Investing creates the opportunity to generate passive income and build wealth long-term. However, more income often means more taxes. There are ways to lighten the tax burden, but it usually requires careful planning and understanding of the many tax benefits available to investors. Here are six ways to minimize taxes while investing. Utilize Tax-Advantaged Accounts Many different types of accounts allow you to invest in a tax-efficient way. These accounts often have tax benefits the IRS provides to incentivize people to save. While you can’t avoid taxes with these accounts, you can defer your taxes, meaning you pay them at a future date. Another option is to pay the taxes now and enjoy tax-free withdrawals in the future. Some examples of accounts with tax advantages include: Individual Retirement Account (IRA): Both traditional and Roth IRAs offer tax advantages. Both accounts allow tax-deferred growth on investments. Traditional IRAs give investors an immediate tax break since contributions are deductible, but investors pay taxes on the distributions. Contributions to Roth IRAs are not tax-deductible, but qualified distributions are tax-free. Company-sponsored retirement account: Employer-sponsored retirement accounts like 401(k)s, 457(b)s,