Ending the year with a taxable income can put you into a higher tax bracket, which means you'll have a higher tax bill. Most people lower this figure by taking the standard deduction when you file your return. Or, if you itemize, make sure you factor in every deduction possible. But there are ways to lower your taxable income even before you file. Contributing to a retirement account like a 401(k) or an individual retirement account, setting money aside in a flexible spending or health savings account.