If you’re earning $300,000 or more annually, you’ve likely discovered that taxes are one of your biggest expenses. At this income level, the tax code gets more complex, and the cost of inaction gets higher. It may be time to consult a financial advisor.

The good news? With proactive planning, you may be able to reduce your tax burden and redirect those savings toward your goals: retirement, business growth, education, or legacy planning.

Here’s how.

1. Start with Strategic Income Planning
High earners often face bracket creep, the Net Investment Income Tax (NIIT), and phaseouts of deductions — all of which increase your effective tax rate. What you can do:

• Time income intentionally — defer bonuses or large payouts into future years
• Accelerate deductions when you expect a spike in income
• Spread large capital gains across multiple tax years, if possible

Tax planning isn’t just about what you make — it’s about when and how you receive it.

2. Max Out Tax-Advantaged Accounts
Many high earners aren’t using all the tools available to them. Consider:

• 401(k), SEP IRA, or Solo 401(k) — depending on your employment or business structure
• Backdoor Roth IRA — to bypass income limits and grow assets tax-free
• HSAs — triple tax-advantaged if you have a high-deductible health plan

If you’re a business owner, you may also consider Cash Balance Plans to significantly increase your pre-tax retirement contributions.

3. Use a Smarter Charitable Giving Strategy
At $300K+, itemizing deductions may benefit you more than the standard deduction — especially if you’re charitably inclined. Tactics include:

• Donor-Advised Funds (DAFs) — bunch donations into one year for a larger deduction
• Donating appreciated securities instead of cash — avoids capital gains tax while giving you a full deduction

4. Plan Equity Compensation with Taxes in Mind
If you have ISOs, NSOs, RSUs, or ESPPs, each has its own tax treatment — and poor timing can cost thousands in surprise taxes. Avoid:

• Triggering Alternative Minimum Tax (AMT) unexpectedly with ISO exercises
• Selling too soon and incurring short-term capital gains
• Forgetting that unvested shares ≠ cash

Work with an advisor who understands the tax implications of equity compensation and can model multiple scenarios.

5. Leverage Your Business Structure Wisely
For business owners and consultants, your entity type can have a huge tax impact. For example:

• S-Corporation status may reduce self-employment taxes
• Proper use of reasonable salary vs. distributions can lower overall tax burden
• Deducting health insurance, home office, or retirement plan contributions can optimize income

Pair this with quarterly estimated tax planning to avoid underpayment penalties.

6. Look Ahead: Estate, Gift, and Multi-Year Tax Planning
The best tax planning doesn’t just focus on this year. High-income households often benefit from:

• Gifting strategies to family or trusts
• Annual exclusion gifting ($18,000 per person in 2024)
• Using today’s lower estate exemption before it potentially sunsets in 2026

Multi-year modeling helps align today’s tax moves with your future plans, whether that’s retirement, a business sale, or generational wealth planning.

Final Thoughts: Complexity Deserves a Plan
At this income level, taxes aren’t just a line item — they’re a strategic decision point.

Proactive planning can reduce taxes, free up cash flow, and create peace of mind.

At Forman Investment Services, we help high-income professionals and business owners design tax-smart strategies that align with the bigger picture. Contact a financial advisor today to review your plan.