If my posts on the mistake of chasing worth shares or the necessity to make investments large cash to make life-changing cash don’t resonate, think about hiring a monetary skilled to handle your portfolio. You is probably not obsessed sufficient to constantly make investments the quantity wanted to retire comfortably. Offloading the burden of investing frees up your time and vitality to deal with 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 personal 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 provides tax planning as a part of its normal shopper service. No additional 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
Whenever you’re a excessive earner—suppose $250,000+ revenue or the potential to get there—you’ve most likely acquired quite a bit in your plate: investments, actual property, possibly 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. In case you’re trying to find a monetary skilled 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 crucial for top earners?
Whenever 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 good points come from small, constant, authorized strikes 12 months after 12 months.
It’s like The Shawshank Redemption: stress and time. Maxing out a well being financial savings account, backdoor Roth contributions, charitable “bunching,” and tax-loss harvesting could seem minor in isolation, however over 20 years, they will carve a severe tunnel towards monetary freedom.
Right here’s the hazard: by the point you file in April, most alternatives are gone. In case you’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 frequently 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 acquired a brief increase after the passage of The One Huge Lovely Invoice 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 utterly.
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 Move-By 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 appropriate purchasers, SALT adjustments + PTET can unlock deductions value tens of 1000’s—cash that stays in your portfolio as an alternative of the IRS’s coffers.
3. How does Empower strategy advanced 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 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 1000’s in missed 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 movement 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 widespread errors Empower might help catch:
- Capital loss carryforwards misplaced when switching preparers/software program
- Incorrect Backdoor Roth processing
- Missed International Tax Credit score
- Unsuitable value foundation for inventory gross sales (ESPP, choices)
- HSA distributions taxed in error
From there, Empower appears to be like ahead—possibly organising a solo 401(ok), timing revenue, or planning capital good points. 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 widespread—and expensive.
- S-Corp proprietor: CPA added medical health insurance premiums to W-2 wages (accurately) however by no means advised the shopper 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 attributable to 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 could 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, usually compounding over years.
Key Methods Empower Makes use of for Excessive Earners
Scott shared a number of proactive strikes that come up many times:
Bunching Charitable Contributions
Customary deduction in 2025: $15,750 (single) / $31,500 (married). By combining two or extra years of donations into one tax 12 months, you may exceed the usual deduction, itemize that 12 months, and take the usual deduction the following—leading to an even bigger whole 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 good points elsewhere—then reinvesting in comparable (however not “considerably an identical”) property—can decrease your current-year tax invoice whereas preserving your portfolio allotted. All Empower Private Technique purchasers ($100K+) reduce your tax burden with proactive utility of tax-loss harvesting and tax location.
Roth Conversions
Transferring funds from a standard IRA to a Roth IRA permits you to lock in as we speak’s tax price 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 very good 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 an alternative on compliance and submitting.
Empower builds tax planning into its general wealth administration service for purchasers with $100K+ in investable property. Which means:
- 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
Huge funding wins get the headlines, however 12 months after 12 months, quiet, boring, proactive tax strikes might be value simply as a lot, typically extra. For top earners, ignoring tax planning is like leaving compounding on the desk.
In case you’ve acquired $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 1000’s in missed alternatives.
For a restricted time solely, e-book your free, no obligation session right here. An Empower skilled will evaluate your investments and web value, and supply some options on the place you may optimize, all without spending a dime.
Empower’s Tax Optimization Providers
Tax optimized investing (tax loss harvesting, tax location, tax effectivity): obtainable to purchasers investing $100K+.
Tax planning steerage (evaluation and proposals – determine gaps and alternatives in your tax technique earlier than you file together with your advisor and tax specialist): obtainable to $250K+.
At $1M+, purchasers obtain the above, along with entry to a CPA, at no extra value.
Disclosure: This assertion is offered by Kansei Integrated (“Promoter”), which has a referral settlement with Empower Advisory Group, LLC (“EAG”). Study extra right here.
To expedite your journey to monetary freedom, be a part of over 60,000 others and subscribe to the free Monetary Samurai e-newsletter. Monetary Samurai is the main independently-owned private finance web site as we speak, established in 2009.
