- Even with federal tax reform up in the air, there are steps taxpayers can take now to save come April 2018.
- Consider donating to charity certain assets that have appreciated in value or invest in a local film or television production or solar energy installation to earn a state tax credit.
- Tax-loss harvesting is another popular tactic.
This has been a banner financial year for just about everyone — corporate earnings and stock markets are at all-time records, millions of individuals and small-business owners have experienced strong income gains, and home equity has reached historic highs.
But for many investors, any income gains could be muted by a high tax bill unless they take steps now to minimize their taxes. According to the Federal Reserve Bank of St. Louis, individuals earning between $100,000 and $199,999 annually in fiscal 2016 had an effective or average tax rate of 17 percent. And those earning between $200,000 and $499,000 had an average tax rate of 22 percent.
Many people are aware of the most common ways to reduce their taxable income, such as increasing their 401(k) contributions. If you haven’t made the maximum contribution for 2017 — $24,000 for people 50 and older or $18,000 for anyone under 50 — it’s not too late to do so.