Save on Your Income Taxes With Your 401(k)
If you’re interested in saving on your income taxes, there are few ways to do it that are as potentially profitable as making use of a 401(k) account through your employer. While the 401(k) shouldn’t be the only component of a potential retirement plan, it is an important one, particularly in that it comes with built-in tax savings. The money invested in a 401(k) is pre-tax savings, which effectively reduces your taxable income, resulting in paying lower taxes.
What makes the 401(k) an even better way to save money on taxes and save money for retirement is the fact that many employers are willing to match an employee’s 401(k) contribution up to a certain level. We once had a job where the employer was willing to match our contributions up to 5% of our salary. By putting 5% of our salary into our 401(k), we were able to effectively obtain a 5% raise.