If you’re like me, paying taxes is cringe-inducing. Our government wastes so much money on frivolous and ridiculous initiatives and programs and departments. It’s aggravating.
What’s worse than that is that our elected officials also have decided to use our tax revenue to fund heinous initiatives like drag events for minors, gender transitions-surgeries for minors, and abortion. That’s heartbreaking.
Some advocate for not paying taxes because of the immoral nature of the government as a form of civil disobedience and dissent, but I think scripture shows us differently and has much to say on how we should use our money especially regarding taxes.
The answer is not to stop paying taxes, but to “render to Caesar” what goes to the government. We can use our civil liberties to call our congressmen and senators and use our votes to change policies, but we should pay what we owe. While doing this, we should take as much advantage of the complicated U.S. tax code as we can.
While complex, the IRS still provides many incentives and benefits that the Christian should use.
Followers of Jesus should pay the taxes they owe. (Matthew 22:21, Romans 13:6-7)
Jesus very famously answered the Herodians when they tried to trip him up and get him killed “Show Me the tax money.” and asked “Whose image and inscription is this?” They had to answer that it was Caesar’s. “Render therefore to Caesar the things that are Caesar’s, and to God the things that are God’s”.
Paul addressed this as well in Romans 13 when he wrote about submission to the government in his day. This government was certainly using taxes for immorality. Rome was outright involved in worship of Caesar and was killing and persecuting Christians, yet Paul urges his readers to remember that rulers are subject to God and placed there in His providence. Paul says “Render therefore to all their due; taxes to whom taxes are due, customs to whom customs, fear to whom fear, honor to whom honor.”
So, we ought to pay our taxes.
Followers of Jesus should give generously. (2 Corinthians 9:7, 1 Peter 4:10, 1 Timothy 6:18, Proverbs 3:9, Acts 4:32-37)
Generosity is a hallmark of the people of God. The early church in the book of Acts “were of one heart and one soul.” These early Christ followers were selling their possessions so they could care for one another so that the gospel message would go to the ends of the earth.
Paul speaks on the topic very often in his letters to the churches, thanking them for their generosity to him and exhorting them to give. He instructs the wealthy to “be rich in good works” and for everyone to “give as he has purposed in his heart”.
As stewards of gifts from God, we should be prone to generosity. Gratitude is the mark of being redeemed. Since we were saved with such grace and mercy shouldn’t it be our joy to extend grace to others?
Followers of Jesus should save and invest for the future and live and spend wisely. (Proverbs 13:22, Proverbs 6:6, 1 Timothy 5:8)
A little sleep, a little slumber,
A little folding of the hands to rest;
34 So shall your poverty come like a prowler,
And your need like an armed man.
The New King James Version (Nashville: Thomas Nelson, 1982), Pr 24:33–34.
Scripture is full of wisdom about working, resting, and being a good steward of what you have. Paul excoriates laziness in his letter to Timothy when he says “if anyone does not provide for his own, and especially for those of his household, he has denied the faith and is worse than an unbeliever”. Jesus’ parable of the talents assumes work and growth (though the point is about the kingdom, not limited to money).
It is good to work and it is good and necessary to provide for our families. Wisdom requires saving and storing up for the future.
Put It All Together
Combining these goals when considering paying taxes can lead to some great ideas for paying less in taxes.
- In my experience, most people just guess what they think is best during the year and when it’s time to file taxes they may strategize a little with their preparer and end up making some pre-tax retirement contributions. Those are good and usually the lowest hanging fruit.
- Max out your retirement plan savings at work.
- Max out your individual retirement accounts too.
- If you’re self-employed you can use SEP IRAs or a Solo 401k to really juice these options.
- Sign up for a High Deductible Health Plan with an HSA option and max out the HSA, but don’t use the HSA funds for current medical expenses.
- You can deduct HSA contributions from your income
- Invest the funds in your HSA. Taxes on the growth are deferred.
- If you use the money later on qualified expenses it’s tax free!
- Give generously and strategically.
- Consider “bunching” property tax payments and large gifts into the same years and alternating years you take the standard deduction if you’ve been close to itemizing year after year.
- Contribute to a Donor Advised Fund if you want to give a lot but don’t exactly know where to donate the money to (or if you don’t want to give it all at once!). You can give to these funds in lump sums and get a big tax deduction in the year of the donation. Then you can distribute gradually to the charities you’ve identified.
- Start a Family Foundation (for the same reasons as DAF above, but with more control and expense)
- Use Qualified Charitable Distributions instead of RMDs when the time comes
- Donate appreciated securities that you own instead of cash to reduce capital gains
- Add flexibility to your tax planning strategy. The tax code is full of ways to minimize income for these:
- Own/open a small business
- Save and invest in a non-qualified brokerage account
- Own investment real estate
At the end of the day, paying taxes means you made some money. So don’t call a blessing a curse. Pay your taxes honestly and fulfill your calling while working to steward the wealth you have been given well.