Actually, your question has it backward…reducing your tax deductions
will increase your taxable income.
Instead, you’ll have to increase tax
deductions to reduce your taxable income.
If you meant reducing your “allowances” (withholding allowances) for payroll
purposes, then it’s the same story. You’d need to increase your eligible
withholding allowances to reduce taxes withheld on income through payroll.
Contributing more to your 401(k) will reduce taxable income through
payroll on a 1:1 basis ($1 less taxable income for each $1 contributed). This
assumes you’re contributing to a traditional 401(k) and not an after-tax Roth
component within the 401(k). Please be aware of the 2015 contribution limits: up
to $18,000 of earned income, or $24,000 of earned income if you’re age 50+.
To reduce taxable income, you would increase your 401k contributions. You can put $18,000 into your 401k if you are under 50 or $24,000 if you are age 50 or above. I hope this helps Craig W. Smalley, E.A. - Admitted to Practice Before the Internal Revenue Service
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.