How do I decrease my taxable income?

Taxpayers decrease taxable income by leveraging deductions and pre-tax programs the law allows. Such actions keep more of the earnings out of the amount the return treats as taxable.

What are practical ways to decrease taxable income?

You can lower it through payroll elections and specific deductions that apply to your distinct situation.

Move	Who it can fit	Why it works
Traditional workplace retirement deferrals like a 401(k)	Employees with an eligible plan	Elective deferrals are generally not taxed — until distribution
Health Savings Account contributions	People covered by a qualifying high-deductible health plan	Individual contributions are generally deductible — even without itemizing
Health FSA or dependent care FSA elections	Workers whose employer offers a cafeteria plan	Salary-reduction contributions generally aren’t treated as wages for federal income tax
Above-the-line deductions examples: specific IRA deductions & student loan interest	Filers who satisfy qualifications for the specific rules	These lower income before the standard vs itemized decision.
Ordinary and necessary business expenses	Self-employed individuals & many small business owners	Deductible costs should be ordinary & necessary for the trade or business

What steps should you take to apply this?

Taxpayers get the biggest payoff by taking actions early and having professional paperwork.

Pull the most recent pay stub & confirm which elections still allow changes
Set a monthly target that complies with the cash flow
Store proof in one folder. Such proof covers plan statements and Forms W-2/1099 as well as dated receipts

Does New Jersey follow the same rules as the IRS?

Not always — New Jersey’s Gross Income Tax has its own deductions. Therefore, the federal result might not mirror your NJ return.

Unreimbursed medical expenses are generally deductible — only for the portion over 2% of New Jersey gross income.
New Jersey’s Gross Income Tax does not present a charitable contribution deduction.

Wasserman Accounting Stands Ready For Assistance

Contact us today to review your pay setup and confirm what applies to the federal and New Jersey filings. Our team can outline the next actions for full compliance.

How Do I Decrease My Taxable Income? Guide for NJ Filers

How do I decrease my taxable income?

What are practical ways to decrease taxable income?

What steps should you take to apply this?

Does New Jersey follow the same rules as the IRS?

Wasserman Accounting Stands Ready For Assistance

Contact us anytime you need our services