Planning tasks succinctly represent labeled transition systems, with each ground action corresponding to a label. This granularity, however, is not necessary for solving planning tasks and can be harmful, especially for model-free methods. In order to apply such methods, the label sets are often manually reduced. In this work, we propose automating this manual process. We characterize a valid label reduction for classical planning tasks and propose an automated way of obtaining such valid reductions by leveraging lifted mutex groups. Our experiments show a significant reduction in the action label space size across a wide collection of planning domains. We demonstrate the benefit of our automated label reduction in two separate use cases: improved sample complexity of model-free reinforcement learning algorithms and speeding up successor generation in lifted planning. The code and supplementary material are available at https://github.com/IBM/Parameter-Seed-Set.