Six Simple Ways to Lower your Taxable Income

Let’s clear something up really quick.

Earning well is great, but being able to keep more of what we earn is what separates income from wealth.

For many high earners, taxes quietly become one of the largest recurring expenses. Bigger than rent, travel, or even lifestyle upgrades. And yet, most people only think about taxes once a year… usually when the damage is already done.

The goal isn’t to dodge taxes, it’s to position our income in a way that reduces tax exposure over time.

Here are six simple, strategic ways to start lowering your taxable income without overcomplicating things.

1. Take advantage of Tax Deferred Accounts

Tax-deferred accounts allow money to grow before taxes are taken out, reducing your taxable income today while saving for the future.

Common examples include:

• 401(k) and 403(b)

• Traditional IRA

• Health Savings Accounts (HSA)

• Flexible Spending Accounts (FSA)

These accounts work especially well for high earners who want immediate tax relief while building long-term security for the future. Bonus points if your employer offers 401K matching contributions. This is essentially free money, so you don’t want to leave any of that on the table.

2. Contribute to Tax Advantaged Accounts

Not all tax strategies are about deferring taxes, some are about eliminating them later. Tax-advantaged vehicles allow money to grow in ways that reduce or eliminate future taxation, creating flexibility and control down the line.

Some examples include:

• ROTH IRA

• ROTH 401K

• Life Insurance Retirement Plan (LIRP)

• Municipal bonds

3. Look for Available Tax Credits

Credits are powerful because they reduce taxes dollar-for-dollar, not just taxable income. Depending on eligibility, credits may include:

• The child tax credit

• Earned income tax credit

• American opportunity tax credit

• Lifetime learning tax credit

• Child and dependent care tax credit

• Savers credit

• Residential energy tax credit

Many people miss these simply because no one ever explained what qualifies. This is where awareness alone can create meaningful savings.

4. Consider Itemizing Your Deductions

If your total deductible expenses exceed the standard deduction, itemizing may lower your taxable income further.

For reference (current thresholds at time of writing):

• $15,750 for single filers

• $31,500 for married filing jointly

This may apply if there are significant mortgage interest, charitable contributions, medical expenses, or state taxes paid. So, keep your receipts.

5. Shift From Only Earning Income to Owning assets

W-2 income is taxed heavily and predictably. Assets, on the other hand, introduce flexibility.

Owning assets can create:

• Depreciation advantages

• Timing flexibility

• Tax deferral opportunities

• Strategic income positioning

This is why wealth isn’t just about earning, it’s about ownership. Assets move differently than paychecks.

6. Work with a Tax Strategist, not just a Tax Preparer

A tax preparer documents the past while a tax strategist designs the future.

One files forms, the other builds alignment.

Strategic tax planning isn’t reactive, it’s proactive, coordinated, and forward-thinking. This is especially important as your income grows, investments expand, families evolve, and legacy planning enters the picture.

Final Thoughts

Earning well is great, but being able to keep more of what we earn by reducing our tax exposure is where wealth is built.

Knowing where our money lives, how it moves, and how long it stays working for us is what replaces chaos with clarity and shifts decisions from being reactive to proactive.

And that’s the difference between earning well and building strategically.