11 Ways High Earners Can Trim Their Tax Bill
When you’re in a top bracket, every extra dollar is taxed at higher rates—which can noticeably shrink take-home income. The good news: with deliberate planning, you can reduce taxable income and potentially lower your overall liability. Below are 11 strategies to consider if your goal is to keep more of what you earn.
1) Max out workplace retirement plans
Pre-tax contributions to employer plans (401(k)s, 403(b)s) cut your current taxable income. For 2025, the projected limit for 401(k)/403(b) contributions is $23,500, plus $7,500 in catch-up if you’re 50+. SIMPLE IRAs are projected at $16,500, with an additional catch-up available.
2) Weigh a Roth IRA conversion
Roth IRAs are funded after tax, and qualified withdrawals in retirement are tax-free. Converting from a traditional IRA or 401(k) can make sense if you expect higher future tax rates—or if your income dips for a year and places you in a temporarily lower bracket.
3) Look at municipal bonds
Interest from many municipal bonds is exempt from federal income tax—and can also be state/local tax-free if you buy within your state. While stated yields may be lower than corporates, the tax-equivalent yield can be attractive for high-income investors.
4) Be thoughtful when selling inherited real estate
Inherited property receives a stepped-up basis to fair market value at inheritance. Selling soon after inheriting can minimize—or even eliminate—capital gains if the value hasn’t risen further.
5) Use a donor-advised fund (DAF)
With a DAF, you can front-load several years of charitable gifts, claim the full deduction in the year you fund it, and then grant to charities over time.
6) Fund a Health Savings Account (HSA)
If you’re in a high-deductible health plan, an HSA offers a triple tax advantage: deductible (or pretax) contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. 2025 limits are $4,300 (individual) and $8,550 (family). Individuals 55+ can add $1,000.
7) Favor qualified dividends where appropriate
Qualified dividends are taxed at long-term capital gains rates (0%, 15%, or 20%), often below top ordinary income rates—making dividend strategy appealing for high earners.
8) Consider tax-residency planning
If you own homes in multiple states—or can relocate—establishing residency in a state with low or no income tax can yield material savings. Nine states currently do not impose personal income tax.
9) Prepay property taxes (when it helps)
Under current SALT rules, the property-tax deduction is capped at $40,000. If you haven’t reached the cap, prepaying can help you itemize and maximize deductions in a target year.
10) Contribute to 529 college savings plans
While 529 contributions aren’t deductible federally, many states offer deductions or credits. Growth is tax-deferred and withdrawals for qualified education expenses are tax-free.
11) Explore Opportunity Zones
Roll eligible capital gains into a Qualified Opportunity Fund (QOF) to defer taxes; after 10 years, additional appreciation in the QOF can be tax-free.
Staying current with tax changes
2025 federal brackets
The IRS adjusts brackets for inflation. In 2025, there are expected to be seven brackets ranging from 10% to 37% for individuals, heads of household, and married filers (separate or joint). If your income lands in the higher tiers (generally 32% or above), you’re in the high-earner category for planning purposes.
Retirement contribution & RMD updates
RMDs: Generally begin at age 73 for individuals who turned 72 after Dec. 31, 2022, and rise to 75 for those turning 74 after Dec. 31, 2033.
401(k) limit (2025): $23,500, with catch-ups for 50+.
SIMPLE IRA (2025): $16,500, plus catch-ups.
IRA contribution (2025): $7,000, with a $1,000 catch-up for 50+ (future inflation adjustments may change amounts).
Ready to put these ideas to work?
Even in the top brackets, layering tactics—maxing retirement plans, using munis, leveraging a DAF, or investing through Opportunity Zones—can meaningfully lower taxes across your career and into retirement.
Contact FMD Wealth Advisors for a personalized review of which strategies fit your situation and how to implement them in a coordinated, tax-aware plan.
Disclosures: FMD Wealth Advisors LLC (“FMD Wealth Advisors”) is a Registered Investment Adviser.
This material is for general information only and is not individualized legal or tax advice. Consult your attorney and CPA regarding legal and tax matters specific to your circumstances. This content is intended to provide general information about FMD Wealth Advisors. It is not intended to offer or deliver investment advice in any way. Information regarding investment services is provided solely to gain an understanding of our investment philosophy, our strategies and to be able to contact us for further information.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
Past performance is no guarantee of future returns.
Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable. Additional Important Disclosures may be found in the FMD Wealth Advisors Form ADV Part 2A. For a copy, please Click here.