If my posts on the error of chasing worth shares or the necessity to make investments large cash to make life-changing cash don’t resonate, take into account hiring a monetary skilled to handle your portfolio. You might 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 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 effectively.
What I did not notice is that Empower presents tax planning as a part of its customary shopper service. No additional invoices, no $300/hour CPA payments. Simply built-in recommendation, included within the administration price. 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 Revenue Earners
Once you’re a excessive earner—assume $250,000+ earnings or the potential to get there—you’ve in all probability obtained rather a lot in your plate: investments, actual property, possibly a enterprise or two. What you may not be paying sufficient consideration to? Tax planning.
It’s not attractive 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 looking for a monetary skilled 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 companion 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 increase long-term returns.
1. Why is tax planning essential for prime earners?
Once you’re within the high federal tax brackets—32%, 35%, or 37%—each strategic transfer counts extra. Saving 1% on taxes for somebody making $100K is good. 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 features come from small, constant, authorized strikes yr after yr.
It’s like The Shawshank Redemption: strain and time. Maxing out a well being financial savings account, backdoor Roth contributions, charitable “bunching,” and tax-loss harvesting could appear 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 crew works year-round—advisors and tax specialists meet commonly 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 obtained a short lived increase after the passage of The One Huge Stunning Invoice Act on July 4, 2025. It’s $40,000 in 2025 (up from $10,000), rising barely annually 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 utterly.
However even excessive earners over $600K aren’t out of luck—when you personal a pass-through enterprise (S-corp, partnership, LLC taxed as such), you may use the Pass-Through Entity Tax (PTET) workaround. Right here, the enterprise pays state taxes, making them totally deductible federally, and also you get a state tax credit score. As of 2025, 35+ states have a PTET choice.
For the suitable purchasers, SALT adjustments + PTET can unlock deductions value tens of 1000’s—cash that stays in your portfolio as a substitute of the IRS’s coffers.
3. How does Empower method advanced high-earner conditions?
Let’s say you’re a enterprise proprietor with vital funding earnings, passive rental earnings, and actual property holdings.
With Empower, you principally have a “tax specialist on demand” baked into your price – no shock payments. The method begins with:
- Reviewing the previous three years of returns for missed alternatives. (You’ve obtained three years to amend and declare a refund.) Empower can spot 1000’s in neglected deductions.
- Holistic planning primarily based in your objectives. Tax technique isn’t in a vacuum—it’s tied to your funding plan, property objectives, and money movement wants.
Widespread missed alternatives for self-employed purchasers:
- Not deducting medical insurance premiums.
- Lacking the Certified Enterprise Revenue (QBI) deduction.
- Ignoring residence workplace deductions.
Extra frequent errors Empower may also help catch:
- Capital loss carryforwards misplaced when switching preparers/software program
- Incorrect Backdoor Roth processing
- Missed Overseas Tax Credit score
- Incorrect price foundation for inventory gross sales (ESPP, choices)
- HSA distributions taxed in error
From there, Empower appears ahead—possibly establishing a solo 401(okay), timing earnings, or planning capital features. 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 frequent—and expensive.
- S-Corp proprietor: CPA added medical insurance premiums to W-2 wages (appropriately) however by no means instructed the shopper they may 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 because 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 insurance deductions. Catching this will save $1,000+ per yr.
These aren’t flashy hedge-fund-like wins—however they’re assured returns by way of tax financial savings, usually compounding over years.
Key Methods Empower Makes use of for Excessive Earners
Scott shared a number of proactive strikes that come up repeatedly:
Bunching Charitable Contributions
Customary 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 complete deduction over time.
Bonus: Donate appreciated property or use a Donor-Suggested Fund for much more effectivity.
Tax Loss Harvesting
Promoting investments at a loss to offset features elsewhere—then reinvesting in related (however not “considerably similar”) 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
Shifting funds from a standard IRA to a Roth IRA enables you to lock in right this moment’s tax fee when 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 may cost $150–$400/hour only for tax consultations. In the meantime, many don’t provide 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. Meaning:
- One price, 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 will be value simply as a lot, generally extra. For prime earners, ignoring tax planning is like leaving compounding on the desk.
If you happen to’ve obtained $100K+ in investable property, Empower is providing Monetary Samurai readers a free session. Even when you’re assured in your present plan, a second opinion might uncover 1000’s in missed alternatives.
For a restricted time solely, book your free, no obligation session here. An Empower skilled will assessment your investments and internet value, and provide some solutions on the place you possibly can optimize, all free of charge.
Empower’s Tax Optimization Companies
Tax optimized investing (tax loss harvesting, tax location, tax effectivity): accessible 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): accessible to $250K+.
At $1M+, purchasers obtain the above, along with entry to a CPA, at no extra price.
Disclosure: This assertion is offered by Kansei Integrated (“Promoter”), which has a referral settlement with Empower Advisory Group, LLC (“EAG”). Study extra here.
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