How I Would Avoid Paying Taxes on 39% of My Income Legally in My 20s

If I were in my 20s, here's how I'd avoid paying taxes on about 39% of my income, legally. I'm Tyler, a former financial advisor and portfolio manager. I make financial content for free, so you don't have to pay for it.

1. Annual Income

Let’s say I make $70,000 a year.

2. Contribute to a 401(k)

I would throw $23,000 into a 401(k). Free company match? Even better! This is a no-brainer for tax savings.

3. Invest in a Roth IRA

Next, I'd put $7,000 into a Roth IRA and invest it aggressively in a fund like Vanguard's VUG. While this is a post-tax account, it will be worth every penny in 40 years when decades of compound growth result in tax-free withdrawals.

4. Max Out Health Savings Account (HSA)

Then, I’d max out my health savings account with $4,300, investing it in low-cost index funds. Future me will definitely thank me for this decision!

5. Utilize Standard Deductions

Finally, I'd stack the single filer deduction, and I’ve officially dropped from the 22% to the 12% marginal tax bracket. This strategy sets me on track to becoming a millionaire in just over 15 years.

Conclusion

If any of this is helpful, sign up for my free weekly newsletter by clicking the link in my bio, and each week, I'll send you over a money playbook that actually works.

Source