Ways To Get Money Without Paying Tax

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Years ago we handed clients a Forbes list by Kelly Phillips Erb, 50 Perfectly Legal Ways To Get Money & Benefits Without Paying Taxes, and it was the most-requested thing in the office. Enough has changed since — the 2017 tax act, the pandemic laws, and the 2025 act — that the list needed to be rewritten rather than reprinted. This is that rewrite, for 2026 law, with the items that are gone marked as gone and the new ones added. The second half of the page is what a tax planner does with a list like this: the moves that turn taxable money into the tax-free kind, starting with the simplest one, giving appreciated stock instead of cash.

From Family, Friends, and Luck

The IRS calls it: Sections 102, 101, 408A

Money that comes to you because someone wanted you to have it.

1. Gifts and inheritances. Property you receive as a gift, bequest or inheritance is not income, in any amount. The giver may owe a gift tax return above $19,000 per person in 2026; you owe nothing. Inherited property also gets a new basis at the date-of-death value, which is why a parent’s appreciated house or stock is better inherited than given.
2. GoFundMe and other fundraisers. Money given out of generosity, with nothing promised in return, is a gift to the recipient and not income, even when the platform issues a 1099-K. Crowdfunding to start a business or in exchange for a product is income to the business.
3. Child support.Changed since 2017 Not deductible by the payer, not taxable to the recipient. (Alimony joined it: for divorces finalized after 2018, alimony is no longer deductible or taxable either.)
4. Life insurance proceeds. Paid because of the insured’s death, not taxable, whether lump sum or installments (the interest on installments is). The estate tax, not the income tax, is where large policies are counted.
5. Money from a Roth IRA or Roth 401(k). Qualified withdrawals — after five years and age 59½ — are entirely tax-free, growth included. Contributions can come out at any time without tax. See Roth IRAs.
6. Rebates. A cash rebate from the manufacturer or dealer on something you buy is a price reduction, not income. It reduces your basis in the item.
7. Your own tax refund. A federal refund is never income. A state refund is income only if you itemized and deducted the state tax the year before and got a tax benefit from it, which the SALT cap makes less common.
8. Foreign currency. A gain of $200 or less on a personal foreign-currency transaction (the euros left over from the trip) is ignored.

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From Your Employer

The IRS calls it: Sections 105, 106, 125, 127, 129, 132 and the fringe benefit rules

Benefits that come out of the paycheck before the paycheck is taxed, or never go on it at all. Most of these have to be set up by the employer in writing; the employee’s job is to use them.

