The more money you earn, the more money you can lose to taxes. This can become quite a significant amount over time. Fortunately, there are several tax breaks that you can take advantage of to keep what you earn.
SALT Deduction
The State and Local Tax deduction, also known as the SALT deduction, allows taxpayers to deduct taxes paid to state and local governments. This happens when the taxpayer itemizes their taxes to account for money spent in ways that have already benefited the state or local government. For example, if a state were to set up a foundation that would benefit state residents, then anyone who contributed to that foundation would receive a tax credit that partially covers their contribution. Currently, SALT deductions are capped at $10,000 a year.
Solar Tax Credits
If you’re thinking of installing solar panels on your home but the high cost is a concern, then consider the solar tax credit. The solar tax credit covers part of the cost of installation. Solar tax credits can reduce the cost of your system by 26%. While this tax credit is highly beneficial, you had better act on it quickly. The tax credit is slowly being phased out over the next couple of years. If you’re on the fence about installing solar panels, do it now. You can take advantage of this tax credit to save money on the installation and then benefit from the overall savings these solar panels will offer you in the future.
Charitable Donations
By making charitable donations you benefit others and also open yourself up to quite a tax break. Charitable donations allow you to deduct as much as 60% of your adjusted growth income. As you do this, it’s important to itemize your taxes to fully take advantage of the tax break. You should also document all of your donations. This will make things easier when it comes time to file your taxes. It’s also important to make sure you donate to a qualified organization. For example, you might donate to a non-profit, but it may not qualify as a tax-exempt organization. Do your research beforehand to make sure your donation can be counted towards your tax deductions.
There are several tax breaks available that can benefit any high-income household. Most of these tax breaks will require some action on your part. However, these actions can benefit you while also cutting you a break.
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