Paying income taxes is a legal obligation, but there are several legal solutions to reduce income tax. We will explore various tax reduction solutions available to you to grow your savings and decrease your income tax.
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What solutions are there to pay less income tax?
Here are the 7 solutions to pay less taxes that we will explore together:
Individual Retirement Plan (PER)
Investment in Innovative Companies (FCPI)
Invest in SMEs or startups
The higher your income, the higher your tax percentage will be. Refer to the income tax scale to determine your tax bracket.
By utilizing tax reduction strategies, you can either lower the amount of taxes to pay or decrease your taxable income, thereby moving from a higher to a lower tax bracket.
Take advantage of deductions and tax credits
The first step to paying less income tax is to maximize the deductions and tax credits you are entitled to.
Many expenses can qualify for these tax credits, including:
Expenses related to domestic employment (household help)
Hosting elderly individuals as part of a family
Learn about the tax benefits offered for each type of expense and make sure to claim them correctly.
Invest in retirement savings products
Retirement savings products, such as the Individual Retirement Plan (PER) and Collective Retirement Savings Plans (PERCO), offer tax advantages. Contributions to these plans can be deducted from your taxable income, reducing your current income tax while preparing for retirement.
Pinel Law (Loi Pinel)
For instance, the Pinel scheme provides tax reductions to investors who purchase new or renovated real estate and lease it for the long term. This requires significant investments, but the benefits can be substantial for those with substantial sums to invest in tax reduction.
Malraux Law (Loi Malraux)
You can use the Malraux scheme, which aims to preserve architectural heritage by offering tax benefits to investors who renovate properties in protected areas.
Invest in Innovative Companies (FCPI)
Investing in innovative companies through mechanisms like the Plan for Savings in SMEs (PEA-PME) can also help reduce income tax. Capital gains from these investments are subject to favorable tax rates. Investing in special funds (FCPI) can provide similar advantages.
Invest in SMEs or startups
Similar to investing in innovative companies, investing in SMEs or startups allows you to pay less income tax.
There are other techniques for tax reduction, such as looking into investments that require significant funds:
There are 7 effective solutions to pay less taxes.
It is possible to reduce taxes on small amounts by benefiting from tax credits, for example, for home assistance. It is also possible to reduce taxes on larger amounts through real estate investments.
Reducing your income tax can be achievable by using these seven legal and effective methods. By planning carefully and taking advantage of available tax benefits, you can optimize your financial situation while fulfilling your tax obligations.
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In order to pay fewer taxes, it is also helpful to seek assistance. Here is the list of wealth management firms by city: