We’re more than half way through the year! Can you believe it? Tax return season is still a long way off, but families should always have taxes on the mind when making financial decisions.

I’d like to write a short post today reminding readers of some of the most fundamentally simple ways to save on taxes. Most Americans want to pay a bit less and the IRS has several practical ways allowing you to do so. Here are several that can make the biggest impact on your tax bill, and also benefit you and others in the future.

Save for retirement

Saving for retirement is the single best way to reduce your taxes. Suppose you are married and you and your spouse earn a combined $120,000 per year. This puts you in the 22% marginal tax bracket. What this means is that for every dollar you contribute to your 401k, your taxes are reduced by 22 cents.

Contributing $12,000 (10%) to your 401ks reduces your taxes owed by $2,640. Contribute more, and your taxes will decrease by more. That’s some impressive tax savings in the short-term, plus you’re building wealth for the future in your retirement account.

Pitch in to your HSA

I love HSAs. I’ve written about them, including in this article. HSAs present loads of advantages. First, the dollars you contribute lower your taxes in a similar way as retirement contributions do. Second, your dollars grow inside your HSA free of any taxes. Third, when you withdraw money from your HSA it’s taken out tax free as long as it is used for eligible medical expenses.

A fourth benefit is your HSA dollars can be treated as a way of saving for future health costs, even after you’ve retired. Finally, current IRS rules also allow an HSA to function like an IRA once you turn 65, allowing you to withdraw those funds for any purpose, not just health-related costs, though income taxes are owed on the withdrawals for non-health expenses.

Convert retirement funds to Roth

While the stock market has recovered a bit over the last few weeks, it’s still measurably lower from its highs this year. Market declines present an opportunity to make lemonade out of lemons--by completing a Roth conversion.

Roth conversions involve selling some of your IRA investments at these low market values, and moving those IRA funds into a Roth IRA. The catch is that moving those funds from your IRA into a Roth IRA creates additional taxable income for the year. You’re probably thinking, “Wait, I thought this article was about lowering my taxes?”

It is. With the funds now in your Roth IRA account, the same investments are purchased soon thereafter at similarly low values, and since the funds are now in a Roth IRA they can grow tax-free for the rest of your life.

Donate to charity

Supporting a local or national charity is another way to potentially reduce your taxes.

Charitable donations don’t always result in a lower tax bill, unless your charitable donations, combined with other deductions, exceed your standard deduction. Every tax filer receives a standard deduction which is an immediate reduction to your income taxes. The 2022 standard deduction is $25,900 for a couple filing their taxes together. This means that if you earn $120,000 in 2022, right off the bat you receive a deduction of $25,900, lowering your taxable income substantially.

In some cases, however, you can itemize your deductions rather than claiming the standard deduction, which can reduce your taxes further. Itemizing only makes sense if your eligible deductions on the Schedule A IRS form add up to more than your standard deduction. Schedule A deductions are things like medical expenses, taxes you’ve paid, interest you’ve paid, and charitable contributions.

So let’s assume that this year you’ve had some high medical bills and paid a lot of interest on your mortgage. Your itemized deductions add up to $25,000. You realize that you’re just $900 away from exceeding the standard deduction. You’re charitably inclined, and have thought about making a $5,000 charitable contribution this year as well. You go for it, resulting in a $30,000 total itemized deduction. Come tax time this will be reported on line 12a of your Form 1040 and instead of having the standard deduction lower your income by $25,900, your income will be lowered by $30,000, further reducing your taxes.

I hope this is a helpful review of some ways to reduce your taxes this year. Retirement savings and HSA contributions are good ones to prioritize, but Roth conversions and charitable giving can potentially make a strong tax impact as well.