It’s that time of year when spring is around the corner, and everyone is looking forward to those warm, sunny days ahead. But first, as we push through the final winter weeks and potential cabin fever, we need to tackle our taxes and ensure we’re squared away with the IRS for another year. While doing taxes may not be your favorite activity, there are plenty of strategies to help reduce your tax bill and keep more of your hard-earned money. Whether you’re a business owner or an individual taxpayer, smart planning can make a significant difference in your financial landscape.
In this blog, we’ll explore some easy (and legal!) ways to lower your tax liability. With a bit of preparation and know-how, you can take advantage of every opportunity to reduce your tax burden. Let’s dive in!
Standard vs. Itemized Deductions (Schedule A)
The standard deduction for single filers in 2025 is $15,000, and for married couples filing jointly, it’s $30,000. Most Americans take the standard deduction, but one way to significantly reduce your taxes is through charitable contributions. By creating a donor-advised fund and bundling contributions into a single year, you may be able to exceed the standard deduction limit. If you’re charitably inclined, strategic giving can lower your overall tax bill.
Pre-Tax Retirement Accounts
Contributing to pre-tax retirement accounts like 401(k)s and 403(b)s is one of the easiest ways to reduce taxable income. Always consult a financial advisor or CPA to determine which accounts make the most sense for your situation, but maximizing these contributions can significantly lower your tax bill while boosting retirement savings.
Tax Loss Harvesting
This strategy applies to both ordinary income and capital gains. Tax loss harvesting involves selling investments that have lost value to offset gains on other investments. Think of it as financial spring cleaning—getting rid of underperforming assets while saving on taxes. Just be mindful of the wash sale rule—you must wait at least 30 days before repurchasing the same asset, or the loss will be disallowed for tax purposes. You can also apply up to $3,000 of capital losses against your ordinary income each year.
Business Deductions
For 1099 employees and business owners, tax incentives like the Qualified Business Income Deduction, home office deduction, and business vehicle deduction can significantly reduce taxable income. Business owners can also take advantage of pre-tax retirement accounts such as solo 401(k)s. These deductions offer unique opportunities unavailable to most W-2 employees.
Roth IRA Contributions
While Roth IRA contributions don’t lower taxes today, they offer tax-free growth and withdrawals in retirement. In 2025, Roth IRA income phase-outs begin at $165,000 for single filers and $246,000 for married couples filing jointly. However, high earners can still contribute through a backdoor Roth IRA. This strategy can be especially beneficial if tax rates rise in the future.
Tax-Efficient Investing
Beyond retirement accounts, taxable brokerage accounts require strategic planning. Consider asset location—where you hold specific investments—to optimize tax efficiency. ETFs (exchange-traded funds) are generally more tax-efficient than traditional mutual funds. Additionally, municipal bonds may help save on federal, state, and local taxes, depending on your situation.
Make This Tax Season Work for You
There’s no need to stress over taxes. By taking control of your financial strategy and implementing some of these simple ways to lower your tax bill, you’ll be well on your way to a more efficient financial future. Sure, tax planning can feel like a maze, but every penny saved is a penny that can work harder for you.
This season, think of tax prep as financial spring cleaning—tidy up your finances, put those savings to work, and maybe even treat yourself with that refund (hey, you earned it!).
Happy tax-saving—and here’s to a refund that brings a smile!
Drew Kelleher, CFP®
Senior Wealth Advisor
Denver Private Wealth Management
2000 S Colorado Blvd. Tower 1, Suite 3700
Denver, CO 80222
[email protected]
720-354-3850 Office
www.denverpwm.com
Denver Private Wealth Management is an independent, SEC-registered financial advisory firm managing over $500M in assets. With 80+ years of combined experience, our team specializes in investment management, financial planning, and portfolio strategy for individuals, families, and small businesses nationwide. Our client-focused, team-based approach ensures comprehensive financial guidance, integrating advisors, portfolio managers, and tax professionals. As fiduciaries, we prioritize transparency, expertise, and personalized wealth strategies.
