How to Start Tax Planning Today: Simple Strategies to Lower Your Tax Bill

When it comes to tax planning, many people feel like a deer in the headlights. Tax laws change frequently, IRS guidance can be overwhelming, and trying to decipher tax codes on your own can feel intimidating. You are not alone.

I spend a lot of time reviewing IRS resources to stay informed, and today I want to walk you through practical ways to start tax planning today—without overcomplicating the process. This post is part of my tax education series, so if you have not watched the earlier videos, I recommend starting there and then coming back to this one.

Disclaimer: This content is for educational and informational purposes only and is not tax advice. Always consult a qualified tax professional regarding your specific situation.

How Do You Start Tax Planning?

Tax planning starts by reviewing your income, adjusting your tax withholding, and contributing to tax-advantaged accounts such as a 401(k), 403(b), or IRA. Reviewing your W-4, using the IRS Paycheck Checkup tool, and planning for life events can help reduce taxable income and avoid surprises at tax time.

Why Tax Planning Matters

At its core, tax planning is about lowering your taxable income and reducing your overall tax bill—while also preparing for your financial future. No one enjoys paying more taxes than necessary, and proactive planning can make a meaningful difference.

Tax Planning for W-2 Employees: Start With Your W-4

If you work a traditional nine-to-five job, tax planning begins with Form W-4. This form determines how much federal income tax is withheld from your paycheck.

Your employer uses IRS tax tables to calculate withholding based on:

Filing status
Income level
Elections made on your W-4

Review your pay stub regularly so you understand exactly how much is being withheld for:

Federal income tax
Social Security
Medicare
State taxes (if applicable)

Use Tax-Advantaged Retirement Accounts

One of the easiest ways to reduce taxable income is by contributing to tax-advantaged accounts, such as:

401(k)
403(b) (for nonprofit employees)

These contributions are made with pre-tax dollars, which lowers your taxable income today while helping you build long-term retirement savings. The more you can contribute responsibly, the greater the tax benefit.

Tax Planning for the Self-Employed

If you are self-employed or have side income, tax planning requires a more proactive approach. You are responsible for:

Finding tax-advantaged accounts
Making contributions
Planning for estimated taxes

For example, individuals with both W-2 and self-employment income may still be eligible to contribute to an IRA using their self-employment earnings.

Automate Your Tax Planning

Automation is one of the most effective tools for consistent tax planning. I personally automate:

IRA contributions
Savings transfers
Business tax reserves

Automating contributions ensures progress even when income fluctuates. Unexpected income—such as stimulus payments or bonuses—can also be strategically allocated to retirement accounts to avoid lifestyle creep and improve long-term outcomes.

Check Your Withholding With the IRS Paycheck Checkup

The IRS offers a helpful online tool called the Paycheck Checkup. This tool helps you determine whether you are withholding enough tax throughout the year based on:

Filing status
Income
Credits and deductions

When I worked in a traditional nine-to-five role, I reviewed my withholding quarterly to ensure alignment with my tax planning goals. This habit can help prevent surprises at tax time.

Life Events Can Trigger Tax Changes

Major life events often result in tax consequences, including:

Getting married or divorced
Having a child
A child no longer qualifying as a dependent
Buying a home
Changes in income

These events can significantly affect credits, deductions, and refunds. Planning ahead—and researching how these changes affect taxable income—can prevent unexpected outcomes.

A tax refund should not be relied on as a savings strategy. A proactive savings plan involves consistent, intentional contributions throughout the year.

Build a Sustainable Tax Planning Strategy

Effective tax planning means:

Creating a plan
Reviewing your paycheck regularly
Taking advantage of tax-advantaged accounts
Staying informed

Technology and online resources make tax education more accessible than ever. The key is using that information intentionally and applying it to your personal financial situation.

Need Personalized Help?

If tax planning still feels confusing or overwhelming, I offer an Accountant for a Day service where I can answer your questions and help you build a plan tailored to your needs.

If you found this helpful, please share it with someone who could benefit from better tax planning.