The best way to lower your tax bill is to through tax planning. Tax planning is the analysis of a financial situation or plan from a tax perspective. The purpose of tax planning is to ensure tax efficiency. Through tax planning, all elements of the financial plan work together in the most tax-efficient manner possible. Tax planning is an essential part of an individual investor’s financial plan. If successful, a tax plan will reduce your tax liability and maximize after-tax wealth. A great way to start tax planning is with a tax projection. A tax projection allows us to estimate your tax liability based on your estimated income, expenses, and withholdings for the year. We start by making a model with your year-to-date information and then forecast, or project, it forward to look at the whole year. We can also layer in different items to see how they affect the tax liability. This can be done for multiple years to plan the best time to dispose of securities, retire, sell a property, or exercise Incentive stock options (ISOs). People like doing this for estimated payments, planning capital gains, planning the exercise of stock options, or other changes/events. It’s a great planning tool if you are expecting changes.