If my current posts on the mistake of chasing value stocks or the necessity to make investments big money to make life-changing money don’t resonate, you might need to contemplate hiring a monetary skilled to handle your portfolio. You might not be investing sufficient commonly to retire comfortably sooner or later. Offloading the burden of investing frees up your time and vitality to give attention to 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 Okay-1s from non-public fund investments. So when Empower reached out about highlighting tax planning errors for top 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 normal consumer service. No further invoices, no $300/hour CPA payments. Simply built-in recommendation, included within the administration payment. Contemplating that taxes are sometimes the one largest expense for high-income earners, having proactive technique baked in is an enormous deal.
The Significance Of Tax Planning For Excessive Revenue Earners
If you’re a excessive earner—assume $250,000+ revenue or the potential to get there—you’ve in all probability acquired quite a bit 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 sensible, 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 shoppers, 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 sensible tax planning can ship. Should you’re looking for a financial professional to handle your wealth, selecting one which integrates tax planning into their service is crucial, 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 increase long-term returns.
1. Why is tax planning important for top earners?
If 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 canine workers…”). The reality: the largest features come from small, constant, authorized strikes 12 months after 12 months.
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 will carve a critical tunnel towards monetary freedom.
Right here’s the hazard: by the point you file in April, most alternatives are gone. Should you’re submitting 2025’s taxes in April 2026, your deadline for many methods was December 31, 2025. That’s why Empower’s staff 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 acquired a brief increase 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? Principally taxpayers with AGI underneath $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—if you happen to 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 possibility.
For the best shoppers, SALT adjustments + PTET can unlock deductions value tens of hundreds—cash that stays in your portfolio as an alternative of the IRS’s coffers.
3. How does Empower method complicated high-earner conditions?
Let’s say you’re a enterprise proprietor with vital funding revenue, passive rental revenue, and actual property holdings.
With Empower, you principally have a “tax specialist on demand” baked into your payment – no shock payments. The method begins with:
- Reviewing the previous three years of returns for missed alternatives. (You’ve acquired three years to amend and declare a refund.) Empower can spot hundreds in ignored deductions.
- Holistic planning based mostly in your targets. Tax technique isn’t in a vacuum—it’s tied to your funding plan, property targets, and money move wants.
Frequent missed alternatives for self-employed shoppers:
- Not deducting medical health insurance premiums.
- Lacking the Certified Enterprise Revenue (QBI) deduction.
- Ignoring residence workplace deductions.
Extra widespread errors Empower may also help catch:
- Capital loss carryforwards misplaced when switching preparers/software program
- Incorrect Backdoor Roth processing
- Missed Overseas Tax Credit score
- Improper price foundation for inventory gross sales (ESPP, choices)
- HSA distributions taxed in error
From there, Empower appears ahead—possibly establishing a solo 401(k), timing revenue, 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 shoppers seen?
Missed medical health insurance deductions are surprisingly widespread—and expensive.
- S-Corp proprietor: CPA added medical health insurance premiums to W-2 wages (accurately) however by no means informed the consumer they might 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 result 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 may save $1,000+ per 12 months.
These aren’t flashy hedge-fund-like wins—however they’re assured returns by way of tax financial savings, typically compounding over years.
Key Methods Empower Makes use of for Excessive Earners
Scott shared just a few proactive strikes that come up repeatedly:
Bunching Charitable Contributions
Commonplace deduction in 2025: $15,750 (single) / $31,500 (married). By combining two or extra years of donations into one tax 12 months, you possibly can exceed the usual deduction, itemize that 12 months, and take the usual deduction the subsequent—leading to an even bigger whole deduction over time.
Bonus: Donate appreciated belongings or use a Donor-Advised Fund for much more effectivity.
Tax Loss Harvesting
Promoting investments at a loss to offset features elsewhere—then reinvesting in comparable (however not “considerably an identical”) belongings—can decrease your current-year tax invoice whereas protecting your portfolio allotted. All Empower Private Technique shoppers ($100K+) decrease your tax burden with proactive utility of tax-loss harvesting and tax location.
Roth Conversions
Shifting funds from a standard IRA to a Roth IRA helps you to lock in in the present day’s tax price if you happen to anticipate to be in a better 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 great CPA may cost $150–$400/hour only for tax consultations. In the meantime, many don’t supply proactive planning in any respect, focusing as an alternative on compliance and submitting.
Empower builds tax planning into its general wealth administration service for shoppers with $100K+ in investable belongings. Meaning:
- One payment, one built-in plan.
- Advisors and tax specialists in the identical room (or Zoom) all 12 months.
- Proactive calls earlier than the deadlines—not “we’ll see you subsequent April.”
The Backside Line
Massive funding wins get the headlines, however 12 months after 12 months, quiet, boring, proactive tax strikes could be value simply as a lot, typically extra. For top earners, ignoring tax planning is like leaving compounding on the desk.
Should you’ve acquired $100K+ in investable belongings, Empower is providing Monetary Samurai readers a free session. Even if you happen to’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 assessment your investments and internet value, and supply some ideas on the place you possibly can optimize, all free of charge.
Disclosure: This assertion is supplied by Kansei Integrated (“Promoter”), which has a referral settlement with Empower Advisory Group, LLC (“EAG”). Be taught extra here.
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