6 Ways to Lighten Your Tax Load

Written By Fabian Degen

Paying taxes is part of life—but overpaying doesn’t have to be. With deliberate planning and the right mix of tactics, both high-net-worth households and everyday earners can trim their bill. Below are six income-tax minimization strategies you can weave into a well-built plan—from tax-aware investing to maximizing retirement benefits.

1) Consider Municipal Bonds

Municipal bonds (“munis”) fund public projects for states and localities. The interest on most munis is generally exempt from federal income tax—and may also be free of state and local tax if you live where the bond is issued. That edge can be especially valuable in higher brackets.
Before you buy:

  • Potential exceptions: Some issues—such as certain private-activity bonds or bonds bought at a discount—can lose part of their tax-free treatment. Confirm the tax status first.

  • Lower stated yields: Munis often pay less than comparable corporate bonds, but after-tax results can still come out ahead for high earners.

  • Time horizon: Munis work best when held to maturity for steady, tax-advantaged income.

2) Favor Long-Term Capital Gains

Hold stocks, bonds, real estate, and other capital assets more than one year to access preferential long-term capital gains rates (0%, 15%, or 20%, depending on income). Assets kept less than a year are taxed at ordinary rates, which can be much higher.
Ways to tilt the odds:

  • Buy and hold: Let positions compound rather than trading frequently.

  • Tax-loss harvesting: Realize losses to offset gains—and use up to $3,000 of net capital losses each year to reduce other taxable income.

  • Income-threshold planning: Time big sales to stay in more favorable brackets.

3) Start (or Expand) a Business

A profitable side venture—or a full-scale company—can open meaningful deductions while creating another income stream.
Common write-offs:

  • Home office: Deduct a portion of housing and utilities for a dedicated workspace.

  • Vehicle & travel: Miles, travel, and certain meals tied to business activity.

  • Health insurance premiums: Often deductible for the self-employed (subject to rules).

4) Max Out Retirement Plans & Workplace Benefits

Contributions to 401(k)s, 403(b)s, and IRAs can lower your AGI today and allow investments to grow tax-deferred (or tax-free, depending on the account).
Key limits (2025):

  • 401(k): Up to $23,500, plus $7,500 catch-up if you’re 50+.

  • Traditional IRA: Up to $7,000 (or $8,000 if 50+); deductibility can phase out based on income.

  • Employer benefits: Explore FSAs, educational assistance, and group life—many have tax-favored treatment.
    RMDs: Keep an eye on SECURE-era rules for Required Minimum Distributions—missing one can trigger steep penalties.

5) Use a Health Savings Account (HSA)

If you’re in a high-deductible health plan, an HSA offers triple tax benefits: pretax (or tax-deductible) contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.
Contribution limits:

  • 2025: $4,300 (individual) / $8,550 (family)
    Employer matches—when offered—grow tax-free alongside your own contributions.

6) Don’t Leave Credits on the Table

Credits reduce your tax dollar-for-dollar, making them more powerful than deductions.

  • Child Tax Credit: $2,200 per eligible child in 2025; phaseouts start at $200,000 for single filers ($400,000 joint).

  • Earned Income Tax Credit (EITC): Designed for lower-income filers; the maximum credit depends on your income, status, and number of qualifying children.

  • Education credits: The American Opportunity and Lifetime Learning credits can offset tuition and qualified education costs.

Take the Next Step

No one should pay more than they owe. Applying these six strategies can meaningfully cut your tax burden—freeing cash to reinvest, launch new ventures, or bolster family security. Ready to tune up your plan?

Contact FMD Wealth Advisors for a personalized, tax-aware review and a roadmap to a more efficient financial future.

Disclosures: FMD Wealth Advisors LLC (“FMD Wealth Advisors”) is a Registered Investment Adviser. 

This material is for general information only and is not individualized legal or tax advice. Consult your attorney and CPA regarding legal and tax matters specific to your circumstances.  This content is intended to provide general information about FMD Wealth Advisors. It is not intended to offer or deliver investment advice in any way. Information regarding investment services is provided solely to gain an understanding of our investment philosophy, our strategies and to be able to contact us for further information.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.  

Past performance is no guarantee of future returns. 

Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable. Additional Important Disclosures may be found in the FMD Wealth Advisors Form ADV Part 2A. For a copy, please Click here.

Fabian Degen
Next

11 Ways High Earners Can Trim Their Tax Bill