Final answer:
Tax planning is a legal strategy to minimize tax liability within the bounds of the law, focusing on efficiency while ensuring compliance with tax obligations.
Step-by-step explanation:
Tax planning is a completely legal means for saving taxes. Its primary goal is to use the available tax laws and deductions to minimize a taxpayer’s burden while remaining within the legal framework. It does not aim to promote tax evasion or understate the taxpayer's real wealth, as these actions are illegal and carry significant penalties. Instead, effective tax planning strategies may consider the most current tax issues, such as changes in tax laws and principles, to optimize a taxpayer's financial situation while complying with the rules. States collect taxes to fund essential services like road repair and education, and tax planning ensures that individuals and businesses can maintain financial efficiency while fulfilling their tax obligations.