A tax shelter is a financial strategy that allows individuals or businesses to reduce their taxable income, thereby lowering the amount of tax they owe. Common examples of tax shelters include retirement accounts like 401(k)s and IRAs, which provide tax benefits for saving for the future. These shelters can help people save money on taxes while also encouraging long-term financial planning. Tax shelters can take various forms, including investments in real estate or certain types of insurance products. While they can be beneficial, it's important to understand the rules and regulations surrounding them to avoid potential legal issues. Consulting a tax professional can help individuals navigate these options effectively.