High Earners & Taxes: Smart Moves to Keep More

For top earners, tax planning isn’t optional—it’s essential. Higher brackets, surtaxes, phase-outs, and Medicare surcharges all add complexity that basic deductions won’t solve. With a deliberate plan, you might have the opportunity to reduce taxes and keep more of what you earn.

At FMD Wealth Advisors, we integrate tax strategy with your broader financial plan. Here are practical ways to get started.

Why High Incomes Face Extra Tax Pressure

As income rises, so does the maze of rules that can increase what you owe:

• Higher federal and state brackets

• The 3.8% Net Investment Income Tax (NIIT) on certain investment income

• Phase-outs that limit deductions and credits

• Income-related Medicare premium surcharges (IRMAA)

Strategic planning helps offset these pressures and strengthens long-term financial security.

Tactics That Help High Earners Cut Taxes

1) Max out tax-advantaged retirement plans
Contribute as much as allowed to workplace plans (401(k), 403(b)) and IRAs. If eligible, consider cash balance pension plans for substantially larger pre-tax contributions—often most valuable for peak-earning professionals nearing retirement.

• Workplace plans: Contribute up to the annual limits (and use catch-up amounts if you’re 50+).

• Cash balance plans: Allow sizable, age-based pre-tax contributions coordinated with your CPA/actuary.

2) Use Health Savings Accounts (HSAs)
HSAs offer a rare triple benefit: deductible contributions, tax-deferred growth, and tax-free withdrawals for qualified medical expenses. They can lower current taxable income while building a healthcare reserve.

3) Give appreciated assets, not cash
Charitable strategies can lower taxes while supporting causes you care about.

• Donate appreciated securities or real estate directly (or via a donor-advised fund) to deduct fair market value and avoid capital gains tax.

• After age 70½, Qualified Charitable Distributions (QCDs) from IRAs can satisfy required distributions without increasing taxable income.

4) Convert to Roth—when timing is favorable
In lower-income years, converting part of a traditional IRA to a Roth IRA lets you pay tax now at potentially lower rates and build a pool of tax-free retirement income later.

5) Harvest losses to offset gains
Sell investments with losses to offset realized gains and, if applicable, reduce a portion of ordinary income. Be mindful of wash-sale rules and coordinate across accounts.

6) Place assets where they’re most tax-efficient
Match investments to account types to minimize yearly taxes:

• In taxable accounts, favor broadly diversified ETFs and, where appropriate, municipal bonds.

• In tax-deferred accounts (IRAs/401(k)s), hold tax-inefficient assets like high-yield bonds or active funds that distribute gains.

Frequently Asked Questions

Can high earners use Roth conversions?
Yes. There’s no income limit on converting traditional IRA assets to a Roth IRA.

What retirement plans tend to work best for high earners?
Cash balance pension plans and solo 401(k)s (for eligible business owners) often provide the largest immediate tax benefits and contribution room.

Does charitable giving really move the needle on taxes?
It can—especially when donating appreciated assets or using donor-advised funds and QCDs to pair deductions and income reduction with your giving goals.

Bringing It All Together

High income doesn’t have to mean a high tax bill. With coordinated strategies—retirement contributions, HSAs, charitable planning, Roth conversions, tax-loss harvesting, and smart asset location—you can lower taxes, strengthen long-term security, and protect more of your wealth.

FMD Wealth Advisors can help you implement a compliant, integrated plan tailored to your situation. Book your Free - Consultation here.

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.

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