5 Ways To Pay Less in Taxes With the New 2025 Tax Brackets, According to Jaspreet Singh
Written by
Josephine Nesbit
Edited by
Jenna Klaverweiden
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
The IRS makes changes to federal tax brackets and the standard deduction to account for inflation each year, which could affect how much you pay in taxes. And it recently released new tax brackets for 2025.
In a recent video, entrepreneur Jaspreet Singh, known as “Minority Mindset” on YouTube, said there are several strategies you can use to reduce what you owe the IRS. Read on to see some ways to pay less in taxes, according to Singh.
Also see six ways to prepare for filing your taxes before the new year.
Lower Your Taxable Income or Increase Your Deductions
“In order for you to pay less money in taxes, you have two options,” Singh explained. “You can lower your income. That way, now you qualify for lower tax rates and you pay less money in taxes. Or you can work to increase your deductions. That way, you have a lower taxable amount.”
A tax deduction reduces the amount of taxable income, resulting in a lower tax bill. Taxpayers have two options when it comes to claiming deductions: standard deductions and itemized deductions.
The standard deduction is a specific dollar amount you can subtract from your income to decrease how much your income is taxed by the government. According to the IRS, the standard deduction is $14,600 for single taxpayers and $29,200 for married couples filing jointly. In 2025, it will increase to $15,000 and $30,000, respectively.
On the other hand, the itemized deduction allows taxpayers to subtract certain expenses from their adjusted gross income to reduce their taxable income. To qualify for higher deductions, you have to have itemized deductions higher than the standard deduction.
Instead of increasing your expenses to qualify for the itemized deduction, Singh recommended tax-advantaged assets, including real estate, stocks and building your own business.
Depreciation Deductions
In the video, Singh discussed straight-line depreciation, which is a way to calculate how much the value of a real estate asset decreases over time in equal amounts each year. It’s often used for tax purposes to account for the “wear and tear” of a property.
It’s also possible to take accelerated depreciation, where more of the property’s value is deducted earlier in its useful life. Unlike with straight-line depreciation, these deductions aren’t equal each year. They’re larger at the beginning and smaller as time goes on.
Accelerated depreciation can also allow you to take a passive loss to reduce your tax bill. If you also work a full-time job, you can deduct the passive loss from your active income, but only under certain exceptions. According to Singh, one exception is if you make under $100,000 per year, you can take up to a $25,000 passive loss.
“It starts to get very complicated, but this is where you want to have a good accountant on your side that can help you find and understand how the tax code works,” Singh said.
1031 Exchange
Another strategy to reduce your tax bill on real estate investments is through a 1031 exchange. By using a 1031 exchange, investors can swap one real estate investment property for another and defer capital gains taxes. This is also called a “like-kind exchange,” and you are not required to recognize gain or loss under Internal Revenue Code Section 1031.
“The only time you actually have to pay those capital gains taxes is if when you are living, you sell a property and then you don’t do a 1031 exchange,” Singh said. “You could do this every five years, and you can do this until you die and never have to pay a penny in these capital gains profit taxes.”
You have to own the property for at least a year, and the IRS has a strict timeline that must be followed in order to qualify for a like-kind exchange.
Long-Term Capital Gains Rate
There are certain tax advantages to being an investor as well. The top tax rate (37%) goes toward earned income, but stock market investments qualify for long-term capital gains tax rates, which top out at 20%.
“As a stock market investor, you get to qualify for lower potential tax rates even as you earn more money because that’s what the tax code says,” Singh explained.
Ordinary and Necessary Deductions
When you own a business, you may qualify for the ordinary and necessary deduction. To be deductible, a business expense must be deemed “ordinary and necessary” by the IRS.
According to the IRS, an ordinary expense is “common and accepted” in your industry, while a necessary expense is “helpful and appropriate” for your trade or business.
“This is now where you can get sophisticated with the way you run and structure your business to also get the benefit of the tax code,” Singh said. “At the end of the day, the tax code is a rulebook and the people that win in the financial system are the ones that learn the rules of money.”
More From GOBankingRates
