With year-end planning comes tax planning, and there are many tax strategies that can be employed to minimize income tax. Minimizing income tax is a common financial goal for many individuals and businesses. Effective tax strategies can help you keep more of your earnings and reduce your tax burden. These strategies involve various legal methods to optimize deductions, credits, and tax-advantaged accounts, while also considering your financial goals 


Required Minimum Distribution  The IRS requires you to take money out of most types of retirement accounts (including Traditional IRA, SEP-IRA, and Simple IRA) when you reach age 72 (73 if you reach age 72 after Dec. 31, 2022.) The same can be said for 401(k) and 403(b) accounts if you are no longer working. The tax consequence can be offset by a QCD.



Qualified Charitable Distribution  (QCD) is a direct transfer of funds from an IRA to a charity. It’s a tax-efficient way for individuals over 70½ to meet their required minimum distribution (RMD) and support a charitable cause without incurring income tax on the distribution.  



Donor Advised Fund  is a charitable giving account established and managed by a public charity or financial institution. Donors can contribute to the fund and receive an immediate tax deduction for their contributions. DAFs offer donors flexibility and convenience in managing their charitable giving while supporting various causes.


Tax-Loss Harvesting

Tax-Loss Harvesting is an investment strategy where you sell assets that have decreased in value to offset capital gains and reduce your tax bill. It’s a way to make the most of market fluctuations and turn investment losses into a tax benefit.


Tax-Gain Harvesting

Tax-Gain Harvesting is an investment strategy where you intentionally sell investments that have appreciated in value. By doing so, you realize capital gains, which can be advantageous in certain situations, such as when your income tax rate is low or when you want to increase the cost basis of your investments to reduce future capital gains taxes. 


Pre-Tax Contributions (IRA, SEP-IRA, HSA)

Increasing retirement or HSA contributions is a tax strategy many forget. It is a great way to reduce the amount of gross income that is subject to income taxes and minimize tax liability. Hence, the more money you contribute, the lower your taxable income will be, and the less you will pay to Uncle Sam.


Purchase Tax-Exempt Securities in Investment Accounts

Investors in higher tax brackets may want to consider tax-exempt municipal bonds, as they may yield more than taxable munis after considering the effects of taxes.  Interest on tax-exempt municipal bonds may also be tax-free on your state tax return if the municipal bond is in your resident state.

Interest earned on U.S Treasury Obligations (T-Bills, T-Notes, or T-Bonds), although subject to federal income tax, is exempt from state income tax.