1. Health insurance from your employer. Premiums your employer pays are not income, though they show on the W-2 (box 12, code DD) for information. Your own share through a cafeteria plan comes out of taxable wages too.
2. Health savings account contributions.Changed since 2017 Employer contributions are excluded; your own are deductible; withdrawals for medical expenses are tax-free. 2026 limits $4,400 self-only, $8,750 family, plus $1,000 at 55. See HSAs.
3. Dependent care assistance.Changed since 2017 Up to $7,500 a year (from $5,000) under an employer plan for 2026 and later, made permanent in 2025.
4. Employer educational assistance.Changed since 2017 Up to $5,250 a year of tuition, fees, books and supplies — and, since 2020 and now permanently, payments on your student loans, with the limit indexed from 2027.
5. Adoption assistance.Changed since 2017 Up to $17,670 of employer adoption benefits excluded in 2026, and a credit of the same amount for your own expenses, $5,000 of it refundable since 2025.
6. Group-term life insurance. The first $50,000 of coverage is free; the cost of coverage above that is added to the W-2 from an IRS table (and is still usually cheaper than buying it).
7. Employee achievement awards. Tangible property — the watch, not a gift card — for length of service or safety, up to $1,600 a year from a written plan, given with a “meaningful presentation.” Cash and gift cards have been taxable since 2018 by statute.
8. Holiday turkeys and other de minimis items. Small things an employer can’t reasonably account for — the turkey, the occasional meal, the coffee, personal use of the copier — are excluded. Cash and gift cards in any amount are not.
9. Employee discounts. Discounts on what your employer sells, up to the employer’s gross profit on goods or 20% on services, for the line of business you work in. Not for real estate or investments.
10. Occasional tickets. Theater and sporting event tickets from the employer, occasionally, are de minimis. Season tickets are wages.
11. Meals on the premises.Changed since 2017 Furnished for the employer’s convenience, on the premises, excluded by you. (The employer’s deduction for them ends after 2025, which will make them rarer.)
12. Lodging on the premises. Excluded if furnished for the employer’s convenience, on the business premises, and as a condition of employment — the ranch hand, the resident manager, the hospital resident.
13. The on-site gym. An employer-operated athletic facility on the premises, used mostly by employees and families, is excluded. A paid membership at a club is wages.
14. Transit passes and parking.Changed since 2017 Up to $340 a month each for transit and for parking in 2026 (verify). The bicycle commuting reimbursement was suspended in 2018 and repealed in 2025.
15. Carpool money. Reimbursements from riders for driving the carpool are not income (and the expenses are not deductible).
16. Airline miles. Miles earned on travel, including travel the employer paid for, are not income when used. Miles or points received for opening a bank account can be, and the bank will send a 1099.
17. A company car for business. Business use is not income. Personal use of the company car is, and goes on the W-2 at an IRS value; the 2026 cents-per-mile method works for cars up to $61,700.
18. The company cell phone. Provided primarily for business reasons, the phone and the personal use of it are excluded.
19. Retirement plan deferrals.Changed since 2017 Not tax-free, but tax-deferred: 401(k) deferrals up to $24,500 in 2026 ($8,000 more at 50, $11,250 at 60–63) and IRA contributions to $7,500 ($8,600 at 50) come out of this year’s income and are taxed when withdrawn. Employer matching and profit-sharing are excluded entirely until then. See retirement savers.
20. Moving expense reimbursements.Mostly gone Taxable since 2018 for everyone except active-duty military moving on orders, and the 2025 law made that permanent (and extended it to the intelligence community).
21. Sick pay from a policy you paid for. Benefits from an accident or disability policy are tax-free if you paid the premiums with after-tax money. If the employer paid, or you paid pre-tax, the benefits are wages. This is the reason to pay for disability coverage yourself.
22. Workers’ compensation. Amounts paid under a workers’ compensation law for an occupational injury or illness are fully excluded. A pension that happens to start because of the injury is not.

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From Your Home and Investments

The IRS calls it: Sections 121, 280A(g), 103, 135, 1202, 529

The exclusions that reward owning things.

1. Selling your home. Up to $250,000 of gain, $500,000 on a joint return, if you owned and lived in it two of the last five years. The biggest exclusion most people ever use. See selling your home.
2. Renting your home for 14 days or less. Rent it out for 14 days or fewer in the year — the tournament, the convention — and the rent is not reported at all. Fifteen days and all of it is. See short-term rentals.
3. Municipal bond interest. Interest on state and local bonds is exempt from federal tax, and Colorado exempts its own. It still counts toward taxing Social Security and the Medicare surcharge.
4. Savings bond interest used for college. Series EE (issued after 1989) and Series I bonds cashed to pay tuition in the same year, if you were 24 or older when the bond was issued, with an income phase-out that starts at $104,700 single / $157,100 joint for 2026 (verify).
5. Qualified small business stock.Changed since 2017 Gain on stock in a qualifying C corporation held five years is excluded up to $10 million — $15 million for stock issued after July 4, 2025, with partial exclusions at three and four years. See C corporations.
6. Growth in a 529 plan.Changed since 2017 Earnings come out tax-free for tuition, up to $20,000 a year of K–12 tuition from 2026, apprenticeships, $10,000 of student loans, and certain credentialing programs added in 2025.
7. Appreciation you never sell. The simplest one: gain is taxed only when realized. Hold the stock, the house, the business, and the growth is untaxed; die holding it, and the basis steps up and the gain disappears for good. See the step-up.
8. Opportunity zone gains.Changed since 2017 Gain reinvested in a qualified opportunity fund is deferred, and the growth on the fund is excluded after ten years; the program was made permanent in 2025 with new zones from 2027.

