If my posts on the error of chasing worth shares or the necessity to make investments huge cash to make life-changing cash don’t resonate, take into account hiring a monetary skilled to handle your portfolio. You will not be obsessed sufficient to persistently make investments the quantity wanted to retire comfortably. Offloading the burden of investing frees up your time and power to deal with work, household, and hobbies.
At this second, I’m making ready to do my taxes once more. Yearly I file an extension (Oct 15 deadline) due to delayed Okay-1s from personal fund investments. So when Empower reached out about highlighting tax planning errors for prime earners, I agreed. It’s a subject I do know all too nicely.
What I did not understand is that Empower provides tax planning as a part of its normal consumer service. No further invoices, no $300/hour CPA payments. Simply built-in recommendation, included within the administration charge. Contemplating that taxes are sometimes the only largest expense for high-income earners, having proactive technique baked in is a giant deal.
The Significance Of Tax Planning For Excessive Earnings Earners
While you’re a excessive earner—assume $250,000+ revenue or the potential to get there—you’ve in all probability received loads in your plate: investments, actual property, possibly a enterprise or two. What you would possibly not be paying sufficient consideration to? Tax planning.
It’s not horny like a moonshot AI inventory, however the compounding impact of sensible, constant tax strikes can rival funding returns over time. As Empower Private Wealth specialist Scott Hipp, CPA, CFP® explains, for high-income, high-net-worth purchasers, tax planning isn’t about chasing one-off loopholes, it’s about proactive, coordinated, year-round technique.
Let’s dive into 4 key questions Scott answered that reveal simply how a lot worth sensible tax planning can ship. If you happen to’re looking for a monetary skilled to handle your wealth, selecting one which integrates tax planning into their service is crucial, not an add-on.
Empower has been a long-time affiliate associate of Monetary Samurai, and I personally consulted for Private Capital (later acquired by Empower) from 2013 to 2015. I’ve seen firsthand how incorporating tax technique into wealth administration can meaningfully enhance long-term returns.
1. Why is tax planning vital for prime earners?
While you’re within the prime federal tax brackets—32%, 35%, or 37%—each strategic transfer counts extra. Saving 1% on taxes for somebody making $100K is sweet. Saving 1% for somebody making $800,000? That’s 4 first-class tickets to Hawaii with a pair thousand left over.
Scott says most individuals consider tax planning as a once-a-year scramble or a hunt for magical loopholes (“I heard Uncle Bob pays zero taxes as a result of he made his canines staff…”). The reality: the most important positive factors come from small, constant, authorized strikes yr after yr.
It’s like The Shawshank Redemption: stress and time. Maxing out a well being financial savings account, backdoor Roth contributions, charitable “bunching,” and tax-loss harvesting could seem minor in isolation, however over 20 years, they’ll carve a critical tunnel towards monetary freedom.
Right here’s the hazard: by the point you file in April, most alternatives are gone. If you happen to’re submitting 2025’s taxes in April 2026, your deadline for many methods was December 31, 2025. That’s why Empower’s staff works year-round—advisors and tax specialists meet usually to tweak and optimize earlier than the clock runs out.
2. What’s the take care of the SALT deduction adjustments?
The State and Native Tax (SALT) deduction cap received a short lived enhance after the passage of The One Huge Lovely Invoice Act on July 4, 2025. It’s $40,000 in 2025 (up from $10,000), rising barely every year till 2029, earlier than reverting in 2030.
Who advantages? Largely taxpayers with AGI below $500K in high-tax states. Hit $600K AGI, and the expanded cap phases out utterly.
However even excessive earners over $600K aren’t out of luck—in the event you personal a pass-through enterprise (S-corp, partnership, LLC taxed as such), you would possibly use the Cross-Via Entity Tax (PTET) workaround. Right here, the enterprise pays state taxes, making them absolutely deductible federally, and also you get a state tax credit score. As of 2025, 35+ states have a PTET possibility.
For the best purchasers, SALT adjustments + PTET can unlock deductions price tens of hundreds—cash that stays in your portfolio as an alternative of the IRS’s coffers.
3. How does Empower method advanced high-earner conditions?
Let’s say you’re a enterprise proprietor with important funding revenue, passive rental revenue, and actual property holdings.
With Empower, you mainly have a “tax specialist on demand” baked into your charge – no shock payments. The method begins with:
- Reviewing the previous three years of returns for missed alternatives. (You’ve received three years to amend and declare a refund.) Empower can spot hundreds in neglected deductions.
