Income Tax Saving Hacks: 6 Smart Strategies to Reduce Your Tax Bill in 2025

Ganpat Singh Chouhan

As the end of the financial year approaches, taxpayers are actively exploring ways to reduce their tax liability. With December 31 marking key deadlines for many tax-saving investments and deductions, now is the ideal time to act. Whether you’re planning new investments or evaluating your salary structure, these six expert-backed tax-saving strategies can help you minimize your tax outgo for FY 2024–25 and boost long-term financial security.

1. Maximize Deductions Under Section 80C

Under the old tax regime, individuals can claim deductions of up to ₹1.5 lakh through eligible investments. Consider these top instruments:

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Employees’ Provident Fund (EPF)
Public Provident Fund (PPF)
5-year tax-saving fixed deposits
Life insurance premiums
Equity-Linked Savings Scheme (ELSS) mutual funds

These options not only reduce taxable income but also support disciplined, long-term wealth creation.

2. Leverage NPS for Extra Tax Savings

The National Pension Scheme (NPS) is one of the most efficient tools for dual benefits: retirement planning and tax savings.

Deduction of up to 10% of salary (or 20% of gross income for self-employed) under Section 80CCD(1)
Additional ₹50,000 deduction under Section 80CCD(1B) over and above the 80C limit

NPS is a must-consider option for those looking to save more on taxes while securing their retirement.

3. Optimize Salary Structure for Maximum Tax Efficiency

Salaried individuals can minimize taxable income by restructuring salary components. Here are some tax-saving elements to consider:

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House Rent Allowance (HRA)
Telephone and internet reimbursements
Children’s education and hostel allowance
Meal coupons or food vouchers

A smart salary structure helps you increase your take-home pay while keeping tax liability in check.

4. Claim Tax Benefits on Home Loan Repayments

Buying a house? You can claim deductions under both Sections 80C and 24(b):

Up to ₹1.5 lakh for principal repayment under Section 80C
Up to ₹2 lakh for interest payments under Section 24(b) (self-occupied properties)

This not only lowers your tax burden but also makes homeownership more financially viable.

5. Get Tax Deductions on Health Insurance Premiums

Health insurance serves a dual purpose: financial protection and tax savings. Under Section 80D, you can claim:

₹25,000 for self, spouse, and dependent children
₹50,000 if covering senior citizen parents

Protecting your family’s health also secures your finances against unexpected expenses.

6. Choose the Right Tax Regime: Old vs New

With two tax regimes now in place, choosing the right one can make a significant difference:

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The old regime allows for deductions and exemptions
The new regime offers lower tax rates, but most deductions are disallowed

Compare your tax liability under both regimes using online tax calculators to determine which one yields greater savings for your income and investment pattern.

Author Profile

Ganpat Singh Chouhan: My name is Ganpat Singh Choughan. I am an experienced content writer with 7 years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.