Hidden Retirement Tax Breaks You Must Claim This Summer

The federal government will invest $416 billion in retirement tax breaks for 2024. Yet most Americans don’t claim what they deserve. The highest-earning 20% of workers get 58% of these benefits, while all but one of these lowest-earning groups receive nothing from these incentives.

These numbers might look discouraging, but tax advantages for retirement planning should be available to everyone. Your retirement plan consultant in Fresno CA, knows that tax-free retirement income opportunities exist across all income levels. The Saver’s Credit remains largely untapped with only 5.7% of taxpayers claiming it. HSA contributions can reach up to $4,300 for 2025.

5 Hidden Retirement Tax Breaks to Use Before Summer Ends

Summer is the perfect time to boost your retirement savings with tax breaks that many people miss. Let’s look at seven hidden retirement tax advantages you should grab before fall:

1. Roth IRA Tax-Free WithdrawalsYour Roth IRA contributions grow tax-free and you can take them out tax-free in retirement if you meet certain conditions. You can also take out what you’ve put in (not the earnings) anytime without paying taxes or penalties.
2. The Saver’s CreditThis valuable but often overlooked credit lets you claim up to $1,000 ($2,000 for married couples filing jointly). You can qualify in 2025 if your adjusted gross income stays under $38,250 for single filers, $57,375 for head of household, or $76,500 for joint filers.
3. HSA Catch-Up ContributionsYou can put up to $4,300 for individual coverage or $8,550 for family coverage in a Health Savings Account in 2025. People 55 and older can add an extra $1,000 yearly as a catch-up contribution.
4. Retirement Account Catch-Up ProvisionsAnyone 50 or older can make extra “catch-up” contributions up to $7,500 yearly to their 401(k) or similar plans, on top of regular contribution limits.
5. Home Sale Tax ExclusionYou can exclude up to $250,000 ($500,000 for married couples filing jointly) of capital gains from selling your main home if you’ve lived there for at least two of the past five years.

Why These Tax Breaks Are Often Overlooked

Knowledge gaps stop millions of Americans from getting valuable retirement tax breaks every year. Only about half of U.S. workers know about significant benefits like the Saver’s Credit. This number drops to 44% in households making under $50,000 per year – the very people who need it most.

Good planning and awareness can help you increase your tax-free retirement income. Learning which benefits apply to your situation is a vital first step to make the most of these opportunities.

How to Maximize These Breaks for Tax-Free Retirement Income

Smart retirement planning needs a good strategy to get the most from your tax breaks. You’ll get better results when you time your contributions right and know the qualification rules.

Self-employed people need to do some extra math. Your calculations should go beyond just taking a percentage of your Schedule C net profit. You’ll need to subtract:

The deductible portion of your self-employment tax

Your own retirement plan contribution

Life insurance policies that follow IRS code 7702 offer a smart way to manage taxes. These policies let you take zero-net loans each year, which could put you in a lower tax bracket.

New retirement planners should talk to their tax advisors about Roth conversions. This strategy works best when your current tax bracket is lower than what you expect in retirement.

Your state’s tax rules matter too. Each state has different rules about taxing Social Security, pensions, and retirement funds.

Conclusion

We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to see how we can help you Retire ”Your Way!”

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