Here’s How You Can Invest $15,300 Tax-Free in 2024

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

You have options when you want to invest, avoid taxes, and set yourself up for a bright financial future. Check out two worth considering. 

Investing on a consistent basis throughout your lifetime is the most surefire way to build wealth and ensure financial freedom in retirement. Investing in certain types of accounts can not only help you build wealth, but can save you money on taxes right now.

Here are two of those types of accounts that millions of Americans can use to invest thousands of dollars and get a bigger tax refund in 2024 and beyond.

IRAs can save you money now or later

Individual retirement accounts, or IRAs, are designed to help Americans save money for retirement in a tax-advantaged way.

IRAs come in two main varieties: traditional and Roth. The main difference between the two is the tax treatment. Traditional IRA contributions can be tax-deductible, but eventual withdrawals in retirement are considered taxable income. Roth IRA contributions don’t qualify for a tax deduction, but qualified withdrawals are 100% tax-free. In either case, your money is free to grow and compound on a tax-deferred basis while in the account, meaning you won’t pay any capital gains or dividend taxes along the way.

Anyone can contribute to a traditional IRA, although to take a deduction, you must not have an employer-sponsored retirement plan, or your income must be under certain limits. And Roth IRA contributions are income-dependent, regardless of whether you have an employer’s retirement plan.

For 2024, the IRA contribution limit is $7,000 per person, with an additional $1,000 catch-up contribution allowed for people aged 50 and older. And it’s worth noting that you can still make IRA contributions for the 2023 tax year (and potentially save on your 2023 taxes) until the April 15, 2024 tax deadline.

RELATED: The Ascent’s Complete Guide to Taxes

HSAs can be an excellent option — if you qualify

Health savings accounts, or HSAs, are one of the most underappreciated types of investment accounts because many people simply think of them as ways to budget for healthcare expenses. But there are a few facts you need to know that might change your mind:

Money deposited into HSAs can be rolled over from year to year. They aren’t “use it or lose it” accounts like flexible spending accounts (FSAs).HSA money can be invested in mutual funds, exchange traded funds (ETFs), or even stocks.HSAs have a triple tax benefit that no other account does. Contributions are tax-deductible, investments grow tax deferred, and any withdrawals for qualifying healthcare expenses are tax-free.Once you turn 65, HSA funds can be withdrawn for any reason, not just for healthcare, so it can be used as a general retirement account as well.

There’s a good chance that healthcare will make up a significant portion of your expenses in retirement. According to Fidelity, the average 65-year-old couple in 2023 can expect to spend $315,000 on healthcare throughout retirement. And an HSA can help you do it in an extremely efficient way.

To be eligible for an HSA, you need to be enrolled in a qualifying high-deductible health insurance plan. But if you qualify, the 2024 HSA contribution limit is $4,150 for those with single healthcare coverage and $8,300 for those with family coverage.

Not an exhaustive list

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

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

 Read More