These positive money habits can work overtime to help reduce your tax bill and build long-term retirement savings.
Give your money two jobs—to help you save on taxes and build retirement savings. Here are four ways.
Your 401(k) deferrals—or what you contribute—come from income before it’s taxed, which means you lower your taxable income for the year. (You’ll pay income taxes when you withdraw funds in retirement.) Bonus: If your plan offers an employer match and you aren't contributing quite enough to get the full amount, a boost in your contributions helps you reach that goal, too.
In 2026, you can contribute up to $24,500 in an employer-sponsored plan such as a 401(k).
If you meet eligibility requirements, contributions to a traditional IRA are made with pre-tax money and may lower your taxable income. In 2026, you can contribute up to $7,500 to an IRA.
If you open a Roth IRA, however, contributions are made with post-tax dollars. The tax advantage comes later in retirement when you can take withdrawals tax free.
If you’re age 50 or older and still working, you can contribute even more to your retirement plan(s).
For those age 50-59, that’s an additional $8,000 to a 401(k) plan or 403(b) plan beyond standard limits (this applies for those age 64 and up as well). For savers aged 60-63, that increases to $11,250.
If you’re contributing to an IRA, you can squirrel away an extra $1,100 once you turn age 50.
This not only lowers your taxable income but also helps you fill in the savings gap if you had to decrease or stop saving for retirement in prior working years.
If you're eligible for a health savings account (HSA), it's a triple tax-advantaged way to save. HSAs, created with pre-tax dollars, lower your taxable income. No taxes on interest or potential growth are due on your HSA savings, and you can make tax-free withdrawals for qualified medical expenses, either while you’re working or if you’re retired. And unlike a flexible savings account, unused HSA funds roll over from year to year.
If you fall within certain income ranges, aren’t claimed as a dependent on someone else’s taxes, and contribute to an employer-sponsored retirement plan or an IRA, you may be eligible for the Saver’s Tax Credit.
The credit could be up to $1,000 for single filers or $2,000 for joint filers.
Ready to increase your retirement plan contributions (and possibly reduce your taxable income, too)? Log in to your account and adjust your contributions. Don’t have an employer-sponsored retirement account? We can help you set up your own retirement savings with an individual retirement account (IRA).
