Key Strategies

Effective tax planning varies by jurisdiction (e.g., US, UK, or international), income level, and situation. Here are common, evidence-based approaches:

• Income Deferral: Delay receiving income to a lower-tax year. For example, in the US, contributing to a 401(k) reduces taxable income now, with taxes paid later at potentially lower rates.
• Deductions and Credits: Maximize itemized deductions (e.g., mortgage interest, charitable donations) or claim credits like the Earned Income Tax Credit (EITC) in the US. Evidence from IRS data shows these can reduce taxable income by 10-30% for eligible filers.
• Retirement Accounts: Use tax-advantaged accounts (e.g., IRAs, Roth IRAs) to grow savings tax-free or tax-deferred. Studies from the Tax Foundation indicate this can save thousands over a lifetime.
• Business Structures: For entrepreneurs, choosing an LLC or S-Corp can optimize self-employment taxes. Data from the SBA shows pass-through entities often lower overall tax burdens.
• International Planning: For expats or global income, strategies like the Foreign Earned Income Exclusion (US) or double taxation treaties reduce liabilities. OECD reports highlight how proper structuring avoids penalties.
• Timing Transactions: Harvest capital losses to offset gains, or bunch deductions in high-income years.