For the most part, the IRS operates on a calendar-year basis. It’s too late, for example, to make deductible charitable contributions for 2023 — only donations made by December 31 qualify. But there are some exceptions that, along with reducing your 2023 tax bill, could improve your retirement security and lower your costs for health care.
Last-minute tax savings for IRA contributions
If you’re not enrolled in a workplace retirement plan, you can deduct a contribution to an IRA of up to $6,500, or $7,500 if you were 50 or older, for 2023. You have until April 15, 2024, to make your 2023 contribution.
Contributions to a traditional IRA will reduce your adjusted gross income (AGI) on a dollar-for-dollar basis, which could also make you eligible for other tax breaks tied to your AGI.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Workers who have a company retirement plan but earn less than a certain amount may qualify to deduct all or part of their IRA contributions for 2023.
- This deduction phases out for single taxpayers with AGI of between $73,000 and $83,000 and for married couples who file jointly with AGI of between $116,000 and $136,000.
- If one spouse is covered by a workplace plan but the other is not, the spouse who isn’t covered can deduct the maximum contribution, as long as the couple’s joint AGI doesn’t exceed $218,000.
- A partial deduction is available if the couple’s AGI is between $218,000 and $228,000.
If you worked for yourself in 2023 or had a side gig, you may be able to sock away even more money — and significantly lower your tax bill. You have until April 15 — or October 15 if you file for an extension — to set up and contribute to a SEP IRA, a retirement plan designed for self-employed workers, small businesses and sole proprietors. For 2023, you can deduct contributions of up to 20% of net self-employment income, up to a maximum of $66,000.
Roth IRA contribution deadline for 2023
You also have until April 15 to contribute to a Roth IRA for 2023. Contributions to a Roth are after-tax, so they won’t lower your tax bill. But if you’re 591⁄2 or older and have owned your Roth for at least five years, withdrawals are tax-free. Contributing to a Roth will also protect your savings from future tax hikes. Here, too, there are income limits for 2023.
- Single taxpayers with modified adjusted gross income (MAGI) of $138,000 or less can contribute the full amount.
- Those with income of between $138,000 and $153,000 can make a partial contribution.
- Married couples who file jointly can make the full contribution if their MAGI is $218,000 or less.
- Those with modified adjusted gross income between $218,000 and $228,000 can make a partial contribution.
In the past, you could make only pretax contributions to a SEP, but legislation enacted in late 2022 allows SEP providers to offer a Roth option. However, because this change is relatively new, you may have a hard time finding a provider who has started to offer a Roth SEP.
When considering whether to invest in a deductible IRA or a Roth, look at your time horizon, says Lowell Smith, cofounder of IRALOGIX," which provides tech-driven IRA solutions to the wealth management industry. If you’re still years away from retirement, the Roth may be the better option because you’ll enjoy years of tax-free growth, he says. If you plan to retire within 10 years, you may want to opt for the deductible IRA.
Save for health care costs
You have until April 15 to set up and fund a health savings account (HSA) for 2023. To qualify, you must have had an HSA-eligible insurance policy in 2023 that started no later than December 1. The policy must have had a deductible of at least $1,500 for individual coverage or $3,000 for family coverage.
You can contribute up to $3,850 to a 2023 HSA if you had single coverage or $7,750 if you had family coverage. You can contribute an additional $1,000 if you were 55 or older in 2023.
Contributions reduce your adjusted gross income. The money in your account will grow tax-free, and withdrawals to pay medical expenses are also tax-free.
Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Related Content
-
The Five Best Side Hustles for RetireesMore older people are working in retirement to boost income and stave off boredom. These gigs and hustles make the most sense for the golden years crowd.
-
Apple Rolls Out AppleCare One to Simplify and Expand Device ProtectionApple's new multi-device plan brings extended coverage, theft protection and the ability to insure older gadgets.
-
Five Ways Trump’s 2025 Tax Bill Could Boost Your Tax Refund (or Shrink It)Tax Refunds The tax code is changing again, and if you’re filing for 2025, Trump’s ‘big beautiful’ bill could mean a bigger refund next year, a smaller one, or something in between. Here are five ways the new law could impact your bottom line.
-
New SALT Deduction Could Put Thousands Back in California Homeowners’ PocketsTax Breaks The federal state and local sales tax (SALT) deduction cap is higher this year, and could translate into bigger savings for Golden State homeowners.
-
Money for Your Kids? Three Ways Trump's ‘Big Beautiful Bill’ Impacts Your Child's FinancesTax Tips The Trump tax bill could help your child with future education and homebuying costs. Here’s how.
-
Why Your Summer Budget Feels Tighter: Tariffs Push Up InflationTariffs Your summer holiday just got more expensive, and tariffs are partially to blame, economists say.
-
Alabama Tax-Free Weekend 2025Tax Holiday Here’s everything you need to know about the 2025 back-to-school Alabama sales tax holiday.
-
Key 2025 Tax Changes for Parents in Trump's MegabillTax Changes Are you a parent? The so-called ‘One Big Beautiful Bill’ (OBBB) impacts several key tax incentives that can affect your family this year and beyond.
-
‘I Play Pickleball in Retirement.’ Is It HSA-Eligible?Retirement Tax Staying active after you retire may be easier with these HSA expenses. But there’s a big catch.
-
Mississippi Tax-Free Weekend 2025Tax Holiday Just in time for Prime Day, Mississippi celebrated a tax holiday in July. Find out what back-to-school essentials were included.