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From Government, Insurance, and Hard Times

The IRS calls it: Sections 104, 108, 139, and the rest of Publication 525

Payments that replace something you lost.

1. Veterans’ benefits. Disability compensation, pensions, education benefits, grants for homes and vehicles, and insurance proceeds paid by the VA are all exempt.
2. Social Security, for some.Changed since 2017 Tax-free if it is your only income; otherwise up to 85% is taxed above the $25,000 / $32,000 base amounts. The $6,000-per-person senior deduction for 2025–2028 offsets much of that tax but doesn’t change the count. See Social Security.
3. Medicare benefits. Benefits under Parts A, B and D are not income to the person for whom they are paid.
4. Public assistance. Welfare, SNAP, housing assistance, energy assistance and other need-based government payments are excluded.
5. Disaster relief payments. Qualified disaster relief payments — from government, employers or charities for living, repair and funeral expenses after a declared disaster — are excluded under §139, and so are the Colorado wildfire payments the state has made.
6. Damages for physical injury. Compensatory damages for physical injury or sickness, lump sum or periodic, are not taxable. Punitive damages, interest, and emotional-distress damages without a physical injury are.
7. Black lung benefits. Treated like workers’ compensation; excluded.
8. Canceled debt while insolvent or in bankruptcy. Forgiven debt is income, except in a bankruptcy case or to the extent you were insolvent the day before. Our insolvency page has the worksheet.
9. Forgiven mortgage debt.Mostly gone The exclusion for forgiven debt on a main home ran from 2007 through 2025 and was not extended; a 2026 short sale or foreclosure balance is income unless insolvency or bankruptcy applies.
10. Forgiven student loans.Changed since 2017 Discharges for death or total disability are permanently tax-free from 2025; Public Service Loan Forgiveness and teacher loan forgiveness are tax-free; income-driven-repayment forgiveness became taxable again in 2026.
11. Peace Corps allowances. Living allowances for housing, utilities, food and clothing are excluded; the readjustment allowance paid at the end is not.
12. Medicaid waiver payments.New since 2017 Payments a caregiver receives for caring for a disabled person in the caregiver’s own home are excluded under Notice 2014-7, and since 2019 can still count as earned income for the EITC.
13. Wrongful incarceration.New since 2017 Civil damages, restitution and other amounts received for a wrongful conviction are excluded, with a refund window for earlier years.
14. Olympic and Paralympic medals. The value of the medal and the prize money from the USOC are excluded, for athletes with income of $1 million or less.

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From School, Public Life, and the New Law

The IRS calls it: Sections 117, 131, 530A and the 2025 act

The rest, including what changed in 2025.

1. Scholarships and fellowships. Tax-free for a degree candidate to the extent spent on tuition, fees, books and required supplies. Room and board, and amounts paid for teaching or research, are income. Trading scholarship dollars for tuition and claiming the American opportunity credit on the rest is a planning move, not a loophole.
2. Campaign contributions. Not income to the candidate if used for the campaign or kept for a future one; the wardrobe is a different story.
3. Historic preservation grants. Payments under the National Historic Preservation Act to preserve a historically significant property are excluded.
4. Foster care payments.New since 2017 Payments from a state or agency for a qualified foster child in your home are excluded, including difficulty-of-care payments.
5. Your kids’ first dollars.Changed since 2017 A child’s wages are taxed at the child’s own rates, which means nothing up to the $16,100 standard deduction in 2026 (verify) — and a Roth IRA can be funded with them. Investment income is tax-free up to $1,350 and taxed at the child’s rate to $2,700 before the parents’ rate takes over (verify 2026 kiddie figures).
6. Trump accounts.New since 2017 New in 2026: a child’s account that grows tax-deferred, with a $1,000 federal seed deposit for children born 2025–2028, parents’ contributions to $5,000 a year, and employer contributions of $2,500 excluded from income.
7. Tips, overtime, car loan interest, and the senior amount.New since 2017 Not exclusions but new deductions for 2025 through 2028: up to $25,000 of qualified tips, $12,500 of overtime premium ($25,000 joint), $10,000 of interest on a new U.S.-assembled car, and $6,000 per person 65 and over, all with income phase-outs. They reduce taxable income without the money ever leaving the return. See the new deductions.

