Tax Planning Tips for High-Income Earners

By: |Published on: Apr 27, 2025|Categories: Tax Planning, tips and tricks|

9 Simple Precautions to Avoid Tax Scams

Why Tax Planning Gets More Important as Your Income Grows

The more you earn, the harder the IRS works to claim its share. And while that’s no surprise, here’s what many high earners don’t realize—waiting until tax season is too late.

At Estess CPA, we work with business owners, physicians, consultants, and professionals who know they need a plan—but aren’t sure where to start. The good news? The right tax strategies aren’t about loopholes. They’re about smart decisions, made early.

If you’re bringing in $250,000, $500,000, or more annually, these tips are for you.

1. Don’t Just Earn—Defer and Spread Your Income

One of the most effective ways to reduce taxable income is to defer income when possible or spread it over multiple years. This is especially useful if:

  1. You’re expecting a one-time windfall like a bonus or stock sale

  2. You have control over when payments are received, such as consulting or contract work

Strategy: Consider deferring income into the next year or using installment sales to spread out capital gains. Ask us how business structure planning can also play a role here.

2. Max Out Retirement Contributions (and Know Your Options)

High earners often hit the limits on traditional retirement plans fast—but there are ways to go beyond the basics:

  1. Max contributions to 401(k) or Solo 401(k)

  2. Backdoor Roth IRA strategies

  3. SEP IRAs or Defined Benefit Pension Plans for business owners

Pro Tip: A cash balance plan can allow six-figure retirement contributions depending on your age and income.

At Estess CPA, we help pair retirement planning with long-term tax strategies so your money works harder for you.

3. Use Health Savings Accounts (HSA) for Triple Tax Benefits

If you’re enrolled in a high-deductible health plan (HDHP), HSAs offer rare triple tax advantages:

  1. Tax-deductible contributions

  2. Tax-free growth

  3. Tax-free withdrawals for qualified medical expenses

Maxing out your HSA each year gives you a tax-efficient way to save for healthcare costs or retirement.

4. Know Where You Stand on the Net Investment Income Tax

If you’re earning more than $200,000 as an individual or $250,000 as a married couple, your passive income could trigger the 3.8% Net Investment Income Tax (NIIT).

Smart planning here means:

  1. Reviewing your investment mix

  2. Timing your capital gains

  3. Using tax-loss harvesting where appropriate

If you’re juggling real estate or stock options, this can get complex. That’s where our wealth management tax services come in.

5. Consider Gifting and Charitable Giving for Tax Savings

Giving back can reduce your tax bill—if done strategically:

  1. Use Donor-Advised Funds (DAFs) to control the timing of donations

  2. Donate appreciated stock instead of cash to avoid capital gains while deducting the full fair market value

  3. Leverage the annual gift tax exclusion ($18,000 per person for 2024) to transfer wealth efficiently

Planning for legacy? Talk to us about integrating giving into your estate planning strategy.

6. Be Smart About State Taxes and Multi-State Income

If you work across state lines, own rental properties, or run a business in more than one state, multi-state tax planning is crucial.

Many high-income earners accidentally overpay—or underpay—because they don’t understand state-specific rules. At Estess CPA, we help clients stay compliant and minimize exposure across state lines.

7. Keep an Eye on Alternative Minimum Tax (AMT) Triggers

The AMT was designed to ensure that high-income taxpayers pay a minimum level of tax, regardless of deductions.

AMT often affects:

  1. Those with large itemized deductions

  2. High investment income earners

  3. Taxpayers exercising stock options

Don’t rely on tax software alone—our CPAs run both regular and AMT calculations to help you avoid surprises.

8. Don’t Let Passive Losses Sit on the Table

Investing in real estate or partnerships? Passive activity loss rules may limit your deductions—but there are ways to make the most of these losses.

Consider:

  1. Real estate professional status qualification

  2. Grouping elections for related business activities

These strategies require careful application. Our team helps ensure the right approach for your investments.

9. Stay Ahead with Quarterly Tax Payments

The IRS expects high-income earners to make quarterly estimated payments. Underpayment penalties can add up quickly if you’re not sending in enough throughout the year.

We calculate your estimated tax payments based on your actual income pattern—not just the standard safe harbor rule.

10. Work with a CPA Who Understands High-Income Tax Planning

This isn’t just about filing taxes. It’s about building a plan that protects your income, grows your wealth, and avoids unnecessary risks.

At Estess CPA, we bring years of experience helping high-income individuals and business owners align their tax strategies with their financial goals.

Ready to Build a Smarter Tax Strategy?

Whether you’re looking to save on taxes, plan for retirement, or make smarter investment moves, our team at Estess CPA is here to help.

Let’s talk about what works for your income, your goals, and your peace of mind.

Contact Estess CPA

📞 Belle Chasse Office: (504) 433-5122
📞 Luling Office: (985) 785-1470
📧 Email: [email protected]
🌐 Website: www.estesscpa.com