Will these deductions reduce my tax amount?

Basically, the higher your income, the higher you need to pay for tax. To avoid such higher tax, it is a good idea to put some of your income into a good investment plan. The good thing about investing is that it comes with a host of tax benefits. For instance, annuities usually provide tax sheltering. This means that your contributions causes your taxable earnings for the year to go down. Your investment earnings will grow tax-free. You will only owe taxes to the IRS once you begin getting income from them.