Tax planning is the process of organizing your financial affairs to minimize your tax liabilities. This involves analyzing your income, expenses, and investments to make informed decisions that can reduce the amount of taxes you owe. Effective tax planning can help individuals and businesses take advantage of deductions, credits, and other tax benefits available under the law. By engaging in tax planning, you can ensure compliance with tax laws while maximizing your savings. It often includes strategies such as timing income and expenses, choosing the right tax filing status, and utilizing tax-advantaged accounts like IRAs or 401(k)s.