Final answer:
To achieve the lowest taxable income, deducting expenses is the most viable method, followed by investing in tax-free bonds. Increasing income without considering tax strategies may result in higher taxable income.
Step-by-step explanation:
To have the lowest taxable income and thus, lower income taxes, the recommended method would be deducting expenses. Taxable income is calculated as adjusted gross income minus deductions and exemptions. By deducting allowable expenses, you can reduce your taxable income which can lead to paying less in taxes. Investing in tax-free bonds also serves as a method to earn income without it being subject to federal taxes, which is an effective strategy to maintain lower taxable personal revenue. However, increasing income without taking into account tax implications may actually result in higher taxes owed. States usually use the tax revenue collected from various sources, such as income tax, to fund public needs like education and infrastructure.
Therefore, the best options for reducing taxable income would include carefully deducting expenses that are permitted under tax laws and considering investments in tax-free bonds, as they provide income that is not subject to federal tax. Understanding taxation policies and how different investment options affect taxable income can help in optimizing one's financial strategies for tax purposes.