Top 5 Tax Strategies Every W-2 Employee Should Know

Are you a W-2 employee looking for ways to save on taxes and maximize your hard-earned income? While many believe their tax-saving options are limited, Toby Mathis breaks down five powerful strategies that can help you minimize your tax burden and keep more money in your pocket.

1. Maximize Your 401(k) Contributions

Take advantage of your employer's 401(k) plan by contributing the maximum amount allowed. In 2025, employees can defer up to $23,500, lowering their taxable income. Don’t forget to leverage your employer’s match—it’s like getting a 100% return on your contributions. Plus, with multiple employers, you could contribute up to $70,000 across various plans.

2. Leverage a Health Savings Account (HSA)

The HSA is a triple-tax-advantaged tool. Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are also tax-free. Families can contribute up to $8,550 in 2025, and individuals up to $4,300. By investing these funds, you can save now and grow your money for future healthcare needs.

3. Make the Most of IRAs and Roth IRAs

Whether it’s a traditional IRA for tax deductions now or a Roth IRA for tax-free withdrawals later, these accounts are powerful tools. Toby also highlights the "Backdoor Roth" strategy, allowing high-income earners to convert nondeductible traditional IRA contributions into a Roth IRA.

4. Optimize Your Itemized Deductions

While many use the standard deduction, you may benefit from itemizing if you strategically "chunk" your deductions. For example, bunch charitable contributions into one year or utilize a donor-advised fund to exceed the standard deduction threshold. This ensures you get the most tax benefit out of your giving.

5. Unlock the Power of Losses

Whether through capital losses, real estate investments, or business ventures, losses can significantly reduce your taxable income. For instance, real estate professionals can use passive losses to offset other income. Starting a side business can also create losses that directly lower your W-2 income.

Take Action Today These strategies demonstrate how proactive tax planning can help W-2 employees save significantly on taxes. If you’re ready to dive deeper into these strategies, check out Toby Mathis's full video on YouTube and discover how to keep more of what you earn.

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Who do you know that could benefit from these strategies? Share this article with them and help them save on taxes, too!

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