Paying less in taxes isn't about tricks. It's about a small set of legitimate, well-known moves that most people skip because they require either upfront paperwork or moving money to places they can't touch for decades. The dollar value of the moves is large — combined, the tactics in this guide save a typical $150k earner $5,000-$15,000 per year. This guide is the 2026 playbook, in priority order, with real numbers.
What changed in 2026
- Contribution limits rose with inflation. 401(k) limit is $24,500 ($32,000 with the 50+ catch-up), IRA is $7,500, HSA family is $9,300.
- Direct indexing in taxable accounts got cheap (Wealthfront, Schwab, Fidelity Go) — making tax-loss harvesting accessible without a wealth manager.
- SECURE 2.0 changes fully phased in. Roth match contributions, auto-enroll defaults, and the 529-to-Roth rollover all matter for planning now.
Step 1 — max your pre-tax accounts
The single biggest tax win for most people. Order:
- 401(k) up to the match. 100% return on the match dollars; non-negotiable.
- HSA up to the family limit ($9,300 in 2026). Triple-tax-advantaged — pre-tax in, tax-free growth, tax-free out for medical. The best tax-advantaged account in the US system if you have an HDHP.
- 401(k) up to the limit ($24,500). Pre-tax reduces your AGI dollar-for-dollar.
- Traditional IRA up to $7,500 (deductible if income allows).
- Backdoor Roth if traditional deduction phases out — non-deductible IRA → Roth conversion.
For a $150k single earner in the 24% bracket maxing 401(k) + HSA, this saves $34,800 × 0.24 = ~$8,350/year in federal tax. Add state and the number is larger.
Step 2 — tax-loss harvesting in taxable accounts
Sell losers to realize losses; offset gains and up to $3k of ordinary income annually. With direct indexing (Wealthfront, Schwab Personalized Indexing), this happens automatically and routinely saves $1,000-$3,000/year on a $250k+ portfolio.
The wash-sale rule (30 days, substantially identical) is the trap. Direct-indexing platforms handle this; DIY requires care.
Step 3 — Roth conversion in low-income years
The single most-skipped high-leverage move. In a year where your income drops (sabbatical, layoff, early retirement before Social Security/RMDs), convert traditional 401(k)/IRA dollars to Roth. You pay tax at the temporarily-low rate; the money grows tax-free forever after.
Example: retiree with $1M traditional IRA, no other income, married filing jointly. Converting $94k/year keeps them in the 12% bracket. Over 10 years, $940k converted at ~12% vs eventual RMD withdrawal at 22-32% saves $100k+ in lifetime tax.
Step 4 — capture state tax credits
State-specific but often-missed:
- 529 plan contribution deductions in states that offer them (NY, IL, IN, etc.).
- Solar / heat-pump / EV credits (federal + state stacking).
- Charitable contribution bunching (use a Donor Advised Fund) to clear the standard deduction threshold every few years.
Step 5 — own a business? S-corp election
If you have $80k+ of self-employment income, S-corp election lets you split between "salary" (FICA) and "distribution" (no FICA). Real savings of $3-8k/year for typical solo consultants. Comes with payroll filing requirements; cost ~$1k/year in accountant fees.
Comparison: tax savings by tactic
| Tactic |
Typical savings |
Effort |
| 401(k) max |
$5-7k/yr |
One-time setup |
| HSA max |
$2-3k/yr |
One-time setup |
| Tax-loss harvesting |
$1-3k/yr |
Automated w/ direct indexing |
| Roth conversion (low-income year) |
$5-20k lifetime per year |
Annual planning |
| 529 state deduction |
$200-1k/yr |
One-time setup |
| S-corp election |
$3-8k/yr (for eligible) |
Annual filings |
| Bunching charitable |
$500-3k/yr |
Every 2-3 years |
What to skip
- "Tax-avoidance" YouTube schemes — offshore LLCs, Puerto Rico fake-residency, life insurance schemes. IRS targets these. Cost is real; downside is criminal.
- Cash-value life insurance "for the tax benefits" — almost always sold for commission. Pure-term + brokerage beats it.
- Mega-backdoor Roth via a plan that doesn't allow it. Don't try to engineer around your 401(k) plan's rules.
FAQ
Should I prioritize Roth or traditional?
Traditional if your current bracket is higher than expected retirement bracket. Roth if reversed. Most working professionals: traditional in high-earning years, Roth in low-earning years.
Is a CPA worth it?
For W-2 wage earners with no business — usually no, the software is enough. For business owners or anyone with rental property, RSU vesting, or international income — yes.
Does itemizing still make sense?
After TCJA, the standard deduction is $30k MFJ in 2026; most people take it. Itemizing only wins with big mortgage interest + charitable + SALT — usually $35k+ of deductions.
What about crypto?
Tax-loss harvesting works on crypto too (and wash-sale doesn't currently apply, though legislation is pending).
Where to go next
For related material see Mega backdoor Roth guide in 2026, Roth conversion ladder in 2026, and HSA account guide in 2026.