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Leveraging Tax-Advantaged Accounts
Another strategy to save on taxes is utilizing tax-advantaged accounts. For example, contributing to a Simplified Employee Pension (SEP) IRA can reduce your taxable income. These accounts allow for contributions of up to 25% of an employee's compensation, or $66,000 for 2023, whichever is less2. Moreover, Health Savings Accounts (HSAs) can be a dual-benefit tool, providing tax-free savings for medical expenses while also reducing taxable income.