Paying taxes is the responsibility of every citizen, but that doesn’t mean you should pay more taxes than you need to. If you plan wisely and take advantage of legal facilities, you can save a lot of tax.
Here are 5 important and legal ways to save on tax in 2025:
1. Increase capital in pension and retirement funds.
Investing more in pension and retirement funds not only secures your future but also reduces your taxable income.
The limit for retirement schemes has already been increased in 2025, so you can save more by investing more.
Tip: If you are a freelancer or a small business owner, investing in a private pension plan is the best step.
2. Use tax credits correctly.
Tax credits directly reduce your tax amount, so be sure to take advantage of them.
Commonly available credits include:
Education credit (for students)
Child credit (for parents)
Green energy credit (for solar panels or electric vehicles)
The government introduces new credits every year, so keep an eye on the latest rules.
3. Open a health savings account (HSA).
The money you put into an HSA is not taxed, nor are the earnings on it taxed.
This account is used only for medical expenses, and the money in it grows over time.
Tip: If you have a high-deductible health plan (HDHP), you should open this account.
4. Deduction of business and professional expenses
If you are involved in a business or freelancing work, you can reduce your taxes by including these expenses in the deduction:
Office rent, internet, and electricity
Business trips and travel
Advertising, website, or marketing expenses
Home office owners can also include some expenses in the deduction.
5. Tax deduction from charity and donations:
Donations made to registered and certified charities reduce the tax on your income.
Remember, it is mandatory to keep the receipt or bank details of donations so that you can claim.
Additional tips:
Invest in tax-saving schemes issued by the government.
Tax loss harvesting is the best method for investors in the stock market, i.e., adjusting profits with losses.
File your taxes on time so that you do not incur any penalty or additional burden.
Conclusion:
Saving taxes does not mean that you have to violate the law. The key is to understand the legal provisions and make the most of them. If you plan properly, you can reduce your taxes and protect your savings.