGE
1. Tweak your W-4 2. Learn more about your 401(k) 3. Look into an IRA 4. Save for college 5. Fund your FSA 6. Subsidize your dependent care FSA 7. Fund your HSA 8. See if you’re eligible for the earned income tax credit (EITC) 9. Give it away 10. Keep a file of your medical expenses 11. Consider selling stocks weighing down your portfolio 12. Get the timing right More like this Taxes 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem Federal Income Tax Calculator and Refund Estimator 2025-2026 Estimate your 2026 tax refund or bill using our free income tax calculator. Enter your income, age and filing status to get started. Sabrina Parys How Federal Tax Brackets and Rates Work Contrary to popular belief, your income isn't taxed at just one rate. The U.S. has a progressive tax system, meaning different portions of your income get taxed at different rates. 2 By Sabrina Parys, Tina Orem 2025 Tax Brackets and Federal Income Tax Rates The 2025 federal income tax rates range from 10% to 37% and apply to taxes due by April of this year. Find out which bracket you're in. Bella Avila 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem Federal Income Tax Calculator and Refund Estimator 2025-2026 Estimate your 2026 tax refund or bill using our free income tax calculator. Enter your income, age and filing status to get started. Sabrina Parys How Federal Tax Brackets and Rates Work Contrary to popular belief, your income isn't taxed at just one rate. The U.S. has a progressive tax system, meaning different portions of your income get taxed at different rates. 2 By Sabrina Parys, Tina Orem 2025 Tax Brackets and Federal Income Tax Rates The 2025 federal income tax rates range from 10% to 37% and apply to taxes due by April of this year. Find out which bracket you're in. Bella Avila 2026 Tax Brackets and Federal Income Tax Rates The IRS adjusts the federal tax brackets annually to keep pace with inflation. The 2026 tax brackets apply to taxes filed in 2027. Bella Avila Standard Deduction for 2025 and 2026: Amounts, When to Take The standard deduction is a popular way for taxpayers to reduce their taxable income. Your deduction amount depends on your age, filing status and other factors. 2 By Sabrina Parys, Tina Orem Capital Gains Tax: Long and Short-Term Rates for 2025-2026 Capital gains are the profits from the sale of assets. They can be subject to short-term or long-term tax rates. 2 By Sabrina Parys, Tina Orem 25 Popular Tax Deductions and Tax Breaks for 2025-2026 A deduction cuts the income you're taxed on, which can mean a lower bill. A credit cuts your tax bill directly. Learn more about common tax breaks and write-offs — and how to claim them. 2 By Sabrina Parys, Tina Orem Get started Get startedon Anthem Tax Services's website
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