Ways to lower your 2025 federal tax liability when filing

I filed my taxes for 2024 and found that I owed Federal Taxes. Looking ahead to my 2025 tax filing, I’m exploring ways to reduce my tax liability. Here’s my current situation:

  • I file married jointly.
  • I am a W2 employee.
  • I have a 401k, Traditional IRA, ROTH IRA, and a Brokerage account.
  • Due to my MAGI exceeding $136K, contributing to a Traditional IRA for tax reduction isn’t an option.
  • I’ve maximized my HSA contributions.
  • I’ve also maximized my 401k contributions.
  • My wife hasn’t fully maxed out her 401k contributions; she’s currently contributing about 10% of the allowable limit for 2023.
  • For deductions this year, I claimed my two children, mortgage interest, and other standard items; I didn’t have significant medical expenses.

Considering these factors, would increasing my federal deductions from each paycheck be the best strategy to avoid owing taxes at year-end?

To lower your 2025 federal tax liability, consider a few strategies. Maximize your wife’s 401(k) contributions since she’s currently contributing less than the limit. Adjust your withholding to have more tax taken out of each paycheck. Look into a Dependent Care FSA for childcare expenses and maximize charitable contributions. Review itemized deductions for mortgage interest and property taxes, and consider tax-loss harvesting in your brokerage account. These steps should help reduce what you owe at year-end.