What is one way taxpayers can reduce their taxable income?

Taking tax deductions is a recognized method for taxpayers to reduce their taxable income. Tax deductions lower the amount of income that is subject to taxation, effectively decreasing the overall tax liability. For example, common deductions include expenses associated with charitable contributions, mortgage interest, and certain business expenses. When taxpayers claim these deductions, they subtract them from their total income, which can lead to a lower tax bill.

In contrast, increasing salary generally leads to additional income, which would likely raise taxable income instead of reducing it. Purchasing stocks does not directly provide a way to reduce taxable income, as investment gains are typically taxed when sold, and initial investments are not deducted. Deferring income, while it can influence the timing of tax payments, doesn’t actually reduce the amount of taxable income in the year the income is earned. Therefore, taking tax deductions is the most effective and straightforward strategy among the options provided to lower taxable income.