Retirement Contributions: Stepping Up Savings Limits

The IRS has increased the contribution limits for 401(k), 403(b), and 457 plans to $23,500, a $1,000 increase from the previous year. This adjustment provides an excellent opportunity to maximize your retirement savings and reduce your taxable income. Individuals aged 50 and older can contribute even more through the catch-up contribution option.

Tip: If you’re maxing out your 401(k), consider contributing to a Roth IRA for tax-free withdrawals during retirement. While the income eligibility threshold for Roth contributions hasn’t seen major changes, it’s worth reviewing where you stand.

Earned Income Tax Credit (EITC): Enhanced Support for Families

The maximum EITC for families with three or more children is now increased to $8,046. For eligible taxpayers, this represents significant savings. However, you must meet specific income and filing status requirements to claim the credit.

Keep in mind that the EITC isn’t limited to large families—it can benefit individuals and smaller households as well. If your income varies annually, make sure to use the IRS’s EITC Assistant tool to check your eligibility.

Health Savings Accounts (HSAs): Key Updates to Know

For 2025, Health Savings Account (HSA) adjustments include a new minimum deductible of $2,850 and a maximum out-of-pocket threshold of $4,300 for High Deductible Health Plans (HDHPs). These changes may require budgeting for higher initial medical expenses before insurance coverage kicks in.

Despite the changes, HSAs remain a highly effective tool for saving in a tax-advantaged way:

• Tax-Free Contributions: Funds deposited into your HSA reduce your taxable income.
• Tax-Free Growth: Invest your HSA funds for long-term growth.
• Tax-Free Withdrawals: Use HSA funds for eligible medical expenses without incurring taxes.

If you’re not already using an HSA, pairing it with a HDHP can unlock