6 Best Tax Deductions for 2019 to Take Advantage Of

2. Contributions to retirement accounts

You can deduct many thousands of dollars from your taxable income if you made big contributions to retirement accounts such as IRAs and 401(k)s. Each of those comes in a traditional or Roth variety.

With a traditional IRA or 401(k), you contribute pre-tax money, minimizing your taxable income for the year, and thereby reducing your taxes, too.

A contribution of $5,000, for example, will shrink your taxable income by $5,000 and if you’re in the 24% tax bracket, that can save you $1,200. (With a Roth IRA or 401(k), you contribute post-tax money that doesn’t reduce your taxable income at all in the contribution year. So, no tax deductions there, but Roth IRAs are still well worth considering, as their back-end tax breaks can be huge.)

In 2018, you could contribute up to $5,500 to one or more traditional or Roth IRA(s) – in total. If you’re 50 or older, the limit is $6,500. (In 2019 that rises to $6,000 and $7,000, respectively.)

The limits for 401(k)s are much higher: For 2018, the limit is $18,500, or $24,500 for those 50 or older. In 2019, it’s $19,000, or $25,000 for those 50 and older. (At a minimum, contribute enough to your 401(k) to grab all available matching dollars from your employer, as that’s free money.)