Tax Strategies for high income earners
Above roughly $400k of household income, phase-outs remove the ordinary deductions and the remaining levers are structural. This guide covers what still works at that level, separated by whether your income is W-2, business, or investment.
What stops working
Income-based credits phase out, itemized deductions get capped by state and local limits, direct Roth contributions close, and passive losses get suspended without material participation. Recognizing which door has closed tells you which one is still open.
High-income W-2
The mega backdoor Roth, deferred compensation elections, charitable bunching through a donor-advised fund, and — where a spouse qualifies — real estate professional status to unlock depreciation against ordinary income. State residency is the largest single-decision lever for anyone with location flexibility.
High-income business owners
Retirement plan design scales with profit: a cash balance or defined benefit plan layered over a 401(k) can shelter several hundred thousand dollars per year for the right age and income profile. Beyond that: entity structure, management fee arrangements between related entities, and planning the eventual exit for qualified small business stock treatment.
Investment and equity income
Loss harvesting, gain timing around bracket edges, opportunity zone deferral for large realized gains, and charitable remainder structures for concentrated low-basis positions. For founders, the exit structure decided years early usually matters more than anything done in the year of sale.
Build the stack, not the trick
At this income level the win comes from four or five coordinated moves compounding annually, not one clever transaction. Each layer needs its own documentation and a professional who will sign the return.
Run this on your own numbers
Strategies referenced in this guide
Get $46K+/yr into Roth despite income limits.
Shelter $100K–$300K+/yr for high-earning owner-only businesses.
Turn W-2 income into tax-free passive rental losses.
Sell your C-corp stock for up to $10M tax-free.
Shift income between entities to optimize tax and asset protection.
Defer + eliminate capital gains via OZ funds.
Frequently asked
At what income does this become worth it?
Structural planning generally pays for itself somewhere above $250k–$400k of household income, earlier if the income is business or real estate rather than salary.
Does moving states really help?
For high earners with location flexibility it is often the largest single lever, but residency is a facts test — days, domicile, and ties all matter, and high-tax states audit departures.
This guide is general education. Eligibility, filings, and elections depend on your facts — confirm any strategy with a licensed CPA, tax attorney, or lender before acting. See our disclaimer.