August 2008
| Bonus |
Average tax savings: $125
If you're not already contributing the maximum, put more into your 401(k), IRA, or other tax-deferred retirement account. You'll also cut the amount of income tax you'll pay each month. (Note that this does not apply to Roth accounts.)
Paying $500 a month into your 401(k) plan, for example, will reduce your federal income tax bite by $50 to $175 per month, depending on your tax bracket. Of course, you'll pay that tax down the road, when you withdraw from your plan in retirement. But in the meantime, invest your tax savings or use them to offset rising prices elsewhere.
