Max Out Tax Deferred Retirement Accounts
The IRS raised the bar in 2026. Contribution limits are higher across the board, and if you’re earning well, you need to be maxing out every option available. That means stuffing your 401(k), SEP IRA, and traditional IRA to the limit. Beyond just reducing your taxable income now, these accounts offer tax deferred growth letting your money compound without the IRS taking its cut each year.
For those above Roth IRA income limits, don’t ignore the backdoor strategy. It’s still legal, still effective, and works like a charm when executed cleanly. Just be sure you’re clear on the pro rata rule and avoid triggering unnecessary taxes during conversion.
Ultimately, tax deferred retirement contributions aren’t just about saving more they’re about saving smart. Pair them with a long runway and a well built plan. For a broader look at how your retirement phases affect your choices, check out Retirement Planning Tips for Different Life Stages.
Leverage Health Savings Accounts (HSAs)
Health Savings Accounts aren’t just for covering doctor visits they’re one of the cleanest tax plays available to high income earners. Here’s why: contributions are tax deductible, the money grows tax free, and if you spend it on qualified medical expenses, withdrawals are also tax free. That’s a triple win.
But the bigger play? Most people don’t realize HSA funds don’t evaporate at year’s end. Unspent dollars roll over indefinitely and can be invested much like a 401(k) into stocks, ETFs, and mutual funds. That means if you don’t touch it, your HSA becomes a long term, tax sheltered investment vehicle.
For high earners with high deductible health plans, it’s often left on the table. Smart move: max out your HSA every year, don’t tap it unless necessary, and let it grow in the background. It won’t just save you at tax time. It could be one of the most efficient retirement medical funds you ever build.
Use Charitable Contribution Strategies
Strategic charitable giving can significantly reduce your tax liability especially for high income earners. Rather than simply donating cash, explore methods that offer both tax efficiency and philanthropic impact.
Donate Appreciated Assets
One of the most effective strategies is to donate appreciated assets, such as stocks or mutual funds, instead of cash. This approach offers two major tax benefits:
Avoid Capital Gains Tax: You won’t be taxed on the appreciation, which you would be if you sold the asset first.
Receive a Fair Market Value Deduction: Claim a deduction for the full current value of the asset at the time of the donation.
This strategy is particularly useful for highly appreciated investments, allowing you to support causes you care about while maximizing your deduction.
Utilize Donor Advised Funds (DAFs)
DAFs serve as a flexible tool for charitable planning:
Bunch Contributions: Combine multiple years’ worth of donations into a single high income year to exceed the standard deduction threshold.
Immediate Deduction, Flexible Distribution: Get the tax deduction now, while choosing charitable recipients later.
Investment Growth: Funds in a DAF can grow tax free until they are granted out.
This makes DAFs especially appealing for high earners who want to time deductions strategically.
Combine with Itemizing Deductions
To take full advantage of your contributions:
Track All Deductible Expenses: Charitable giving, mortgage interest, state and local taxes combine them to exceed the standard deduction threshold.
Optimize Timing: In high income years, bunching deductions and itemizing has the potential to generate sizable tax savings.
When paired with smart giving strategies, itemizing becomes a powerful way to lower taxable income and ensure your generosity is as financially efficient as it is impactful.
Optimize Investment Taxation
Taxes eat returns. For high income earners, the goal isn’t just to grow wealth it’s to keep more of it. Three straightforward moves can make a big impact.
First, lean into tax loss harvesting. If you’ve sold assets at a gain, look for losers in your portfolio to offset those gains. Done right, this can shave thousands off what you owe the IRS. Just watch the wash sale rule.
Second, patience pays. Holding investments for more than a year shifts gains into the long term capital gains bracket often far lower than what you’d pay on short term flips. It’s not sexy, but it works.
Third, take a look at municipal bonds. The interest they generate is usually tax free at the federal level, and sometimes state free too. For investors in high tax brackets, that tax exemption can make muni yields surprisingly competitive.
None of these are flashy, but they’re durable. Stack enough smart moves and the tax bill starts to shrink.
Set Up a Pass Through Entity
If you’re self employed or running a business, you’re probably paying more in self employment taxes than you need to. One fix: set up a pass through entity like an S corporation or LLC. It’s not just paperwork it’s about keeping your income under tighter control. With an S corp, you pay yourself a reasonable salary (which is subject to payroll taxes), then take remaining profits as distributions, which aren’t. That alone can shave thousands off your tax bill.
There’s also the Qualified Business Income (QBI) deduction to tap into up to 20% of income may be deductible if you qualify. This deduction is available for certain pass through businesses and can be a game changer for creators, consultants, and freelancers trying to keep their taxable income lean.
Bottom line: if you’re generating serious revenue from your vlogs, brand deals, or any independent hustle, a pass through entity isn’t just smart it’s necessary. Talk to a CPA, run the numbers, and make the jump before next tax season.
Plan Ahead with a Tax Professional
Tax laws don’t sit still and 2026 is set to prove it. New rules around SALT (state and local tax) deductions and shifts in high income tax brackets will impact how much top earners owe. These aren’t small tweaks; they can reshape your effective tax rate if you’re not paying attention.
This is where a proactive CPA comes in. A good one doesn’t just file your return they run scenario planning across income projections, investment shifts, and law changes. That modeling gives you options. Do you front load charitable giving? Rethink where income lands in the calendar year? Shift assets into a different structure? With the right plan, you keep more of what you earn instead of giving it up to surprise liabilities.
Annual strategy reviews aren’t optional anymore. If your income’s growing or diversifying, tax season shouldn’t be the first time you think about your numbers. Regular check ins keep your approach in sync with both the tax code and your reality.