3 Best Money Moves Boomers Should Make This Tax Season
Written by
Kerra Bolton
Edited by
Zuri Anderson
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Tax season can feel overwhelming, especially for baby boomers who may be navigating retirement plans, investment portfolios or managing wealth. However, there are smart, legal ways for older adults to lower their tax bill and keep more of their hard-earned money.
Here are the three best money moves boomers should make this tax season.
Keep More, Pay Less
With tax season underway, savvy boomer investors are exploring strategies to make the most of their portfolios, including ways to keep more of their money while paying less.
“We work with clients to do tax loss harvesting, which is where we may sell depressed and underperforming securities to intentionally capture a loss in order to offset capital gains and reduce taxable income,” said Jeffrey Wood, certified public accountant (CPA), certified financial planner (CFP®) and partner at Elysium Financial.
“This only works in a non-qualified account and must be done by the end of the year, so if you miss it for this year, be sure to take advantage of this strategy before the end of this year. If you miss it for this tax year, be sure to take advantage of this strategy before the end of this (calendar) year.”
Another tax tip for boomers seeking to keep more of their money is to defer income into the next tax year, if the current year is larger than normal or puts the taxpayer over a certain tax bracket threshold, Wood said.
“In addition, business owners might also look to expedite needed business expenses in a certain year when income may be higher in order to reduce that income and lower their tax liability,” he added. “These also would need to be done in the year that the income is earned and reported, but it is important to keep in mind.”
Legally Lower Your Tax Bill
Boomers looking to legally lower their tax bill can also shelter their income, said Dan Ray, a legal expert at NOLO, an online legal encyclopedia.
“All boomers with sufficient earned income qualify for contributions of up to $8,000 to an IRA,” including a $1,000 catch-up contribution, Ray said. “They also qualify for a $30,500 to a 401(k), including a $7,500 catch-up contribution, for the 2024 tax year.”
Ray said boomers could consider stocks and ETFs (exchange-traded funds) as another vehicle in the short-term. However, investors should be prepared to act quickly.
“Bonds and interest-bearing investments should be pretty steady, given the overall strength of the economy, and barring some move that causes markets to panic,” Ray noted. “Be alert.”
Reduce Estate Taxes
The federal estate and gift tax isn’t a serious consideration for most people because it only affects the mega rich, said Jeff Burtka, an attorney specializing in estate planning.
“But the exemption is going to be cut in half at the end of this year, unless Congress and the White House act, which might be likely considering the GOP’s track record on increasing the exemption,” Burtka said.
He explained that generally, the federal estate tax and gift tax are one tax. Gifts made during one’s lifetime and the value of one’s estate at death are added together. If they are below the exemption amount of roughly $14 million in 2025, no estate tax is due. However, there is an annual gift tax exclusion of $19,000 in 2025, meaning gifts under $19,000 aren’t subject to gift taxes and don’t count toward the $14 million exemption.
“And that exclusion is $19,000 per person,” Burtka said. “So, if I gave four people gifts in 2025, I could give away $76,000 tax-free, and my spouse and I together could give double that because we could each give up to $19,000 to each of those people.”
More From GOBankingRates
