Smart Tax Moves for Wealth Builders: Keep More of What You Earn
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Let’s be real—tax season can be a total drag. But it doesn’t have to be! I know taxes aren’t the sexiest thing out there, but at the end of the day, smart tax planning can help you keep more of your money working for you - which IS sexy! Whether you’re scaling your business or getting the most out of your comp package, knowing how to approach tax planning can help you build long-term wealth with confidence.
So let’s get our cool nerd glasses on and talk about some creative strategies you can explore to get the most out of tax season—without the headache.
1. Maximize Retirement Contributions (and Tax-Deferred Growth)
Think of retirement accounts as a way to lower your tax bill today while supporting your financial future—whether you're self-employed, earning a high salary, or building multiple income streams. Generally, you want to prioritize maxing out your tax-advantaged accounts before investing in taxable accounts.
General Order of Operations (AKA: Tax-Efficient Adulting 101):
Many workplace retirement plans come with a match, so start by contributing enough to your 401(k) to get the full match—it’s free money!
Depending on your plan, the next step is maxing out your 401(k) ($23,500 in 2025 plus catch up contributions after age 50) before looking at an IRA (Traditional or Roth).
If you've maxed out workplace plans and IRAs and still have extra money burning a hole in your pocket, then consider taxable brokerage accounts for additional investing. 🔥 Pro tip: Make your life easier and consider turning off automatic dividend reinvestment in taxable brokerage accounts. This will help to reduce tax liability and simplify tracking. Instead, set up a monthly or quarterly schedule to reinvest dividends strategically.
Solo 401(k) or SEP IRA: If you’re self-employed, a Solo 401(k) allows you to contribute as both an employer and employee, potentially deferring up to $70,000 in 2025. A SEP IRA is another great option, allowing contributions of up to 25% of net earnings (capped at $70,000 in 2025).
Backdoor Roth IRA: If you exceed Roth IRA income limits, this strategy lets you still take advantage of tax-free growth by contributing to a Traditional IRA and converting the funds over to a Roth IRA. (Note: Be mindful of the pro-rata rule, which can impact taxation on conversions. Always consult your tax and financial advisors first.)
2. Maximize Deductions and Tax Credits
Whether you're running a business or navigating a high-income career, understanding key tax deductions and credits can help you keep more of what you earn. First let’s clear up the jargon: Deductions reduce taxable income, while credits provide a dollar-for-dollar reduction in what you owe.
Deductions to Leverage:
🏡 Home Office Deduction: If you regularly use part of your home for business, you can deduct a portion of rent, utilities, and internet expenses. Working in PJ’s never sounded so good. 😊
💊 Health Insurance & HSA Contributions: If you’re self-employed, health insurance premiums can be fully deductible. Plus, an HSA (Health Savings Account) offers triple tax benefits—pre-tax contributions, tax-free growth, and tax-free withdrawals for medical expenses.
❤️ Charitable Contributions & Itemized Deductions: Donations, mortgage interest, medical expenses, and state/local taxes can be itemized to reduce taxable income. Keep track of expenses to determine if itemizing makes sense versus taking the standard deduction. Yay for being generous and smart!
Tax Credits to Explore:
R&D Tax Credit: Are you the next Google? Or solving world hunger? If you’re innovating, designing, or developing new processes, you may qualify for this powerful credit!
EV and Energy Efficiency Credits: Purchasing an electric vehicle or making energy-efficient home upgrades could qualify you for valuable tax credits. (Note: Some credits are non-refundable, meaning they reduce tax liability but won’t generate a refund.)
Education & Lifelong Learning Credits: If you're investing in yours or your children’s skills or education, credits like the Lifetime Learning Credit or American Opportunity Tax Credit can offset tuition and education-related expenses. Get after it, high achiever!
3. Optimize Your Business Entity for Tax Efficiency
For business owners, your business structure impacts how much you pay in taxes. As you grow, it’s worth evaluating whether an S-Corp, LLC, or C-Corp best aligns with your financial goals.
S-Corp Election: If you’ve been crushing it and your business has strong net profit, an S-Corp can help reduce self-employment taxes by allowing you to take a reasonable salary while distributing remaining profits as dividends (not subject to payroll taxes). Work with a tax professional to determine if this is right for you.
Pass-Through Deduction (QBI Deduction): Some businesses qualify for the Qualified Business Income (QBI) deduction, allowing a 20% deduction on net income, reducing taxable income. (Note: This deduction is currently set to expire Dec 31, 2025.)
Sure, taxes can feel like a money pit—but with the right strategy, they can actually help you grow and protect your wealth. Who doesn’t want that?! These aren’t the only strategies available, but they are some of the best places to start. Proactive tax planning allows you to reinvest more into your goals—whether that’s scaling your business, optimizing investments, or securing financial freedom.
That said, taxes can be complex, and not all strategies make sense for everyone. Working with the right financial team can make a difference—helping you maximize wealth without overpaying in taxes. Always consult with your advisors before making any decisions.
Want to dive deeper into these strategies?
📖 Grab my Meaningful Money Workbook—it’s foundational for conscious investors like you. 💬 Let’s talk tax wins! Drop a comment below or shoot me a DM on LinkedIn—what’s the smartest tax move you’ve made (or the one that’s got you scratching your head)?
