Article

5 Ways to Build A Better Tax Plan

This article explores tax efficient strategies and addresses questions such as: How can I legally reduce my taxes? What about investment losses? And are there any tax-free growth options? It’s about aligning personal financial goals within existing tax laws.

March 3, 2025
Important Disclosure: Content on our website and in our newsletters is for informational purposes only. The information provided may (or may not) directly apply to your situation. We recommend that readers work directly with a professional advisor when making decisions in the context of their specific situation.

After finishing last year’s taxes, it’s a great time to start planning for the next year. A smart tax plan doesn’t have to be complicated—it’s about taking simple steps now to save money later. Here are five straightforward strategies that can help in building a tax plan that works:

1. Tax-Loss Harvesting
Some investors choose to sell investments that have lost value in order to balance out gains from other sales. This process, known as tax-loss harvesting, can lower the amount of taxes owed. Even though the loss isn’t recovered, it helps reduce the overall tax bill. After selling, an investment in a similar category is often purchased to keep the portfolio on track.

2. Taking Advantage of Tax-Free Long-Term Gains
For those in the right tax bracket, long-term gains can be tax-free. A financial professional can look for opportunities and advise on this strategy. If available, this option can lead to noticeable savings over time.

3. Contributing to an IRA
Contributions to a Roth or traditional IRA can be made until Tax Day in April, for the prior tax year. Experts suggest making these contributions as early as possible—even using a tax refund for the contribution can be a smart move. For those who are eligible to contribute to a Roth IRA, it has an additional benefit, since it earns income tax-free!

4. Using the Backdoor Roth
Some individuals might earn too much money to make a direct contribution to a Roth IRA. In these cases, the backdoor Roth strategy can be a clever workaround. It works by taking contributions to a traditional IRA and then periodically converting them to a Roth IRA. Only the growth between the time of the original contribution and the conversion to the Roth may be subject to tax.

5. Deferring Taxes with Smart Investment Choices
Certain financial products allow taxes on dividends, interest, and capital gains to be deferred. This means taxes aren’t payable immediately. Deferring taxes allows investment growth to compound more efficiently, adding significant benefits down the road.

To take advantage of key tax strategies, planning ahead is key. Instead of waiting until the last minute, talk with a financial adviser or tax professional now. These strategies can help to build an effective tax plan, securing a better financial future.

Other content you may like

  • Establishing True Financial Wellness

    Establishing True Financial Wellness

    August 2, 2022
    #wellnessmonth Here are 8 suggestions that can get you going on the path to financial wellness. Not only are these simple daily actions that can have a big impact on your health, they also incorporate self-care tips that improve how wealth and income affect our emotional and physical well-being.
    Read this Article
  • Craft a Charitable Giving Strategy, While Improving Your Bottom Line

    Craft a Giving Strategy for Your Business

    November 16, 2023
    How can you give back to your community while improving your bottom line? Regardless of your company’s size and resources, you can find a way to make a difference in your community. This article will give you a few tangible ideas to start you thinking about your own giving strategy.
    Read this Article
  • Boost Your Family's Savings

    A Budget Can Help Boost Your Family’s Savings

    March 30, 2021
    In difficult economic times, many young couples and families may find themselves wondering where their money goes. Faced with income constraints and competing demands for their money, many people simply spend what they must on necessities and save whatever happens to be left over. Or they spend all of their wages trying to make ends […]
    Read this Article
  • The link you have selected is located on another server. The linked site contains information that has been created, published, maintained, or otherwise posted by institutions or organizations independent of this organization. We do not endorse, approve, certify, or control any linked websites, their sponsors, or any of their policies, activities, products, or services. We do not assume responsibility for the accuracy, completeness, or timeliness of the information contained therein. Visitors to any linked websites should not use or rely on the information contained therein until they have consulted with an independent financial professional. Please click “Continue to Link” to leave this website and proceed to the selected site.
    phone-handset