Thinking of reducing my income tax for this year. What is a good option for a 26 yr old with a monthly income of 5.2k gross?

Hi there,

As your income grows, tax payments will become higher with respect to your income earned. Starting early at age 26, is a good step to getting your finances in order.

As you are currently receiving employed income, you will not qualify for deductions on your insurance policies. The most immediate steps you can take to reduce your taxable amount, and to maximize your monies, is to do voluntary CPF contributions to yourself. Namely, the retirement sum top up (RSTU), which gives you a guaranteed 4% p.a. in your SA.

Alternatively, you can start considering making contributions to your SRS accounts. However the monies in this account would need to be invested out, as the crediting rate is 0.05% by default. There is a possibility of higher returns, depending on your choice of investment.

In both cases, choosing an option can reduce your tax burden by 50%, so the choice at the end of the day would be which suits you better. Hope i was able to shed some insight, if you need more information do feel free to reach out!​​​

There are various ways to go about this, and IRAS's website has a full list of ways that are eligible for tax relief: https://www.iras.gov.sg/irashome/Individuals/Lo...

For instance, you may sign up for courses, get an insurance policy, do donations, top up CPF, contribute to SRS.

The exact option will depend on how you wish to plan your future. To illustrate, SRS may be a viable option to plan for your retirement. However, you must be wary of withdrawal before the statutory retirement age. On the other hand, you may check your insurance portfolio and see whether which policy is eligible for tax relief.

I share quality content on estate planning and financial planning here.