Realizing long-term capital gains
Long – term capital gains are taxed at lower rates than short term gains and regular income. 

Earning qualifying dividends
Qualified dividends are subject to the reduced rates for long-term capital gains.

Earning tax-free income
You can earn tax-free income by-
*Investing in tax exempt securities
*Seeking tax-free education benefits with scholarship arrangements, qualified tuition programs and Coverdell ESAs.

Deferring Income

You can defer income to years in which you will pay less tax through-
*Deferred pay plans such as full participation in 401K plans
*SEP plans or traditional IRA’s
*Transacting Installment sales when you sell real property that has appreciated in value
*Investing in U.S. savings bonds

Income splitting

Through income splitting, you divide your income among several persons or taxpaying entities that will pay an aggregate tax lower than the tax that you would pay if you reported all of the income.  Although the tax law limits income-splitting opportunities, certain business and family income planning through the use of trusts and custodian accounts can provide tax savings. 

Tax free exchanges

You can defer tax on appreciated property by transacting tax free exchanges.

Buying a personal residence

*If you buy a home, condominium, or cooperative apartment, you may deduct mortgage interest and taxes.  When you sell your principal residence, you may be able to avoid tax on gains of up to $250,000 if single and up to $500,000 if married filing jointly.  
*Homeowners can borrow on their home equity and deduct interest expenses within limits. 

Take advantage of special personal tax breaks for education

The tax law provides several breaks for education expenses.  These breaks include scholarships, grants, tuition plans, education credits, Coverdell Education Savings Accounts, and the student loan interest deduction.

Take advantage of personal tax credits

These tax credits include the new premium tax credit, dependent care credit, adoption tax credit, and earned income credit, if