As March rolls in and tax season approaches, you may be dreading April 15th – the day you’ll need to pay the IRS. Even if you’ll be receiving a refund this year, you can benefit from strategies to minimize your tax liability and keep more of your hard-earned money. As a financial advisor team with years of experience helping individuals and families optimize their finances, we would like to share some practical strategies that can make a real difference in your tax bill.
Make an IRA contribution before April 15th.
For this year: You can make IRA contributions for 2025 until April 15. A traditional IRA contribution is tax-deductible if you meet certain qualifications and can reduce your taxable income.
If you are self-employed or have income from contract work or a side hustle, you can still make 2025 contributions to a Self-Employed Pension (SEP) IRA up until you file your business taxes.
Maximize your retirement contributions in 2026.
Contributing to retirement accounts such as a 401(k) or IRA not only helps you build a nest egg for the future but also provides significant tax benefits. Traditional 401(k) and IRA contributions are made with pre-tax dollars, which means you reduce your taxable income for the year.
Contribute to your Health Savings Account.
A Health Savings Account offers potential tax advantages, including pre-tax contributions, tax-free growth, and tax-free withdrawals if used for qualified health expenses (subject to applicable regulations).
Contribute to an Illinois 529 College Savings Plan.
If you are helping a child or grandchild save for college, you can save on Illinois state taxes with a 529 plan. Contributions to an Illinois 529 plan may be eligible for state tax deductions for Illinois residents (subject to specific conditions and limits). The funds grow tax-free, and distributions are tax-free if used for qualified education expenses.
Be strategic with your giving.
If you are over 701/2, you can make tax-free donations to charity directly from your IRA and satisfy your Required Minimum Distribution (RMD) after age 73.
Consider tax-efficient investments.
Investing in tax-advantaged accounts or choosing investments that generate qualified dividends and long-term capital gains can help lower your overall tax burden. Municipal bonds, for example, offer interest income that is often exempt from federal and sometimes state taxes.
Consult a professional.
Tax laws are complex and frequently change. Working with a financial advisor in conjunction with your tax professional can help you navigate these rules and uncover opportunities for savings you might otherwise miss. As a local advisor team, we are happy to provide personalized guidance tailored to your situation and goals.
If you’re looking to explore tax-efficient strategies and ways to strengthen your financial plan this year, reach out to our office for a complimentary consultation. With experienced advice, you can work toward maximizing your savings and plan confidently for the future.
Wishing you a successful and stress-free tax season!
This article is provided by Dan Hedge, CFP®, CKA® and Linnea Taylor, financial consultants at Benjamin F. Edwards & Co. in St. Charles, IL, and was prepared by or in cooperation with Benjamin F. Edwards & Co. The information included in this article is not intended to be used as the primary basis for making investment decisions nor should it be construed as a recommendation to buy or sell any specific security. Benjamin F. Edwards & Co. does not endorse this organization or publication. Consult your investment professional for additional information and guidance. Benjamin F. Edwards does not provide tax or legal advice.
Benjamin F. Edwards & Co., Member SIPC and FINRA
5222479 – EXP: 02/28/2027
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