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Provide your fellow students with two (legal) ideas how to reduce their state and/or federal tax...

Provide your fellow students with two (legal) ideas how to reduce their state and/or federal tax liability each year. Share either something you have used or something you have found on the internet.   

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Answer: 2 legal ideas to reduce your state tax liability are

1) Contribute as much as you can to your retirement account.There are some tax advantaged retirement accont like 401(k) under which one can take deductions for the contributions one makes in that year.

2) Investing in health savings accounts (HSA) results in decrease in taxable income as funds are invested with pre-tax money. One could take out this money tax-free to cover healthcare costs to get a huge tax benefit since both deposits and withdrawals are tax free. And, if one does not use the funds for healthcare, he/she also have the option to withdraw money after age 65 and be taxed on the distributions as ordinary income without paying any penalties.

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