5 Great Workplace Tax Breaks: Get These Savings Now

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Are you looking for some new ways to save money? The workplace offers an important starting point for tax breaks that can help you to do so — by not paying any unnecessary taxes. That’s because the U.S. government has deemed certain expenditures — like retirement savings and healthcare expenses — so important that they get preferential tax treatment.
The catch is that in some cases, you have to plan for these in advance by pre-allocating your salary. That means if you anticipate paying $2,500 a year in healthcare expenses, you can have that amount deducted from your paycheck (pre-tax) and you get reimbursed for expenses as the year goes on. But if you don’t spend as you’ve budgeted, you may lose the money you’ve set aside altogether. In the following post, we discuss the five major ways you can reduce your tax bill by taking advantage of workplace tax breaks.

1. Boost Your 401k Contributions

Are you taking full advantage of your retirement savings at work? Your 401(k), or whatever workplace retirement you have, is the first place to start. As we’ve written in Unlock Your Retirement Savings Potential: The 401k, 401(k)s are king not only because of their tax advantages — they’re made with pre-tax dollars and grow tax free — but also because they’re often accompanied by an employer match. A “match” means your employer may incentivize you to save by supplementing your savings up to a certain percentage.

From day one, the 401k’s attributes mean you can almost double your money. If you save the maximum ($17,500) and you’re in the top tax bracket (39.6 percent) and your employer offers a typical match (50 percent), then you’ve already nearly doubled the amount of money you’ve effectively saved ($33,180). When that money sits in your retirement account and grows tax free, that means it grows faster. Fifteen years later, you may stockpile over 3x in your 401k versus a regular account. You’ll have to pay taxes on that money eventually — but only on withdrawals, so it’s still a great deal.