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Making It Happen on Purpose

The IRS calls it: planning

The list above is what the law excludes. The planner’s job is to route money through those doors instead of around them. Ten moves we use, roughly in order of how often:

Give appreciated stock, not cash

Five things to know, from a one-page handout we have given clients for years:

1. Stock held more than a year that has gone up is a better gift than cash. You deduct the full market value on the day of the gift if you itemize, and the capital gains tax on the growth is never paid by anyone. Shares bought for $4,000 and worth $10,000 give a $10,000 deduction and erase $6,000 of gain. Held a year or less, the deduction is limited to what you paid.
2. If the stock has lost value, sell it and give the cash. You keep the deduction and you also get the capital loss.
3. Ask the charity and the broker about the procedure and the timing. Most brokers need a letter of instruction naming the charity’s account; mutual fund companies have their own forms; the gift is complete when the shares leave your account, not when you sign, so start in November, not December 28.
4. Get the receipt in writing — the charity’s acknowledgment with the date and the number of shares, and no goods or services received — and keep your own record of the value on the gift date (the average of the high and low that day). Gifts of stock over $5,000 go on Form 8283 but do not need an appraisal; closely held stock over $10,000 does.
5. The deduction is limited to 30% of adjusted gross income for appreciated property to a public charity (60% for cash), with a five-year carryover of the rest. For a big gift in a high-income year, a donor-advised fund takes the stock now and pays the charities over time; see charitable giving. From 2026 the first 0.5% of AGI of total gifts is not deductible, which makes bunching gifts into one year worth more, not less.

The other nine

• The qualified charitable distribution. At 70½, give up to $111,000 in 2026 (verify) straight from the IRA to charity: it counts toward the required distribution and never appears as income, which beats a deduction for anyone who doesn’t itemize. See charitable IRA gifts.
• Fill the pre-tax accounts first. 401(k), HSA, dependent care and the cafeteria plan all turn taxable wages into excluded ones with a payroll election. The HSA is the only account that is excluded going in, growing, and coming out.
• Hold the winners; harvest the losers. Unrealized gain is untaxed, long-term gain is taxed at 0% up to $49,450 of taxable income single / $98,900 joint in 2026 (verify), and losses offset gains plus $3,000 of other income. A low-income year — retirement before Social Security, a sabbatical — is the year to sell at 0% or convert to a Roth at 12%.
• Let the step-up do the work. Give cash to the kids while living; leave them the appreciated house and stock, which take a new basis at death. Giving appreciated property while alive hands them your basis and your gain.
• The 14-day rental. If the business you own needs a meeting space, it can rent your home for up to 14 days a year at a market rate, deduct the rent, and you report nothing. Document the rate and the meetings.
• Pay for disability insurance yourself, with after-tax dollars, so the benefits are tax-free when you are living on them.
• Put the kids on the payroll. A child’s wages from the family business are deductible to the business, taxed at the child’s zero rate up to the standard deduction, and — for a sole proprietorship or a parents-only partnership — free of Social Security tax under 18. Fund a Roth IRA with them.
• Sell the house every two years, if you are a serial renovator: the $250,000/$500,000 exclusion resets after two years of ownership and use.
• Use the new deductions while they last. Tips, overtime, car loan interest and the senior deduction run 2025 through 2028; for a two-earner household near the phase-outs, the timing of a bonus or a Roth conversion decides whether they apply.

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Questions we get

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What to bring

• Every 1099 and 1099-K, even for money you believe is tax-free — we report it and the exclusion together
• Settlement agreements, insurance explanations of benefits, and the letter that came with any lump sum
• The W-2 with all of box 12, and the employer’s benefits summary if you have one
• For stock gifts: the broker’s confirmation of the transfer date and shares, the charity’s acknowledgment, and your purchase records
• Closing statements on any home sale, and the dates you lived there
• Scholarship award letters and the Form 1098-T

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Figures reflect the 2026 tax year as currently published and are rounded for readability. Items marked (verify) are to be confirmed against IRS or Colorado DOR sources before the figures freeze in December. Written October 26, 2026.