- Holistic planning based mostly in your objectives. Tax technique isn’t in a vacuum—it’s tied to your funding plan, property objectives, and money circulation wants.
Widespread missed alternatives for self-employed purchasers:
- Not deducting medical insurance premiums.
- Lacking the Certified Enterprise Earnings (QBI) deduction.
- Ignoring house workplace deductions.
Extra widespread errors Empower can assist catch:
- Capital loss carryforwards misplaced when switching preparers/software program
- Incorrect Backdoor Roth processing
- Missed International Tax Credit score
- Fallacious value foundation for inventory gross sales (ESPP, choices)
- HSA distributions taxed in error
From there, Empower appears ahead—possibly organising a solo 401(ok), timing revenue, or planning capital positive factors. The thought is to create an ongoing tax playbook, not simply repair previous errors.
4. What real-world tax financial savings have purchasers seen?
Missed medical insurance deductions are surprisingly widespread—and expensive.
- S-Corp proprietor: CPA added medical insurance premiums to W-2 wages (accurately) however by no means advised the consumer they might deduct these premiums above the road. Amending three years’ returns saved ~$6,000 in federal taxes.
- Sole proprietor: Deducted medical insurance as a Schedule A itemized deduction, however couldn’t profit resulting from medical expense thresholds and never itemizing in any respect. Amending saved ~$7,500.
- Medicare premiums: Many don’t know they qualify as self-employed medical insurance deductions. Catching this may save $1,000+ per yr.
These aren’t flashy hedge-fund-like wins—however they’re assured returns through tax financial savings, usually compounding over years.
Key Methods Empower Makes use of for Excessive Earners
Scott shared a couple of proactive strikes that come up time and again:
Bunching Charitable Contributions
Normal deduction in 2025: $15,750 (single) / $31,500 (married). By combining two or extra years of donations into one tax yr, you possibly can exceed the usual deduction, itemize that yr, and take the usual deduction the following—leading to a much bigger whole deduction over time.
Bonus: Donate appreciated belongings or use a Donor-Suggested Fund for much more effectivity.
Tax Loss Harvesting
Promoting investments at a loss to offset positive factors elsewhere—then reinvesting in comparable (however not “considerably equivalent”) belongings—can decrease your current-year tax invoice whereas protecting your portfolio allotted. All Empower Private Technique purchasers ($100K+) reduce your tax burden with proactive software of tax-loss harvesting and tax location.
Roth Conversions
Transferring funds from a standard IRA to a Roth IRA allows you to lock in as we speak’s tax price in the event you count on to be in a better bracket later. Future withdrawals? Tax-free. That is particularly highly effective in lower-income years earlier than RMDs kick in.
Saving Cash On A Good CPA
An excellent CPA would possibly cost $150–$400/hour only for tax consultations. In the meantime, many don’t provide proactive planning in any respect, focusing as an alternative on compliance and submitting.
Empower builds tax planning into its total wealth administration service for purchasers with $100K+ in investable belongings. Which means:
- One charge, one built-in plan.
- Advisors and tax specialists in the identical room (or Zoom) all yr.
- Proactive calls earlier than the deadlines—not “we’ll see you subsequent April.”
The Backside Line
Huge funding wins get the headlines, however yr after yr, quiet, boring, proactive tax strikes could be price simply as a lot, generally extra. For prime earners, ignoring tax planning is like leaving compounding on the desk.
If you happen to’ve received $100K+ in investable belongings, Empower is providing Monetary Samurai readers a free session. Even in the event you’re assured in your present plan, a second opinion might uncover hundreds in missed alternatives.
For a restricted time solely, e book your free, no obligation session right here. An Empower skilled will overview your investments and internet price, and provide some strategies on the place you possibly can optimize, all totally free.
Empower’s Tax Optimization Companies
Tax optimized investing (tax loss harvesting, tax location, tax effectivity): accessible to purchasers investing $100K+.
Tax planning steerage (evaluation and proposals – determine gaps and alternatives in your tax technique earlier than you file together with your advisor and tax specialist): accessible to $250K+.
At $1M+, purchasers obtain the above, along with entry to a CPA, at no further value.
Disclosure: This assertion is supplied by Kansei Included (“Promoter”), which has a referral settlement with Empower Advisory Group, LLC (“EAG”). Be taught extra right here.
To expedite your journey to monetary freedom, be part of over 60,000 others and subscribe to the free Monetary Samurai e-newsletter. Monetary Samurai is the main independently-owned private finance web site as we speak, established in 2009.
