- Max out your 401(k) or Contribute to an IRA.
- Take Advantage of Employer Benefit Plans.
- Bunch your Itemized Deductions.
- Use the Gift-Tax Exclusion to Shift Income.
- Consider Tax-Exempt Municipal Bonds.
- Documentation – Keep Good Records.
How can I reduce my taxable income?
Save Income Tax on Salary
- Deductions under Section 80C, Section 80CCC and Section 80CCD. Citizens of India can save tax under these 3 sections.
- Medical Expenses.
- Home Loan.
- Education Loan.
- Shares and Mutual Funds.
- Long Term Capital Gains.
- Sale of Equity Shares.
What reduces the amount of tax you are liable to pay?
Tax credit – A tax credit is an item that directly reduces the amount of tax you pay in a full tax year, thereby reducing your tax liability. Some are given automatically and others you must claim. You can’t refund any unused credits or carry them over into another tax year.
How can I reduce my taxable income 2021?
6 Ways to Lower Your Taxable Income
- Save for Retirement. Retirement savings are tax-deductible.
- Buy tax-exempt bonds.
- Utilize Flexible Spending Plans.
- Use Business Deductions.
- Give to Charity.
- Pay Your Property Tax Early.
- Defer Some Income Until Next Year.
How can I save tax if I earn 20 lakh?
Tax Exempted Salary Components
- Meal Coupons.
- Car Maintenance.
- EPF (Contribution by Employer)
- NPS (Contribution by Employer)
- Gift voucher.
- Mobile Phone and the Internet Bill Reimbursement.
- Newspaper/Journal Allowance.
- Children Education/Hostel Allowance.
Is HRA part of PF calculation?
Since HRA is excluded from PF, the worker’s PF contribution would be tiny, and that helps the employer who has to pay only a small amount as matching contribution, he explains.