The One Bill You Control

Supplement to Big Sarge Economy Watch Vol. 1 Issue 12. You cannot vote out the Fed or argue the pump down a nickel. But your taxable income is the one number on this whole list you actually control — and the tax code is full of legal ways to lower it. Here are eight.

Every issue of this newsletter walks the receipts you cannot change. Gas at $4.48 a gallon. A daycare bill that rivals a mortgage. A Federal Reserve that just raised the price of your credit card to fight an inflation you did not start. So here is one where you hold the pen. The core move is simple: lower your “taxable income” so fewer of your dollars get taxed. Also, fewer of them get taxed at the higher rates. Wealthy people have known this for a hundred years. They pay accountants good money to work it. None of it is a loophole. It is written in the law, in plain sight. Most of it is sitting there waiting for a working family to claim it. I spent twenty-three years in uniform, and I learned to read the regulation and take what it owed me. Same idea here.

1. Pre-tax retirement contributions. Every dollar you put into a traditional 401(k) or IRA cuts your taxable income dollar for dollar. For 2026 the IRS lets you put up to $24,500 into a 401(k), plus an $8,000 catch-up if you are 50 or older (and $11,250 if you are 60 to 63). A traditional or Roth IRA takes up to $7,500, plus a $1,100 catch-up at 50-plus.
2. HSA contributions. If you carry a high-deductible health plan, a Health Savings Account is the only account in the code that is triple tax-advantaged: deductible going in, growing tax-free, and coming out tax-free for medical costs. The 2026 limits are $4,400 for individual coverage and $8,750 for family, with an extra $1,000 if you are 55 or older.
3. Itemized deductions. Mortgage interest, state and local taxes, and charitable gifts lower your taxable income when together they beat the standard deduction ($16,100 single, $32,200 married filing jointly for 2026). The state-and-local cap just jumped from $10,000 to $40,400 under the 2025 tax law. Thus, this puts itemizing back on the table for a lot of homeowners in high-tax states.
4. Tax-loss harvesting. In a regular brokerage account, selling an investment at a loss offsets your capital gains, plus up to $3,000 of ordinary income on top of that. Losses you cannot use this year carry forward to the next.
5. Timing income. Push a bonus, a freelance check, or a Roth conversion into a lower-income year — between jobs, or early in retirement before Social Security starts — and it gets taxed in a lower bracket.
6. Business deductions. If you are self-employed, legitimate business expenses come off your net income before a dollar of it ever reaches your personal bracket. Keep the receipts.
7. Charitable giving strategies. “Bunching” two or three years of donations into a single year can push you over the standard deduction. Also, donating appreciated stock instead of cash lets you take the deduction and skip the capital-gains tax on the gain.
8. 529 plan contributions. Not deductible on your federal return, but many states hand you a state income-tax deduction for money you put in for a child’s education.

Here is the distinction that matters. Some of these just move when you pay. A traditional 401(k) is not tax-free money, it is tax-later money, and the bill comes due when you withdraw it in retirement. Others — the HSA spent on medical care, the harvested loss, the appreciated stock you gave away — can lower or wipe out the tax on that money for good. Both are worth doing. Just know which one you are using. That way, you are not surprised by a tax bill you only postponed.

One straight-shooter note: this is general information, not tax advice, and I am a retired Senior Master Sergeant, not your CPA. Your situation is your own. Run any of these past a tax professional before you move real money.

Key takeaway: You cannot control the Fed, the pump, or the grocery aisle. You can control how much of your paycheck the IRS gets to tax. Every dollar you shelter in a 401(k), an HSA, or a smart deduction is a raise the government is not going to hand you.

Sources: Internal Revenue Service, 2026 contribution limits (IR-2025-111); IRS and Fidelity on 2026 HSA limits; 2026 standard deduction and the $40,400 SALT cap under the One Big Beautiful Bill Act of 2025.

An independent read on the national economy and the working American. Founded and written by Wayne Ince. Tampa, Florida.