5 Money Tasks To Tackle Right Now To Lower Your Tax Bill
For many people, tax time is one of the most expensive times of year — arguably rivaling the holiday spending blitz. Only during tax season, you don’t get presents or Hallmark TV specials. You just brace yourself for an inconvenient tax bill. But what if you could lower it?
Just as there are strategies to slash your holiday budget, there are money moves that can shrink your tax bill. The best part? You can start now. MoneyLion researched what should be on your tax-time to-do list.
1. Defer Income
There are times when paying taxes early works to your advantage, but TurboTax notes a caveat. In a recap of last-minute tax strategies to lower your bill, the firm noted that you’re often better off waiting. Why? Deferring income from the current year into the next can delay taxes — reducing your current year’s taxable income.
For You: 7 Ways You're Accidentally Committing Tax Fraud
Learn How: This One Low-Effort Money Move Could Change Your Finances in 2026
TurboTax offers this example: If you’re due a year-end bonus (congratulations, by the way), ask your employer whether the payment can be pushed into next year.
There’s a catch.
“Deferred income may create tax problems the following year, particularly if you find yourself in a higher tax bracket,” a TurboTax expert wrote. “You’ll have to balance any current tax savings with the taxes you’ll have to pay in the future. However, if your priority is to reduce this year’s taxes, the less income you realize in the current year, the better.”
2. Maximize Retirement Contributions
A strong financial future rests on a solid retirement plan. Maxing out contributions when possible not only strengthens your savings but also lowers your taxable income.
As Fidelity Viewpoints explains, contributions to a 401(k), traditional IRA and certain other retirement accounts can reduce your taxable income dollar for dollar.
If you have a workplace retirement plan, you can contribute up to $23,500 for 2025, rising to $24,500 in 2026. Those 50 and older can make catch-up contributions of $7,500, increasing to $8,000 in 2026.
For IRAs, the annual contribution limit — including Roth and traditional IRAs — is $7,000 for 2025 and $7,500 for 2026. If you’re 50 or older, you can contribute an additional $1,000 in 2025 and $1,100 in 2026.
Your future self — and the one paying taxes now — will thank you.
3. Don’t Forget Health Savings Accounts
If you have a health savings account because you’re enrolled in a high-deductible health plan, take note: For 2025, contribution limits are $4,300 for individuals and $8,550 for families. People 55 and older who are not enrolled in Medicare can contribute an additional $1,000.
“In 2026, you can contribute up to $4,400 if you are covered by a high-deductible health plan just for yourself, or $8,750 if you have coverage for your family,” Fidelity Viewpoints said. “If both spouses are covered by a family high-deductible health plan and share an HSA, they are eligible for one catch-up contribution of $1,000 if one of them is 55 or older and not enrolled in Medicare.”
4. Leverage Available Tax Credits
To paraphrase Mary Poppins, tax credits make tax season go down easier. To determine which credits you qualify for — especially with changes tied to the One Big Beautiful Bill Act — consider consulting a certified public accountant or other tax professional.
Writing for Kiplinger, the team at Ameriprise Financial explained why this strategy can pay off: “A tax credit reduces your tax liability, dollar for dollar. To ensure you’re not missing new credits from the government, review potential credits available to you on a yearly basis.”
5. Take Capital Losses
In an ideal world, every investment would pay off. But sometimes you lose money on a capital investment, such as a stock. There is a silver lining: You can use those losses to reduce your taxes.
Here’s how TurboTax explains it: “You’ll have to sell the stock at a loss first, a process known as ‘realizing’ a loss. Once you realize a loss, you can use it to offset any realized capital gains you may have. If you have more capital losses than gains, the IRS allows you to use up to $3,000 of excess loss to offset your ordinary taxable income.”
This strategy, often called tax-loss harvesting, can help trim your taxable income while keeping your broader investment plan intact, though timing and wash-sale rules matter.
Depending on your situation, capital losses can reduce a meaningful portion of your tax liability, making it worth discussing with an adviser.
The Bottom Line
Tax time doesn’t have to feel like the opposite of the most wonderful time of the year. Make these moves now, and you may be able to shrink your taxable income, reduce what you owe and head into filing season with fewer surprises.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
More From MoneyLion: