There’s really nothing nice to say about inflation when it comes to your bottom line. It’s hard on your wallet. It’s hard on your savings because it reduces the buying power of the dollars you socked away. And it’s hard on your paycheck, because chances are your last raise did not keep pace with headline inflation, which the latest reading puts at 8.2%. But that same high inflation has led to a couple of changes that might offer you a little relief. And every little bit helps.
You can reduce your taxable income … and save more for the future When you save money in a tax-deferred workplace retirement plan like a 401 or 403, you can reduce your taxable income because you get a deduction for your contribution the year you make it. The more you save, the more you cut your tax bill. Starting next year, you will be allowed to contribute up to $22,500 into your 401, 403, most 457 plans or the Thrift Savings Plan for federal employees. That’s $2,000 – or roughly 9.