How to Cut Your Tax Bill

Dear friends,

Tax Day just passed. And if you're like most people, you're either frustrated by how much you owed or confused about where all your money went.

The truth is, taxes are one of the biggest expenses you'll face in your lifetime. But most people don't think about them until it's too late—when the bill is due and nothing can be changed.

That's why I'm writing this now. Not to help you file, but to help you prepare so that next April, you're in control.

In this guide, I'll walk you through clear and legal strategies to reduce your tax bill, save more money each year, and use the tax code to your advantage.

This is about being proactive. Not scrambling at the last second.

Let's get started.

Maximize Retirement Contributions

One of the easiest ways to lower your tax bill is by contributing to retirement accounts. These contributions can either reduce your taxable income today or grow tax-free for the future.

Here’s how to take advantage of both.

401(k):
If you have access to a 401(k) through your employer, you can contribute up to $23,500 in 2025. If you’re 50 or older, you can make an additional $7,500 catch-up contribution.
Traditional 401(k) contributions are made pre-tax, which lowers your taxable income now. Roth 401(k) contributions are made after tax but grow tax-free forever. Choose based on whether you want the tax break now or later.

Traditional IRA and Roth IRA:
If you don’t have a 401(k) or want to invest more, IRAs are a great tool. You can contribute up to $7,000 in 2025, or $8,000 if you’re 50 or older.
Traditional IRA contributions may be tax-deductible, depending on your income. Roth IRAs won’t reduce your taxes today, but all future growth and withdrawals in retirement are tax-free.

Strategy Tip:
I like to use both. Having a mix of traditional and Roth accounts gives flexibility in retirement. You can pull from either bucket depending on your tax situation each year.

Retirement accounts are more than just saving for the future. They’re a powerful way to save money on taxes right now.

Leverage Health Savings Accounts (HSAs)

If you qualify for one, an HSA is one of the most powerful tax tools available. It gives you three tax advantages in one account.

First, your contributions are tax-deductible. That means they lower your taxable income in the year you make them. Second, the money grows tax-free. And third, if you use it for qualified medical expenses, withdrawals are also tax-free.

That’s a triple benefit you won’t get from any other account.

For 2025, you can contribute up to $4,300 if you’re on an individual health plan or $8,550 if you’re on a family plan. If you’re 55 or older, you can contribute an extra $1,000.

To qualify, you need to be enrolled in a high-deductible health plan. But once you’re eligible, the benefits are hard to beat.

Another big perk: HSA funds roll over every year. You don’t lose what you don’t spend. Many people even treat their HSA like a backup retirement account, letting it grow and saving it for medical expenses later in life.

If you’re not already using one and you’re eligible, this is one of the easiest ways to cut your tax bill while saving for real expenses you’ll actually face.

Use Tax-Loss Harvesting

If you invest in a taxable brokerage account, tax-loss harvesting is one of the smartest ways to lower your tax bill.

Here’s how it works.

When you sell an investment for more than you paid, you trigger a capital gain—and that means taxes. But if you also sell an investment that has lost money, you can use that loss to offset your gains.

If your losses are bigger than your gains, you can deduct up to $3,000 in losses against your ordinary income. Anything beyond that carries forward into future years.

It’s a simple strategy, but the savings can add up quickly.

Example:
Let’s say you sell a stock and lock in a $10,000 gain. If you also sell another investment that has a $7,000 loss, you can use that full loss to reduce your taxable gain. You’ll only owe taxes on the remaining $3,000 in profit.
On the flip side, if you didn’t have any gains this year, you could only deduct $3,000 of that $7,000 loss against your income. The extra $4,000 carries forward to future years until it's used up.

The key is to stay invested. After selling a losing stock or ETF, reinvest the money into something similar, but not identical. That keeps your portfolio aligned while locking in the tax benefit.

Just make sure to avoid the wash sale rule. If you buy the same or a “substantially identical” security within 30 days before or after the sale, the IRS won’t let you take the loss.

This strategy is best used during volatile years when the market gives you both winners and losers. And when used consistently, it becomes a valuable tool for compounding wealth with less drag from taxes.

Optimize Charitable Giving

If you're already donating to causes you care about, there’s a smarter way to do it—one that can reduce your tax bill while maximizing your impact.

One strategy is to donate appreciated assets like stocks instead of cash. If you’ve held a stock for more than a year and it’s gone up in value, donating it lets you avoid capital gains tax and still deduct the full market value. It’s a double win.

You can also use a donor-advised fund. This lets you contribute a lump sum in one year, take the full deduction now, and spread out your donations to charities over time. It’s useful if you have a big income year and want to front-load your giving for future use.

If you’re 70½ or older, you can donate directly from your IRA using a Qualified Charitable Distribution, or QCD. You can donate up to $100,000 per year, and it counts toward your required minimum distribution without increasing your taxable income.

Charitable giving doesn’t just feel good—it can also be a powerful tool to reduce your tax liability when used strategically.

Conclusion: Don’t Wait Until Next April

Most people don’t think about taxes until they’re already staring at the bill. By then, it’s too late.

The key to saving money on taxes isn’t complicated—it’s preparation. All of the strategies in this guide are legal, accessible, and can be started today. None of them require you to be rich. They just require you to be intentional.

Retirement contributions, HSA planning, harvesting losses, and smarter charitable giving can save you thousands each year. And when you stack those wins over time, they compound just like your investments.

So instead of stressing every April, put yourself in control now.
Make this the year you stop overpaying and start planning.

You work hard for your money. It’s time to keep more of it.

Cheers!

Matt Allen

Disclaimer for BeanWealth

BeanWealth is a publisher of financial education and information. We are not an investment advisor and do not provide personalized investment advice or recommendations tailored to any individual's financial situation. The content provided through our website, newsletters, and any other materials is for educational purposes only and should not be construed as financial or investment advice.

All information is provided “as is,” without warranty of any kind. BeanWealth makes no representations or guarantees regarding the accuracy, completeness, or timeliness of the information presented. The opinions and views expressed in our content are those of the author(s) and do not necessarily reflect the views of BeanWealth, its partners, or its affiliates.

Investors should perform their own due diligence and consult with a professional financial advisor before making any investment decisions. None of the information provided herein constitutes a solicitation to buy or sell any securities or financial instruments. Any projections or forecasts mentioned are speculative and subject to risks and uncertainties that could cause actual outcomes to differ.

BeanWealth, its employees, and affiliates may hold positions (long or short) in the securities or companies mentioned, and these positions may change without notice. No guarantees are made regarding the continuation of these positions.

Forward-looking statements, estimates, or forecasts provided are inherently uncertain and based on assumptions that may not occur. Other unforeseen factors may arise that could materially affect the actual outcomes or performance of the securities discussed. BeanWealth has no obligation to update or correct any information after the date of publication.

BeanWealth disclaims any liability for losses or damages, whether direct or indirect, resulting from the use of the information provided. By accessing or using any BeanWealth content, you agree to this disclaimer and our terms of service.

Unauthorized distribution, reproduction, or sharing of this content is strictly prohibited and subject to legal action.