With the holidays in the rearview mirror, there’s another, less festive season looming: tax season. If you’re already worried about your upcoming bill or you’re hoping to maximize your tax refund, there are still some steps you can take.
Here are three ways you can still lower your tax bill in 2024.
1. Contribute to a traditional IRA
You have until April 15 to fund an individual retirement account for the previous tax year, regardless of whether it’s a traditional IRA or a Roth IRA. In other words, your deadline for maxing out your 2024 IRA contribution is April 15, 2025.
But since a traditional IRA is funded with pre-tax dollars while a Roth IRA is funded with after-tax dollars, you’d need to choose a traditional IRA if you wanted to lower your taxable income for the year.
You may be able to deduct your full traditional IRA contribution, depending on your income and whether you or your spouse has access to a workplace retirement plan. The table below shows the deductibility rules for 2024 and 2025.
Traditional IRA deduction rules for 2024 and 2025
| Tax filing status | 2024 | 2025 |
|---|---|---|
| Any tax filing status if neither you nor your spouse is covered by a workplace plan | Contribution is fully deductible | Contribution is fully deductible |
| Single (covered by a workplace plan) | Contribution is fully deductible if income is $77,000 or less; a phaseout applies if income is $77,000-$87,000; not deductible if income is above $87,000 | Contribution is fully deductible if income is $79,000 or less; a phaseout applies if income is $79,000-$89,000; not deductible if income is above $89,000 |
| Married filing jointly (if you’re covered by a workplace plan) | Contribution is fully deductible if combined income is $123,000 or less; a phaseout applies if income is $123,000-$143,000; not deductible if income is above $143,000 | Contribution is fully deductible if combined income is $126,000 or less; a phaseout applies if income is $126,000-$146,000; not deductible if income is above $146,000 |
| Married filing jointly (if you’re not covered by a workplace plan but your spouse is) | Contribution is fully deductible if combined income is $230,000 or less; a phaseout applies if income is $230,000-$240,000; not deductible if income is above $240,000 | Contribution is fully deductible if combined income is $236,000 or less; a phaseout applies if income is $236,000-$246,000; not deductible if income is above $246,000 |
| Married filing separately (if either spouse is by a workplace plan) | Contribution is partially deductible if your income is less than $10,000; no deduction if income is higher than $10,000 | Contribution is partially deductible if your income is less than $10,000; no deduction if income is higher than $10,000 |
If you’re younger than 50, you can contribute up to $7,000 to a traditional IRA, Roth IRA, or a combination of the two in both 2024 and 2025. You can make an additional $1,000 catch-up contribution in both tax years if you’re 50 or older, bringing your maximum contribution to $8,000.
2. Fund your HSA
A health-savings account lets you save and invest pre-tax money. If you use your HSA funds for IRS-approved qualifying medical expenses, your withdrawals are tax- and penalty-free, as well. Like IRAs, HSAs let you contribute up until tax day for any given year, so you can fund your HSA for 2024 until April 15, 2025.
Unused HSA funds roll over from year to year, even if you change jobs or health insurance. You can even use your HSA money for non-medical expenses without penalty once you’re 65, though withdrawals will count as taxable income if the money isn’t used for health costs.
HSA limits for 2024 and 2025
| Type of coverage | 2024 limit | 2025 limit |
|---|---|---|
| Self-only | $4,150 | $4,300 |
| Family | $8,300 | $8,550 |
If you’re 55 or older, you can make an additional $1,000 catch-up contribution in both 2024 and 2025.
Note that to fund a health savings account, you’ll need to have what’s known as a high-deductible health plan. That means you’ll typically pay more out of pocket for many health services before your insurance kicks in.
3. Use a SEP IRA or Solo 401(k) for self-employment income
If you have self-employment income, you can use a SEP IRA or solo 401(k) to save for retirement. You don’t need to be a full-time business owner to take advantage, though. You can save in these accounts if you earn money freelancing or you do gig work, like driving for Uber or delivering groceries on Instacart, on the side.
SEP IRA rules
You can contribute up to $69,000 to a SEP IRA in 2024 and up to $70,000 in 2025, or up to 25% of your self-employment income — whichever is less. You can fund a SEP IRA even if you’re covered by a workplace retirement plan at a regular job. However, if you own a business with employees, you’ll need to contribute the same percentage for each eligible employee.
You have until the date you file taxes for your business to open and fund a SEP IRA. That means you can generally contribute to a SEP IRA for 2024 until April 15, 2025 — or Oct. 15 if you file for a tax extension.
Solo 401(k) rules
A solo 401(k) is sometimes referred to as a one-person 401(k), and it’s basically a 401(k) you set up for yourself.
You can contribute up to the standard 401(k) limits of $23,000 in 2024 and $23,500 in 2025 as an employer, plus an additional 25% of your compensation as a business owner – but total contributions can’t exceed $69,000 in 2024 or $70,000 in 2025. If you’re 50 or older, you can make up to $7,500 in catch-up contributions for both tax years.
The deadline to make your contributions as the employee has already passed, but you can still make contributions up until the tax deadline as the employer. That means you get until April 15, 2025, to make employer-side contributions, or Oct. 15, 2025, if you file for an extension.
