Here’s how you can invest $15,300 tax-free in 2024.

Investing consistently throughout your life is the surest way to build wealth and ensure financial freedom in retirement. Investing in certain types of accounts can not only help you build wealth, but it can also save you money on taxes right now.

Here are two types of accounts that millions of Americans can use to invest thousands of dollars and receive larger tax refunds for 2024 and beyond.

An IRA can save you money now or later.

Individual Retirement Accounts (IRAs) are designed to help Americans save for retirement at a tax advantage.

There are two main types of IRAs: Traditional and Roth. The main difference between the two is tax treatment. Traditional IRA contributions may be tax deductible, but final withdrawals in retirement are considered taxable income. Roth IRA contributions are not tax deductible, but qualified withdrawals are 100% tax free. In both cases, your money grows freely and compounds on a tax-deferred basis while it is in the account. That means you won’t have to pay capital gains or dividend taxes in the process.

everyone You can contribute to a traditional IRA, but you must not have an employer-sponsored retirement plan or your income must be below certain limits to qualify for the deduction. And Roth IRA contributions depend on your income, whether or not you have an employer’s retirement plan.

The 2024 IRA contribution limit is $7,000 per person, with an additional $1,000 catch-up contribution allowed for those age 50 or older. And it’s also worth noting that you can make IRA contributions for the 2023 tax year (potentially saving you on 2023 taxes) until the April 15, 2024 tax deadline.

Related: Ascent’s Complete Guide to Taxes

HSAs can be a great option. If you qualify

Health Savings Accounts (HSAs) are one of the most underrated types of investment accounts because many people think of them simply as a way to budget for medical expenses. But there are a few things you should know that may change your mind.

• Funds deposited in an HSA can be rolled over from year to year. It is not a “use it or lose it” account like a Flexible Spending Account (FSA).
• HSA funds can be invested in mutual funds, exchange-traded funds (ETFs), or stocks.
• HSAs include: triple It offers tax benefits not found with other accounts. Contributions are tax-deductible, investments are tax-deferred, and withdrawals for qualified medical expenses are tax-free.
• Once you turn 65, HSA funds can be withdrawn for any reason, not just for medical purposes, making it a regular retirement account.

Medical expenses will likely account for a significant portion of your expenses in retirement. According to Fidelity, by 2023, the average 65-year-old couple is expected to spend $315,000 on medical expenses during retirement. And HSAs can help you do that in a very efficient way.

To qualify for an HSA, you must have a qualified, high-deductible health insurance plan. However, if you are eligible, HSA contribution limits for 2024 are $4,150 for single medical coverage and $8,300 for family coverage.

Not a complete list

There are other types of tax-advantaged investment accounts available to you for your thorough review. For example, if you have self-employment income, you may be able to use special types of retirement accounts, such as SIMPLE IRAs, SEP-IRAs, and Solo 401(k)s. Your employer may offer a 401(k) or other type of retirement plan. But the point is, there are some great ways to invest your money for the future and save on your 2024 taxes at the same time.

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