Tax Tips for Gen Z: 14 Ways to Start Saving Early

From student loans to side hustles, Gen Z is dealing with more ways to manage money, and more challenges, than previous generations. Understanding how taxes fit in can help you hold on to every dollar you’ve earned.

Whether you’re wrapping up your degree, starting your first job, or figuring out tax filing basics, these tips will help you save earlier and smarter through these key financial milestones.

Key takeaways

• It’s never too soon to learn how taxes work. Everything from taking education credits to starting retirement contributions can lead to substantial tax benefits.
• Being proactive with your finances all year, from tracking your income to understanding credits and deductions, can help ensure you make the most of your earnings.
• Understanding how taxes work early on can give Gen Z much-needed confidence and control.

Education

Understanding the tax benefits associated with your education can make a big difference to your finances as a student. Knowing what education credits and deductions apply helps to lower your taxes while supporting your goals for the future. 

• Use the American Opportunity Tax Credit (AOTC). This credit helps with qualified education expenses for the first four years of college — claimed by either you or your parents.
• Take advantage of the Lifetime Learning Credit (LLC). This credit applies to courses that improve your job skills, even if outside your degree program. Courses like industry certifications might qualify.
• Check if you qualify for the student loan interest deduction. You might be eligible to deduct up to $2,500 and directly reduce your taxable income (less taxable income means lower taxes generally). The amount you can deduct will depend on your overall income.

Entering the Workforce

Earning your first paycheck is also your first chance to start building long-term financial habits. Learning how retirement contributions, workplace benefits, and tax withholdings work can help you stretch your income further.

• Start saving towards retirement as early as possible. Even small, consistent contributions can grow significantly over time thanks to compound interest.
• Check what benefits your job offers. Taking advantage of perks like tuition assistance, health savings accounts (HSAs), and commuter benefits can save you money and reduce your taxable income. 
• Adjust your withholdings. This can mean no tax surprises at tax-time, whether you want a bigger refund or less taxes due. You can ensure you have enough withheld to meet your tax needs with our W-4 Calculator.

Basics of Investing

Investing is an effective way to grow wealth, but tax rules play a big part in how much you keep. Understanding the difference between taxable and tax-advantaged accounts helps you make smarter decisions early on. 

• Start with retirement accounts like 401(k)s or IRAs. Learn about tax advantages, such as Roth IRAs, which grow tax-free.
• Learn about index funds. These are a smart way to start investing with low fees and diversification to reduce risk.
• Look for strategies popular with newer investors. Micro-investing apps¹ and fractional shares² can make it easy to start investing with small amounts while still enjoying tax advantages.

Maximizing Your Side Gig(s)

Side hustles can be a major source of income for Gen Z, but they come with extra responsibilities. Tracking expenses and understanding when and how much to pay can prevent headaches later on.

• Keep detailed records of all earnings and costs. You can deduct many of your expenses, including those related to the space in your home that you use exclusively for your side hustle.
• Check if you should pay taxes as you earn. If you’re making significant income from side gigs, you may need to pay estimated taxes quarterly to avoid penalties. 
• Track your earnings accurately from all sources. Third-party apps like Venmo, PayPal, Cash App, and Patreon have to report income above certain thresholds³.

Filing 101

When tax season arrives, filing correctly and on time is key to avoiding penalties and maximizing potential refunds. So many things can impact what you owe, or are owed, so taking the time to prepare and double-check your information is vital.

• Make sure you understand different filing statuses. It can help determine which one saves you the most money. The right status can maximize your deductions and credits.
• Claim the Child Tax Credit if you have kids. It has increased to $2,200 in tax year 2025 for each dependent child under 17.

Common mistakes to avoid when filing:

• Missing deadlines: File on time to avoid penalties. If you can’t file on time, you can request an extension by the April deadline, but if you owe you need to pay at least 90% of what you owe by the tax deadline to avoid penalties or interest.
• Incorrect information: Double-check your details to avoid errors that could delay the processing of your return and  your refund. 
• Overlooking deductions and credits: To get the most money back, make sure you claim all the deductions and credits you’re eligible for.

No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert prepare and file them for you, we’ll make sure you get every dollar you deserve and your biggest possible refund — guaranteed.

References

1. FINRA, What Is Micro-Investing? | FINRA.org, February 2025
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2. FINRA, Investing in Fractional Shares | FINRA.org, June 2025 ↩︎
3. IRS, Understanding your Form 1099-K | Internal Revenue Service, March 2025 ↩︎