Tax Strategies for High-Income Earners in 2025: How to Keep More of What You Make
- Aureus Advisory Partners
- Oct 9
- 4 min read
Updated: Oct 26
If you earn six or seven figures, taxes are likely your biggest expense. You work hard, build income streams, and create opportunities. . . yet each year the IRS tries to claim more of it.
The truth is, high earners do not need to take more risks to keep more of their money. They simply need strategy.
Here are the smartest, most IRS-approved ways to legally lower your 2025 tax bill and strengthen your financial position for the years ahead.
1. Choose the Right Entity Structure
Your entity determines how much you pay in taxes and how you pay yourself.
If you are still operating as a single-member LLC or sole proprietor, you are paying self-employment tax on your entire profit. Switching to an S-Corporation can reduce that burden significantly.
With an S-Corp, you pay yourself a reasonable salary through payroll, and the rest can be distributed as owner profit, which is not subject to self-employment tax.
💡 Aureus Tip: For many business owners, this structure alone can save thousands each year. Our team handles both the setup and reasonable salary calculations to keep you compliant.
2. Maximize Retirement Contributions
High earners have unique opportunities to reduce taxable income through retirement plans.
Solo 401(k): Contribute up to $69,000 in 2025 ($76,500 if over 50).
SEP IRA: Contribute up to 25% of your income, capped at $69,000.
Defined Benefit Plan: Perfect for very high earners wanting to save $100K–$250K per year in pre-tax dollars.
These contributions directly reduce your taxable income while growing your wealth for retirement.
💡 Aureus Tip: For easy setup, we recommend Rocket Dollar, ideal for business owners and S-Corps.
3. Use Charitable Giving Strategically
Charitable contributions are powerful tax tools when used correctly.
Instead of writing checks in December, consider:
Donor-Advised Funds (DAF): Contribute appreciated stock or cash, get an immediate deduction, and decide later which charities receive the funds.
Qualified Charitable Distributions (QCDs): For those over 70½, you can donate directly from your IRA without increasing taxable income.
💡 Aureus Tip: Timing matters. If you expect a higher income year, bunch multiple years of giving into one through a donor-advised fund for a larger single-year deduction.
4. Leverage Real Estate and Depreciation
Real estate offers significant tax advantages that high earners often overlook.
If you own rental property or invest in real estate, you can deduct:
Mortgage interest
Property taxes
Repairs and maintenance
Depreciation (a paper deduction that lowers taxable income without reducing cash flow)
💡 Aureus Tip: Work with your CPA to run a cost segregation study if your property qualifies. Accelerated depreciation can unlock thousands in deductions now instead of spreading them over decades.
5. Fund Health and Education the Smart Way
Health Savings Account (HSA): Contribute up to $4,300 (single) or $8,550 (family) in 2025. Contributions are tax-deductible, growth is tax-free, and withdrawals for medical expenses are tax-free.
529 Education Plans: Grow funds tax-free for future tuition, books, or even student loan repayment.
💡 Aureus Tip: An HSA is the only triple tax-advantaged account in the U.S. Use it as a long-term investment vehicle for retirement healthcare.
6. Review Timing of Income and Expenses
Sometimes the smartest move is about when income or expenses hit your books.
Defer income: If your business allows it, push invoices or bonus payments into the next year to lower this year’s taxable income.
Accelerate expenses: Pay business costs, bonuses, or software renewals before year-end to increase deductions.
💡 Aureus Tip: Timing is especially important for cash-basis taxpayers. If you pay before December 31, it counts this year.
7. Claim Every Legitimate Business Deduction
If you are self-employed, your lifestyle may be full of tax deductions hiding in plain sight. Common deductions include:
Home office expenses
Travel for business purposes
Vehicle mileage or auto expenses
Professional development and certifications
Business software, insurance, and marketing
💡 Aureus Tip: Keep digital records. Tools like Keeper and QuickBooks Online automatically track and categorize your deductions so you never lose proof of a write-off.
8. Invest Through Tax-Efficient Accounts
Once you have maxed out pre-tax contributions, consider investments that minimize ongoing taxation.
Roth IRA or Backdoor Roth IRA: Pay taxes now, enjoy tax-free growth and withdrawals later.
Brokerage with Tax-Loss Harvesting: Offset gains by selling losing positions before year-end.
Municipal Bonds: Interest earned is generally exempt from federal tax.
💡 Aureus Tip: The higher your income, the more important asset location becomes. Place income-generating investments in tax-advantaged accounts and long-term holdings in taxable accounts.
9. Consider a Family Management or Holding Company
For those with multiple income streams or investments, a holding company structure can centralize operations and optimize tax efficiency.
This setup allows you to pay family members for legitimate business roles, shift income into lower brackets, and simplify compliance.
💡 Aureus Tip: If you are paying family for administrative or marketing help, document their roles and issue proper payroll or 1099s.
10. Schedule a Tax Strategy Session Before Year-End
High earners often wait until tax season to start asking questions, but by then the year is over and options are limited.
A year-end planning session ensures:
Proper entity structure for next year
Optimized retirement contributions
Smart income and expense timing
Maximum deductions before December 31
💡 Aureus Tip: Tax preparation reports the past. Tax strategy builds the future.
Final Takeaway
The key to paying less tax is not loopholes. It is knowledge, timing, and structure.
The wealthiest individuals do not wait for their CPA to find savings after the fact. They plan every move in advance with strategy and intent.
You earn at a high level. You should plan that way too.
Ready to Take Action?
If you are a high-income earner looking to build a real tax strategy, schedule your consultation today HERE.
Or explore our favorite tools that make implementation easy: