Still Time: Reduce Your 2024 Tax Bill

One simple move can lower your tax bill and increase your retirement savings. Contributing to an eligible retirement account by the April 15, 2025, income tax deadline will reduce your 2024 taxable income by the amount you contribute.

Individual Retirement Account (IRA)

An IRA offers you the flexibility to choose various investments to hold in your account. For 2024, you can contribute up to $7,000 to an IRA – $8,000 if you're age 50 or older. You must have "earned income," including money from wages, salaries, tips, bonuses, commissions, or self-employment, to contribute to an IRA. Your spouse can contribute to an IRA as well.

SIMPLE IRA

A "Savings Incentive Match Plan for Employees," or SIMPLE IRA, is a retirement savings plan designed for small businesses with 100 or fewer employees. Employers must match employee contributions dollar for dollar – up to 3% of an employee's compensation – or make a fixed 2% contribution for all eligible employees, even if an employee chooses not to contribute. As with a traditional IRA, you can contribute to a SIMPLE IRA until April 15, following the end of the tax year, and benefit from the tax deduction.

Solo 401(k)

Solo 401(k) plans are designed to cover a business owner with no employees and his or her spouse. You can make elective deferrals of up to 100% of your earned income, up to the annual contribution limit, plus employer nonelective contributions of up to 25% of compensation. Contributions can be made until the company's tax return deadline, including extensions.

Financial and tax professionals can help you determine which plan is right for you.