12 Ways to Lower Your 2021 Tax Bill

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An unexpected tax bill can ruin anybody’s day. To help avoid that unpleasant surprise, here are 12 easy moves many people can make to cut their tax bills. In many cases, you must itemize rather than take the standard deduction in order to use these strategies, but the extra effort may be worth it.

  1. Tweak your W-4
  2. Stash money in your 401(k)
  3. Contribute to an IRA
  4. Save for college
  5. Fund your FSA
  6. Subsidize your Dependent Care FSA
  7. Rock your HSA
  8. See if you’re eligible for the Earned Income Tax Credit (EITC)
  9. Give it away
  10. Keep a file of your medical expenses
  11. Sell those dogs weighing down your portfolio
  12. Get the timing right

Less taxable income means less tax, and 401(k)s are a popular way to reduce tax bills. The IRS doesn’t tax what you divert directly from your paycheck into a 401(k).


For 2019, you can funnel up to $19,000 per year into an account. For 2020, the limit rises to $19,500.


If you’re 50 or older, you can contribute an extra $6,000 in 2019. In 2020, the catch-up contribution rises to $6,500.

These retirement accounts are usually sponsored by employers, although self-employed people can open their own 401(k)s. And if your employer matches some or all of your contribution, you’ll get free money to boot.

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