Every salaried professional in the United States has the same short list of legal ways to reduce the tax on their pay, and the order in which they matter almost never changes: the retirement account first, because the deduction is worth the marginal rate; the health savings account second, because it escapes both income tax and FICA; then the choice between traditional and Roth treatment, which is a bet on future rates rather than a saving; and finally the question of where you live, which for a high earner can outweigh everything else on this list. What follows sets out each one with the figure attached, the condition that limits it, and the mistake that most often wastes it. None of it requires an adviser, and none of it is aggressive: these are the provisions the tax code was written to offer.
The 401(k) Deduction Is Worth Your Marginal Rate, Not a Flat Amount
A traditional 401(k) contribution comes out of pay before federal income tax, so a dollar contributed saves whatever your top bracket takes. In the 22% band, the annual employee limit of $23,500 reduces the federal bill by about $5,170; in the 32% band the same contribution saves about $7,520. That is the whole reason the same advice produces very different results for two people: the contribution is identical, the saving is not.
Two conditions bound it. The limit applies per person across all employer plans, not per plan, so someone who changes job mid-year has to add up both. And the employer match is separate from the employee limit, which is why turning down a match is the most expensive decision available: it is an immediate return that no investment can promise, and it is forfeited permanently if the contribution is not made in that pay period.
The Health Savings Account Is the Only Account Taxed Nowhere
An HSA, available to anyone enrolled in a qualifying high-deductible health plan, is deductible going in, untaxed on its growth, and untaxed coming out when spent on medical costs. Contributions made through payroll also escape Social Security and Medicare, which no retirement account does. For a worker in the 24% band, that combination is worth roughly 31 cents on the dollar against about 24 for a 401(k).
The common error is treating it as a spending account and emptying it each year. Receipts can be reimbursed at any point in the future, with no deadline, so paying current medical costs from ordinary income and leaving the balance invested converts the HSA into a retirement account with better tax treatment than either a 401(k) or a Roth IRA.
Traditional or Roth: a Bet on Your Future Rate
A traditional contribution deducts now and is taxed on withdrawal; a Roth contribution is taxed now and never again. Neither is better in the abstract, and the arithmetic reduces to one question: will your marginal rate in retirement be higher or lower than it is today? Someone in the 32% band who expects to draw income in the 22% band should deduct now. Someone early in a career, in the 12% band, with decades of compounding ahead, is usually better off paying tax now at a rate that is unlikely to be seen again.
Where income exceeds the direct Roth IRA limit, the same treatment is still reachable: a non-deductible contribution to a traditional IRA converted to Roth achieves it, subject to the pro-rata rule if other pre-tax IRA balances exist. Some employer plans also allow after-tax contributions converted in place, which raises the annual ceiling considerably. Both are ordinary, documented procedures, not schemes, but both depend on plan features that have to be confirmed before relying on them.
Where You Live Can Be Worth More Than Any Deduction
Nine states levy no tax on wage income. On a $150,000 salary the difference against California or New York is several thousand dollars a year, and it recurs annually with no paperwork and no limit. For a remote worker, this is the single largest lever on this page.
It is also the one most often miscalculated. States without an income tax raise revenue elsewhere: property tax above 1.7% of home value in Texas, combined sales tax near 9.5% in Tennessee. A homeowner can hand back the entire income tax saving in property tax alone. And moving mid-year means filing as a part-year resident in both states, with the former state entitled to tax income earned while you lived there. The figure to compare is total tax plus housing, not the income tax line by itself.
What Does Not Work for a W-2 Employee
Several deductions widely discussed online are unavailable to someone paid on a W-2. Unreimbursed employee expenses, including a home office used for an employer's benefit, are not deductible for federal purposes under current law, whatever a state return may allow. Commuting is never deductible. Professional clothing is deductible only when it cannot be worn outside work. Self-employed people have access to a genuinely different set of provisions, which is why advice written for freelancers misleads employees, and why a side business changes the picture rather than extending it.
The Order That Actually Maximises Take-Home Pay
Contribute enough to the 401(k) to capture the full employer match. Fund the HSA to its limit if eligible. Return to the 401(k) up to the annual limit if the marginal rate is 22% or above. Consider Roth treatment for part of the balance if the future rate is genuinely uncertain. Then, and only then, look at geography, because a move is the only item on this list with consequences beyond tax. Working in that order costs nothing and captures most of what is available to a salaried worker.