If my posts on the mistake of chasing value stocks or the necessity to make investments big money to make life-changing money don’t resonate, think about hiring a monetary skilled to handle your portfolio. You will not be obsessed sufficient to constantly make investments the quantity wanted to retire comfortably. Offloading the burden of investing frees up your time and vitality to concentrate on work, household, and hobbies.
At this second, I’m getting ready to do my taxes once more. Yearly I file an extension (Oct 15 deadline) due to delayed Ok-1s from non-public 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 properly.
What I did not understand is that Empower affords tax planning as a part of its normal consumer service. No additional 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 an enormous deal.
The Significance Of Tax Planning For Excessive Revenue Earners
While you’re a excessive earner—suppose $250,000+ revenue or the potential to get there—you’ve most likely bought quite a bit in your plate: investments, actual property, perhaps 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 good, 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 good tax planning can ship. If you happen to’re trying to find a financial professional to handle your wealth, selecting one which integrates tax planning into their service is important, not an add-on.
Empower has been a long-time affiliate accomplice 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 essential 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 canine staff…”). The reality: the largest positive aspects come from small, constant, authorized strikes yr after yr.
It’s like The Shawshank Redemption: stress and time. Maxing out a health savings account, backdoor Roth contributions, charitable “bunching,” and tax-loss harvesting could seem minor in isolation, however over 20 years, they’ll carve a severe 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 workforce works year-round—advisors and tax specialists meet commonly to tweak and optimize earlier than the clock runs out.
2. What’s the cope with the SALT deduction adjustments?
The State and Native Tax (SALT) deduction cap bought a short lived enhance after the passage of The One Big Beautiful Bill 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 beneath $500K in high-tax states. Hit $600K AGI, and the expanded cap phases out fully.
However even excessive earners over $600K aren’t out of luck—should you personal a pass-through enterprise (S-corp, partnership, LLC taxed as such), you would possibly use the Pass-Through 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 correct purchasers, SALT adjustments + PTET can unlock deductions price tens of hundreds—cash that stays in your portfolio as a substitute of the IRS’s coffers.
3. How does Empower strategy complicated 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 bought three years to amend and declare a refund.) Empower can spot hundreds in missed deductions.
- Holistic planning primarily based in your targets. Tax technique isn’t in a vacuum—it’s tied to your funding plan, property targets, and money circulation wants.
Widespread missed alternatives for self-employed purchasers:
- Not deducting medical health insurance premiums.
- Lacking the Certified Enterprise Revenue (QBI) deduction.
- Ignoring residence workplace deductions.
Extra frequent errors Empower can assist catch:
- Capital loss carryforwards misplaced when switching preparers/software program
- Incorrect Backdoor Roth processing
- Missed International Tax Credit score
- Flawed value foundation for inventory gross sales (ESPP, choices)
- HSA distributions taxed in error
From there, Empower appears ahead—perhaps establishing a solo 401(k), timing revenue, or planning capital positive aspects. The concept is to create an ongoing tax playbook, not simply repair previous errors.
4. What real-world tax financial savings have purchasers seen?
Missed medical health insurance deductions are surprisingly frequent—and expensive.
- S-Corp proprietor: CPA added medical health insurance premiums to W-2 wages (appropriately) however by no means advised the consumer they may deduct these premiums above the road. Amending three years’ returns saved ~$6,000 in federal taxes.
- Sole proprietor: Deducted medical health insurance as a Schedule A itemized deduction, however couldn’t profit as a consequence of 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 health insurance deductions. Catching this will save $1,000+ per yr.
These aren’t flashy hedge-fund-like wins—however they’re assured returns through tax financial savings, typically compounding over years.
Key Methods Empower Makes use of for Excessive Earners
Scott shared a number of proactive strikes that come up time and again:
Bunching Charitable Contributions
Commonplace deduction in 2025: $15,750 (single) / $31,500 (married). By combining two or extra years of donations into one tax yr, you’ll be able to exceed the usual deduction, itemize that yr, and take the usual deduction the following—leading to an even bigger whole deduction over time.
Bonus: Donate appreciated property or use a Donor-Advised Fund for much more effectivity.
Tax Loss Harvesting
Promoting investments at a loss to offset positive aspects elsewhere—then reinvesting in related (however not “considerably an identical”) property—can decrease your current-year tax invoice whereas conserving your portfolio allotted. All Empower Private Technique purchasers ($100K+) decrease your tax burden with proactive software of tax-loss harvesting and tax location.
Roth Conversions
Transferring funds from a conventional IRA to a Roth IRA permits you to lock in at this time’s tax charge should you anticipate to be in the next 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
A superb CPA would possibly cost $150–$400/hour only for tax consultations. In the meantime, many don’t supply proactive planning in any respect, focusing as a substitute on compliance and submitting.
Empower builds tax planning into its total wealth administration service for purchasers with $100K+ in investable property. 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
Large funding wins get the headlines, however yr after yr, quiet, boring, proactive tax strikes will be price simply as a lot, typically extra. For prime earners, ignoring tax planning is like leaving compounding on the desk.
If you happen to’ve bought $100K+ in investable property, Empower is providing Monetary Samurai readers a free session. Even should you’re assured in your present plan, a second opinion might uncover hundreds in missed alternatives.
For a restricted time solely, book your free, no obligation session here. An Empower skilled will evaluation your investments and internet price, and supply some options on the place you’ll be able to optimize, all totally free.
Empower’s Tax Optimization Companies
Tax optimized investing (tax loss harvesting, tax location, tax effectivity): obtainable to purchasers investing $100K+.
Tax planning steering (evaluation and proposals – establish gaps and alternatives in your tax technique earlier than you file along with your advisor and tax specialist): obtainable 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”). Study extra here.
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