When we talk about tax reduction, there is no minimum regulatory or legal limit. in fact, The possibility of reducing the amount of tax depends on the personal preference, psychology and personal history of each taxpayer..
Some people want to pay as little tax as possible, while others are comfortable with the idea of contributing to public services like free education and various safety nets.
Major tax reduction methods
Do you earn some money? Are you wondering if you earn enough to be exempt from taxes?
Stop asking yourself this question. From the moment you pay your first Euro tax, know that there are ways to reduce this tax.
There are many methods to reduce your tax amount. Some of them are accessible from a few hundred euros of taxable income.
Tax deduction
A tax deduction involves subtracting from the overall gross income an amount corresponding to certain expenses.
This method is particularly beneficial for taxpayers with significant income because, for the same amount paid (for example, 1000 euros), the deduction based on the tax bracket gives significant benefits:
- 0% bracket: 0 euro tax savings
- 11% bracket: 110 euro tax savings
- 30% bracket: 300 euro tax savings
- 41% bracket: 410 euro tax savings
- 45% bracket: 450 euro tax savings
A tax credit is a direct reduction in the amount of tax owed. Unlike deductions, tax credits can be attractive to low- or moderate-income earners because they allow a refund, in certain cases, even if the taxpayer does not pay taxes.
Adopt a tax minimization strategy that suits your situation
As mentioned earlier, there is no minimum threshold to avail the benefit of tax reduction. however, The choice to use one method over another should be consistent with the taxpayer’s situation and objectives.
The case of less taxpayers
For those with a taxable income of less than or equal to 250 euros, it is generally not relevant to invest in savings schemes blocked for a minimum period of six years. Indeed, there is no certainty of recovering the entire initial investment at the end of the period. In this case, tax credit can be an interesting option.
The case of high tax payers
Taxpayers in higher tax brackets have every interest in using the tax deduction method when it is consistent with their objectives. Solutions that require a large initial investment (such as buying a new or old property for renovation) can offer significant and permanent tax reductions.
