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

  • Podcast Highlight - International Investing Amid Conflict

    November 28, 2023
    The Team gets David’s insight on international investing from his role in JP Morgan Global Assets Management.
    Read this Article
  • A Positive Start to the Year for Stocks

    A Positive Start to the Year for Stocks

    June 23, 2023
    Looking at stats from January through May, it’s good to see a positive start to the year for U.S. stocks. This market overview also looks at the growth heavy U.S. large cap stock index and charts the hidden risk in Growth vs. Value. Included is a current and historical look at how the Fed funds rate affects core bonds, short term bonds, and performance strategies with a potential Fed Reserve pause.
    Read this Article
  • Financial Wellness

    The Power of Financial Wellness

    January 17, 2025
    The New Year is a time for resolutions and new beginnings. Every January, local gyms are inundated with people looking to get fit. But by February, those same local gyms are ghost towns. The challenge: Self-improvement requires new habits, not just resolutions, and it extends beyond our health. As we embark on a new year. Let's […]
    Read this Article
  • Is Your Retirement Ship Stuck in the Suez Canal?

    Is Your Retirement-Ship Stuck in the Suez Canal?

    August 18, 2021
    Do you aspire to retirement goals that are so big you feel stuck? You might be able to relate to one of the largest container ships in the world that was stuck in the Suez Canal, costing $15 million a day in lost revenues. Here’s a basic list of must-dos for 40 and 50 year old captains to help unstick your Retirement-Ship so that you might see smoother sailing.
    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