I Asked ChatGPT What I Can Do To Reduce Next Year’s Tax Bill — Here’s What It Said
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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When people worry about their tax bill, it’s often already too late. By the time April rolls around, most of the decisions that shape how much you owe are already locked in.
Curious whether there is anything realistic I could still do to reduce next year’s tax bill, I asked ChatGPT to walk me through the options. It highlighted several overlooked moves that can shape how much taxpayers owe.
Tax Planning Needs To Start Earlier Than Most People Think
Many taxpayers think of taxes as a once-a-year event, but ChatGPT stressed that your tax bill or refund is the result of decisions you make throughout the year. Income timing, savings choices and even how money is invested can all influence what shows up on a return.
Reducing a future tax bill is about adjusting how your money flows month to month. The earlier those adjustments happen, the more flexibility taxpayers tend to have, it said.
Adjusting Withholding Can Prevent Costly Surprises
Last year’s tax situation can help you prepare for this one. If you owed a lot of money or received a big refund, your paycheck withholding may need adjusting, ChatGPT said. Many people either over-withhold and give the IRS an interest-free loan or under-withhold and face an unexpected tax bill.
Even small changes can reduce penalties, limit refund delays and make tax season far more predictable.
Retirement Contributions Do Double Duty
One of the most helpful tools for reducing taxes is putting money into tax-advantaged retirement and savings accounts, ChatGPT said. These include:
- 401(k) or 403(b): Contributions here reduce taxable income dollar for dollar.
- Traditional, Roth or SEP IRA: Individual retirement accounts (IRAs) offer either tax-deferred growth (traditional IRA) or tax-free growth and withdrawals (Roth IRA).
Increasing contributions earlier in the year spreads the impact across paychecks and can feel far less disruptive than scrambling to fund an account at the last minute, the AI insisted.
Utilize Health Savings Accounts
Health-related tax breaks don’t always get the same attention as retirement accounts, but ChatGPT highlighted health savings accounts (HSAs) as a powerful way to reduce taxes. Certain health accounts allow for tax-deductible contributions, tax-free growth and tax-free withdrawals when used correctly.
For eligible taxpayers, these accounts can reduce taxable income while also creating a buffer for future medical expenses. Just be sure to go over the eligibility rules before assuming the benefit applies and be sure you’re only spending on qualified healthcare expenses.
Strategically Defer Income
Another action you can take is looking at income timing, not just totals. ChatGPT noted that when income arrives can sometimes matter as much as how much arrives, particularly for people with variable income.
Deferring income is one way to bring down a tax bill. This could mean putting off a sale or cashing in on investments, asking for a bonus to kick in on the next calendar year or holding off on collecting side gig income to a later date, when possible.
Another option is to bunch deductions. ChatGPT said if you’reclose to the standard deduction, grouping charitable gifts or medical expenses into one year can push you over the threshold.
Take All Credits and Deductions
Sometimes taxpayers miss out on credits that can reduce their taxable income dollar for dollar. ChatGPT suggested looking to such credits as education credits, child and dependent credits, EV credits and energy-efficient home improvement credits.
For the self-employed, be sure you’re taking all the deductions available to you, such as home office, mileage, software, equipment and health insurance premiums for the self-employed.
Small Planning Tweaks Add Up Over Time
Rather than suggesting radical changes, ChatGPT focused on incremental adjustments. Reviewing filing status, tracking deductible expenses and revisiting investment placement can all influence long-term tax outcomes.
Individually, these changes may seem modest. Together, they can meaningfully reduce how much of a household’s income goes to taxes year after year.
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