You’ve worked hard to build your income so why let the IRS take more than its fair share? If you’re a high earner, chances are you’re paying way more in taxes than you need to. The secret? Tax strategy.
At Insogna CPA, a leading Austin, Texas CPA firm, we help high-income professionals and business owners maximize deductions, minimize tax liability, and keep more of what they earn without raising any red flags with the IRS.
Here are 10 legit ways to start slashing your tax bill today.
1. Max Out Your 401(k) and HSA Contributions (Because Free Money > Taxes)
Want an instant tax break? Contribute the max to your 401(k) and HSA before year-end.
✔ 401(k) Limit (2024): $23,000 ($30,500 if you’re 50+).
✔ HSA Limit (2024): $4,150 (individual) / $8,300 (family).
Why It Works: Contributions reduce your taxable income, grow tax-free, and in the case of an HSA, let you withdraw tax-free for medical expenses. It’s like a triple tax win!
2. Use a Backdoor Roth IRA to Beat Income Limits
Earn too much for a Roth IRA? The Backdoor Roth IRA is your loophole.
✔ Contribute to a traditional IRA (nondeductible).
✔ Convert it to a Roth IRA (watch out for conversion taxes).
Why It Works: Your money grows tax-free forever, and no required minimum distributions (RMDs) mean more control over your retirement funds.
3. Stock Options? Plan Your Moves Strategically
If you have stock options or RSUs, cashing out without a plan could cost you thousands in taxes.
✔ Incentive Stock Options (ISOs): Hold for at least one year after exercising to qualify for long-term capital gains rates.
✔ Restricted Stock Units (RSUs): Consider an 83(b) election to pay taxes upfront and lock in lower rates.
Why It Works: Strategic timing on stock sales shifts your tax burden from high ordinary income rates to lower capital gains rates.
4. Invest in Oil & Gas (Yes, Really.)
Oil & gas investments come with serious tax perks.
✔ Deduct up to 80% of your investment in the first year through Intangible Drilling Costs (IDCs).
✔ Claim a 15% depletion allowance on income generated from these investments.
Why It Works: These deductions can offset W-2 and other active income, meaning less money goes to the IRS and more stays in your pocket.
5. Use Conservation Easements to Reduce Taxable Income
Want to help preserve land and lower your tax bill? A conservation easement lets you donate land rights in exchange for major deductions.
✔ Deduct up to 50% of your AGI in the year of donation.
✔ Carry forward unused deductions for up to 15 years.
Why It Works: If you have capital gains, this strategy helps offset them legally while supporting conservation efforts.
6. Invest in Dividend-Yielding Stocks for Lower Taxes
Not all investment income is taxed equally and smart investors know how to play the game.
✔ Qualified dividends get taxed at 0%, 15%, or 20%—way lower than ordinary income tax rates.
✔ Reinvest dividends into tax-advantaged accounts to shield them from taxes.
Why It Works: Choosing qualified dividends over ordinary investment income means more money stays in your portfolio, not Uncle Sam’s.
7. Give to Charity the Smart Way (and Lower Your Tax Bill)
Giving back feels great and it can also slash your taxable income.
✔ Donor-Advised Funds (DAFs): Donate a lump sum today, get the deduction now, and distribute the funds over time.
✔ Qualified Charitable Distributions (QCDs): If you’re 70½+, donate directly from your IRA to avoid taxes on required minimum distributions (RMDs).
Why It Works: Bunching charitable donations in high-income years can maximize deductions when you need them most.
8. Optimize Your Real Estate Strategy for Tax Savings
If you own rental properties, you’re sitting on a tax-saving goldmine. You just need the right strategy.
✔ Depreciation Deductions: Write off the cost of your property over time to reduce taxable income.
✔ Cost Segregation Studies: Accelerate depreciation for bigger tax deductions upfront.
✔ 1031 Exchange: Sell an investment property and defer capital gains taxes by reinvesting in another property.
Why It Works: Real estate tax strategies can turn taxable income into tax-free cash flow while building long-term wealth.
9. Protect Your Wealth with Smart Estate Planning
High-net-worth individuals need a game plan for passing down wealth without getting hit with estate taxes.
✔ Gift up to $18,000 per year, per recipient tax-free.
✔ Use a Spousal Lifetime Access Trust (SLAT) to remove assets from your taxable estate.
✔ Grantor Retained Annuity Trusts (GRATs) pass wealth efficiently without triggering hefty taxes.
Why It Works: Estate planning keeps your wealth in your family and out of the IRS’s hands.
10. Work with a Proactive CPA Who Gets High-Income Tax Strategy
Here’s the deal: generic tax advice won’t cut it. If you’re a high-income earner, you need customized, proactive strategies that legally minimize your tax burden.
What a CPA Can Do for You:
✔ Personalized tax planning to match your income and investments.
✔ Proactive moves to lower your tax bill before year-end.
✔ Audit-proof deductions so you stay compliant while saving big.
Final Thoughts: Keep More of What You Earn
The reason high-net-worth individuals don’t overpay in taxes? They have a strategy.
At Insogna CPA, a trusted Austin accounting firm, we specialize in helping high-income earners keep more of their wealth through smart, legal tax planning.
📞 Want to start saving thousands in taxes? Schedule a call with Insogna CPA today and take control of your financial future...