Half of people are unaware paying more into your pension can reduce your income tax bill and unlock other important savings, new research reveals.If you can afford it, boosting your pension contributions can make you richer in retirement and also keep your taxable income below other key thresholds.It can push you into a lower income tax bracket, which matters when thresholds are frozen until 2031 and more people are being dragged into paying bigger bills.And if you are a higher earning parent, it can allow you to carry on receiving child benefit or free childcare hours.If your employer offers a salary sacrifice scheme, where you forego wages that are paid into your pension instead, you will also make a saving on National Insurance (NI) contributions.Some 52 per cent of people do not realise paying into a pension can reduce their taxable income and the benefits this can bring, according to financial service firm Standard Life, which polled 2,000 people, weighted to be representative of the UK adult population. Tax benefits: Paying more into your pension can reduce your income tax bill and bring other benefits'It’s widely understood that pensions are designed to help fund your retirement,' says Mike Ambery, retirement savings director at the firm. 'However, far fewer realise the valuable role they can play in wider financial planning.'There are a number of scenarios in which it may make sense to sacrifice some of your pay in exchange for a pension contribution.'Tax thresholdsPaying a larger amount into your pension can help to push you into a lower income tax bracket.Income tax rates and bands are here, and check Scotland's here.Ambery says a key issue is the removal of the £12,570 tax-free personal allowance after you cross the £100,000 earnings milestoneAbove this, the personal allowance is reduced by £1 for every £2 of adjusted net income above this point and is lost completely at £125,140, he explains.'This means that higher earners can be subject to what is effectively an 60 per cent income tax rate on this portion of their earnings.'Child benefitReducing your salary means you can carry on receiving this useful benefit, which is currently £27.05 a week for the eldest and £17.90 a week for each additional child.It is paid if you are responsible for a child who is under 16, or under 20 if they are still in school or on an approved training course.Since 2013, it has been withdrawn for higher earners, initially on a sliding scale affecting families where one parent was receiving between £50,000 and £60,000, but from April 2024 this was bumped up to income between £60,000 and £80,000.Ambery says: 'Child benefit can be a helpful financial boost for those working parents who are eligible.'If anyone in the household has an adjusted net income above £60,000, the High-Income Child Benefit Charge applies and begins to claw back some of this benefit. The charge increases as income rises and, at £80,000, is equal to the full amount of child benefit received.'Childcare support This is a genuine cliff edge, where a relatively small increase in income can potentially lead to a much larger increase in childcare costs, says Ambery.He warns that rather than support being withdrawn gradually, if either parent has an expected adjusted net income above £100,000 the household can lose eligibility for the Government's 15 or 30 hours of funded childcare for working families.Ambery adds: 'Alongside funded hours, parents should check whether they are eligible for the Government’s Tax-Free Childcare, as this can also be affected by income.'For families paying for nursery, holiday clubs or wraparound care, this support can make a real difference if you are eligible.'How does salary sacrifice help?Salary sacrifice schemes allow workers to reduce their wages in return for the money being paid directly into their retirement fund, reducing the amount of NI paid by both workers and their employers.And as explained above, paying a larger amount into your pension can help to push you into a lower income tax bracket, whether you do it via salary sacrifice or not.The Government is cracking down on the amount workers can pay into their pensions via salary sacrifice. Contributions made via these schemes without incurring NI contributions will be capped at £2,000 a month from April 2029.But anyone who has an employer that offers these schemes can still make full use of them by making uncapped contributions for now.A pay rise can come with a hidden stingMike Ambery says: 'Understanding how pensions interact with the tax system can make a meaningful difference to family finances.'However, what's striking is that more than half of people aren’t aware of the power of pension contributions when it comes to reducing their taxable income.'He adds: 'Frozen tax thresholds mean that a pay rise doesn't always leave families better off.''Receiving an income boost - such as through a salary increase or a bonus - can be very welcome news. However this can also come with a hidden sting if earnings tip more quickly into higher rate tax than people realise, especially while income tax thresholds remain frozen.'Help with financial advice and planning Financial planning can help you grow your wealth, sort your pension, or make sure your finances are as tax efficient as possible.Key reasons that many seek financial planning involve investing for retirement and inheritance tax planning.Services such as Unbiased can match you with a financial professional according to your needs:> Find a local financial adviser* Products featured are independently selected by This is Money's specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence.