When it comes to tax savings, there are some investment moves that need to be completed by December 31 of the tax year such as tax-loss harvesting. Fortunately, there are still several things investors can do between the end of the year and tax day to save on their taxes for the previous year. 

Here are four investment moves you can make up until tax day (April 15) to save on your 2023 taxes. 

4 investments that may reduce your taxes before tax day

1. Contribute to a traditional IRA

One way to get a potential tax break is by contributing to a traditional individual retirement account (IRA). These contributions can reduce your taxable income and lower your tax bill if you’re eligible for the deduction. 

Whether or not you can take a tax deduction for traditional IRA contributions depends on your level of income. Single filers can take at least a partial deduction if their income is below $83,000, while married couples who file a joint tax return can take at least a partial deduction if their income is below $136,000. If you’re single or married and neither you or your spouse are covered by a workplace retirement plan, there are no income restrictions on taking the tax deduction. 

Once you’ve contributed to an IRA, the money can be invested and grow tax-deferred until it’s withdrawn during retirement. Using an IRA is a great way to supplement your workplace retirement plan, such as a 401(k). 

You can also make Roth IRA contributions up until tax day, but these contributions are made with after-tax dollars, meaning you won’t get a current tax deduction. Roth IRA tax benefits come during retirement when withdrawals are tax free. 

2. Spousal IRA contributions

People often overlook the opportunity to make spousal IRA contributions when one spouse has little or no earned income. But as long as one spouse has earned income, both spouses can contribute to an IRA, potentially doubling the tax deduction that is available. 

For example, consider a married couple where each spouse is 45 years old and one spouse earns $100,000 from their full-time job and the other spouse earns $5,000 from a part-time job. Each spouse can contribute up to $6,500 to a traditional IRA for 2023, setting up a potential tax deduction of $13,000. Couples age 50 and older can contribute up to $7,500 each for the 2023 tax year. 

There are income thresholds for many different types of taxes, so lowering your taxable income through an IRA contribution may save you money in other ways as well. However, the rules can be tricky to understand so you may want to consult with a financial advisor or tax professional. 

Here are a few things to keep in mind:

  • The couple must have earned income that is at least equal to the total IRA contribution
  • You must file a joint tax return
  • If neither person participates in a workplace retirement plan such as a 401(k), there are no income limits for taking the tax deduction. 
  • If both spouses are covered by a workplace retirement plan, then full or partial deductions are allowed as long as your income is less than $136,000. 
  • If you do not participate in a workplace retirement plan, but your spouse does, deductibility ends at income levels of $228,000 in 2023. For the spouse that does participate, the income threshold is $136,000. 

3. Contribute to a health savings account (HSA)

You also have until tax day to make contributions to Health Savings Accounts (HSAs). HSAs come with a triple-tax advantage because you can get a current tax deduction for contributions, the money can be invested and grow tax-free, and withdrawals used for qualified medical expenses are tax-free. The money can be withdrawn penalty-free for any reason during retirement, but withdrawals for non-medical expenses will be taxed. 

Keep in mind that you must be enrolled in an HSA-eligible health plan in order to contribute to an HSA. Contribution limits for 2023 are $3,850 for individuals and $7,750 for families. Those age 55 and older can contribute an additional $1,000.

These limits are based on employer and employee contributions, so if your employer contributed $1,000, an individual could only contribute $2,850 before reaching the limit (unless they’re age 55 or older). 

4. SEP IRA contributions 

If you’re self-employed, a Simplified Employee Pension (SEP IRA) can be a great way to boost your retirement savings. You can contribute on a pre- or post-tax basis, and are able to set aside up to 25 percent of your net income or $66,000, whichever is less. The limit jumps to $69,000 for the 2024 tax year. 

SEP IRAs are particularly useful for small business owners who don’t have access to more traditional employer sponsored plans such as 401(k)s. SEP IRAs come with higher contribution limits than traditional or Roth IRAs, making them even more attractive as a retirement saving tool.

Keep in mind that if you have employees, you’ll need to contribute an equal percentage of compensation to their SEP IRAs as well. Here’s everything you need to know about SEP IRAs. 

Bottom line

Even though 2023 has come to a close there are still moves you can make to save on your taxes as long as you do so before tax day. Consider making IRA contributions for you or your spouse and max out your HSA contributions if you have an eligible health plan. Those who are self-employed can take advantage of higher contribution limits by contributing to a SEP IRA before tax day.