A tax strategy is a plan that individuals or businesses create to minimize their tax liabilities while remaining compliant with tax laws. This involves understanding various tax deductions, credits, and exemptions that can reduce the amount of taxable income. Effective tax strategies can lead to significant savings and better financial management. Common elements of a tax strategy include timing income and expenses, choosing the right filing status, and utilizing tax-advantaged accounts like IRAs or 401(k)s. Consulting with a tax professional can also help in developing a tailored approach that aligns with specific financial goals and circumstances.