The High-Earner’s Guide to Tax Efficiency

*Disclaimer: This is just for informational purposes. None of this should be seen as tax advice. Work with your financial planner and tax professional to evaluate which strategies would be the best for your situation. All figures are accurate as of 2026.

1. Max the Pre-Tax 401(k)

Ignore the social media noise. Retirement accounts work. In 2026, you can put away $24,500 of your own money plus your employer match. If you are in your peak earning years, deferring taxes until later is a massive win for your current cash flow.

2. The Mega-Backdoor Roth

If your plan allows it, this is a powerhouse move. You max your pre-tax 401(k), then put after-tax dollars into the plan and roll them into a Roth. The IRS limit is $72,000 total. It’s a lot of moving parts, but the result is a mountain of tax-free growth.

3. The Backdoor Roth IRA

Too much income for a Roth IRA? Use the backdoor. Put $7,500 (per spouse) into a Traditional IRA and convert it immediately. Just watch out for the pro-rata rule if you have other pre-tax IRA money sitting around.

4. Optimize Health and Care Accounts

• HSA: This is the best account in existence. It reduces taxable income, grows tax-free, and is spent tax-free on health costs. In 2026, a family can do $8,750. Invest it and let it ride.

• FSA: If no HSA is available, use this to lower your taxable income. Use it or lose it.

• Dependent Care FSA: You can funnel $7,500 here for childcare. It’s a direct hit to your taxable income.

5. Strategic Giving

Don’t just write checks.

• Donate Securities: Give appreciated stocks before you sell them to avoid capital gains.

• Bunching: If you are near the standard deduction, stack two years of giving into one. You get the same impact for the charity but a much higher tax deduction for yourself.

6. Real Estate and Equity Comp

Real estate offers massive tax breaks through depreciation and loopholes like REPS or short-term rentals. If you get paid in RSU’s, ISO’s, or NSO’s, you need a specific plan for when to vest and sell. Holding too long often just increases your risk and your tax bill.

7. Conversions and Asset Location

• Roth Conversions: When your income is lower or the market is down, move money from pre-tax to Roth. Pay the tax while the "cost" is low.

• Asset Location: Put high-growth assets in tax-free accounts and boring, low-growth assets in tax-deferred accounts. Stop the tax drag on your wealth.

8. The Advanced Moves

• Tax Loss Harvesting: Sell losers to offset winners. You can use $3,000 of excess losses to offset regular income.

• 529 Plans: Great for college. Some states, like Indiana, give you a massive tax credit just for contributing.

• Estate Planning: If you are building a legacy, start gifting under the reporting limits now to protect your estate from future taxes.