Most of us, unless we're independently wealthy, need to be saving and investing for retirement. That can seem like a drag, but it's vitally important. Fortunately, most of us are likely able to make use of tax-advantaged retirement accounts such as IRAs and 401(k)s.

These accounts come in two main varieties, and one kind can shrink your tax bill for 2025.

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Traditional vs. Roth

The two main kinds of IRAs and 401(k)s are traditional and Roth ones. A traditional account is the kind that can shrink your tax bill soon. Here's how: For 2025, the contribution limit for IRAs is $7,000 -- plus $1,000 if you're 50 or older. (That has risen to $7,500 for 2026, plus a $1,100 catch-up contribution.) Let's say that your taxable earnings are $75,000. If you contribute, say, $7,000 to a traditional IRA, that sum gets deducted from your taxable income -- which will fall to $68,000. Presto! Your income has shrunk, so your tax bill will, too.

It works differently with Roth accounts. They also offer a tax benefit, but it's a back-end one, not a front-loaded one. If you contribute to a Roth account, your contribution is not deducted from your income. But if you follow the rules, when you withdraw money from your Roth account later, it will be tax-free. That's potentially a bigger tax benefit, but much depends on your particular situation and how valuable an upfront tax break is to you.

Note, too, that these contribution limits are total ones. So if you have two or more IRAs, you can contribute up to the maximum across all of them -- perhaps plunking $3,000 in one and $4,000 in another.

Are you late?

If you're thinking that this is great news only for next year, think again. The deadline for contributing to an IRA is April 15 of the year following the tax year in question. So for the 2025 tax year, the deadline is April 15 of this year, 2026.

There's more good news! Opening an IRA is fast, easy, and free. Check out our list of the best IRA brokers to get started before Tax Day. All you need to do is open an account, which you can generally do online, and submit your contribution.

Once you do, you can invest that money in a range of investments, such as stocks, bonds, exchange-traded funds (ETFs). For most people, it's hard to go wrong with a simple, low-fee S&P 500 index fund, such as the Vanguard S&P 500 ETF (VOO +0.23%). For a good mix of income and growth, check out the Schwab U.S. Dividend Equity ETF (SCHD 0.40%), which recently sported a dividend yield of 3.4%.