Tax Optimization for a W-2 Employee
The 7 levers most people leave on the table every year.
You're a salaried employee in the US who takes the standard deduction.
A checklist of pre-tax and tax-advantaged moves that can save $2,000–$10,000+ per year.
You probably can't itemize your way to lower taxes. But there are 7 structural moves that reduce your taxable income before deductions even matter.
- 01
Max the 401(k) match — minimum
An employer match is a guaranteed 50–100% return. If your match is 'up to 6%', contributing less than 6% is leaving direct cash on the table.
- 02
Use the HSA if you're eligible
If your health plan is HSA-eligible, the HSA is the most tax-advantaged account in the US: pre-tax in, tax-free growth, tax-free out for medical. Invest it, don't spend it.
→ HSA vs FSA - 03
Fund a Roth IRA (or backdoor Roth)
$7,000/year of tax-free growth forever. Above the income limit? Use the backdoor Roth (contribute to a traditional IRA, immediately convert).
PitfallBackdoor Roth pro-rata trap if you have other pre-tax IRA money. Roll it into your 401(k) first. - 04
Use commuter / dependent-care benefits
Pre-tax dollars for transit, parking, or daycare. Easy 22–32% discount on expenses you'd have anyway.
- 05
Harvest tax losses in taxable accounts
Sell losing positions to offset gains plus up to $3,000 of ordinary income per year. Carry the rest forward.
→ Tax-loss harvesting tool - 06
Hold long, sell long
Hold for 12+ months to convert short-term gains (taxed as income) into long-term gains (taxed at 0/15/20%).
→ Capital gains tax - 07
Bunch deductions if you're near the threshold
If your itemized deductions are close to the standard deduction, stack 2 years of charitable giving into one tax year (donor-advised fund), then take the standard deduction next year.