Three Ways to Cut Your Taxes (Legally!)

While your taxes are still top of mind, now’s the time to start thinking about how to lower your tax bill next year. Here are three IRS-approved ways to do that.

1. Stash more cash in your HSA.

If you’re enrolled in the HSA option, contribute as much as you can to your Health Savings Account (HSA). Your HSA is triple-tax advantaged. You don’t pay federal income and FICA taxes on your contributions, withdrawals for eligible expenses or any interest your account earns. So the more you contribute (up to IRS limits), the more you save in taxes. If you’re in the 25% tax bracket and contribute $3,000 to your HSA, for example, you could save $750 in taxes for that year alone.* Imagine how those savings add up over time.

*Source: HealthEquity calculator

What to do

Use HealthEquity’s HSA contribution calculator and Future Balance calculator to see how your HSA contribution amount might affect your tax savings now and over time. Then, to change your contribution amount at any time, log on to EmployeeConnect > Your Benefits Resources > Change Coverage.

2. Max your 401(k)

With your 401(k), you get a tax break today while you save for tomorrow. Your paycheck contributions are generally made before-tax, and the money in your account grows tax-free until you withdraw it in retirement. Together, your contributions, IRS tax-savings and the company’s matching contributions make your 401(k) a powerful savings vehicle. To take full advantage, contribute as much you can—but no less than 6% so you can max the company match.

What to do

For 2017, you can save up to $18,000 in your account before taxes. If you are age 50 or older, you can contribute an additional $6,000 in catch-up contributions. Keep in mind that you can also make Roth after-tax and regular after-tax contributions, up to the maximum contribution limit of $54,000. To learn more or change your 401(k) contributions, visit

3. Fund an FSA

If you’re not already enrolled in a Flexible Spending Account (FSA), you can’t act on this final tip right away. Your next opportunity to enroll will be Annual Enrollment in the fall for the 2018 plan year. It’s worth considering in the meantime. FSAs reduce your taxes while you save and pay for everyday expenses like health care, child care and elder care. Just make sure you understand the use-it-or-lose-it rule and how the Health Care FSA works with your medical option.

If you’re already enrolled in an FSA, simply use your funds for eligible expenses and save your receipts.

What to do

Think about enrolling during Annual Enrollment. (You also might be able to enroll in a Dependent Care FSA during the year if you have a baby or other eligible qualified status change.) The 2018 contribution limits will be noted in your enrollment materials.

Change Your Tax Withholdings

You can tweak your tax withholdings anytime by modifying your W-4 via EmployeeConnect.

Modifying your W-4 won’t lower your tax bill, of course, but it will affect when you pay those taxes—in smaller amounts throughout the year or in a larger sum in April. If you paid a huge tax bill for 2016, consider raising your withholding so you owe less by next April. Or, if you received a huge refund, consider reducing your withholding to avoid giving Uncle Sam a free loan all year.