An earlier version of this article was written with wikiHow and featured on its website. We updated it for 2026.
If you earn a salary, you still have ways to lower your tax bill. First, you can shrink your taxable salary income with pre-tax contributions to retirement and health accounts. Then you can claim every credit and deduction you qualify for. Here is how.
Method 1: Lower your taxable salary income with retirement contributions
Contribute to a 401(k) or 403(b)
If your employer offers a 401(k) or 403(b), you can defer part of your pay before income tax. For 2026, the employee limit is $24,500. In addition, workers age 50 and older can add catch-up contributions. The IRS adjusts these limits each year.
Because the money comes out before income tax, your taxable salary drops. As a result, you may even move into a lower tax bracket. Keep in mind that the tax is deferred, not forgiven. You pay it when you withdraw the money in retirement.
Add a 457(b) plan if you have one
State and local governments and some nonprofits offer 457(b) plans. The 457(b) limit is separate from the 401(k) or 403(b) limit. So if you have both types of plans, you may be able to defer up to twice as much.
Consider a traditional IRA
Contributions to a traditional IRA may be tax-deductible. However, the deduction depends on your income, your filing status and whether you have a workplace plan. For 2026, the IRA limit is $7,500, plus a catch-up amount if you are 50 or older.
Tip: Lower-income savers may also qualify for the saver’s credit, worth up to $1,000 per person.
Method 2: Use an HSA or FSA
Health savings account (HSA)
If you have a high-deductible health plan, you can contribute to an HSA. For 2026, the limits are $4,400 for self-only coverage and $8,750 for family coverage. Contributions through payroll avoid income and payroll taxes. Also, you can spend the money tax-free on qualified medical costs.
Unlike an FSA, your HSA balance carries over from year to year. If you buy your own insurance, you can still open an HSA by choosing an eligible high-deductible plan.
Flexible spending account (FSA)
Many employers offer FSAs for health care or dependent care. Your contributions come out of your pay before tax. Then you use the account to pay eligible costs with tax-free dollars. For example, if you pay for child care, a dependent care FSA lets you cover it with pre-tax money.
Warning: With most FSAs, you lose money you don’t spend by the plan deadline. Some plans allow a small carryover or a grace period. So estimate your costs carefully.
Method 3: Claim credits and deductions
Compare the standard deduction and itemizing
Most people now take the standard deduction. For 2026, it is $16,100 for single filers and $32,200 for married couples filing jointly. However, you may benefit from itemizing if you have large mortgage interest, state and local taxes, charitable gifts or medical costs.
Deduct student loan interest
You can deduct up to $2,500 of student loan interest, even if you don’t itemize. However, the deduction phases out at higher incomes.
Check the earned income tax credit
The earned income tax credit (EITC) helps workers with low to moderate incomes. Most people who qualify have children, but some workers without children qualify too. To see if you qualify, use the IRS EITC Assistant.
Claim the child tax credit
The child tax credit is worth up to $2,200 for each qualifying child under 17. Part of it is refundable, so you may get money back even if you owe no tax. The credit phases out above $200,000 of income, or $400,000 for joint filers. Also, each child needs a valid Social Security number.
Claim the credit for other dependents
For other dependents, such as a child 17 or older or an elderly parent, you may claim a $500 credit. However, you can’t claim either credit for someone another taxpayer claims.
Get help lowering taxes on your salary income
The right mix of strategies depends on your income, benefits and family. To build a plan, call (415) 842-2940 or book a free 15-minute call.