Every financial plan makes an assumption about income-tax rates. The further into the future you are planning, the bigger effect this tax assumption will build into your finances. The rules for reducing your income taxes continually change. These rules are important even for lower-wage and average-wage earners.
An old assumption was that your income tax rate will be lower once you retire so deferring taxes was your best financial move. This is no longer true because taxes of all kinds are increasing, government debts are sharply increasing, so your future tax rate will likely be the same or higher. The result of this tax-rate change is that your best financial move may be to pay taxes now instead of deferring them, or move money to tax sheltered locations like a Roth IRA.
Another old income-tax reduction tactic was to offset a tax increase by increasing your tax deductions; such as charitable donations, health care expenses, and appliance energy credits. However, law makers in Washington have caught on to this tactic so their new taxes are based upon your adjusted gross income (AGI). This number is not impacted by any deductions, so you need different tactics to reduce your AGI. A new tax-reduction tactic is to re-characterize your income from taxable to non-taxable. For example, if you have bonds paying interest, sell those and purchase tax-free bonds. There are others but tax expertise is required to make sure you are correctly following the IRS rules.
There are only a few weeks left in the year to re-examine and take action on the income-tax rates that you have been assuming. Taxes are your largest expense so take the time to minimize your liability with professional level expertise. Remember, there are always three levels of investment taxation to evaluate: you, the investment, and the entity structure or account it is held within. Your tax planning needs to take all of these into consideration.