I’m Darrin Mish. Tampa tax attorney, 32 years in, more than $100 million in IRS debt resolved. That’s my resolution practice. What follows is the other side of the desk – the planning moves that keep you from ever needing it.
Once your income crosses a certain threshold, the tax code starts working against you. Higher marginal rates, phase-outs on deductions and credits, the Net Investment Income Tax, Medicare surtaxes – the penalties for earning more stack up fast.
But the tax code also provides more planning opportunities at higher income levels. The key is knowing which levers to pull.
Understand Your Marginal Rate Landscape
At high income levels, you are not just paying income tax. You are potentially paying the 3.8% Net Investment Income Tax on investment income above $200,000/$250,000, the 0.9% Additional Medicare Tax on earned income above the same thresholds, and higher Medicare premiums through IRMAA.
Your effective marginal rate on the next dollar earned might be 40-45% when you add all of these together. Knowing your true marginal rate is the starting point for every planning decision.
Maximize Tax-Deferred Retirement Accounts
Max out your 401(k) ($23,500 in 2025, $31,000 if 50+). If you have a cash balance pension plan or defined benefit plan through your business, contributions can potentially reach $250,000+ per year. These contributions reduce AGI dollar-for-dollar.
For business owners, a Solo 401(k) with both employee and employer contributions can shelter up to $69,000 in 2025. Adding a cash balance plan on top of that can double or triple the amount.
Strategic Roth Conversions
High earners cannot contribute directly to a Roth IRA, but they can convert Traditional IRA funds to Roth. The conversion is taxable, but strategic conversions during lower-income years (sabbatical, business downturn, early retirement) can lock in gains at lower rates.
Charitable Giving With Appreciated Assets
High-income taxpayers benefit most from donating appreciated assets. The deduction offsets income at your top marginal rate, and you avoid capital gains tax entirely. A $100,000 stock donation to a donor-advised fund could save $35,000-45,000 in combined income and capital gains taxes.
Business Structure Optimization
If you are a high-earning business owner, the right entity structure matters enormously. S Corp election to reduce self-employment tax, Section 199A deduction optimization, retirement plan design, and income timing are all tools that compound at higher income levels.
Real Estate Professional Status
If you or your spouse qualifies as a real estate professional (750+ hours per year in real estate activities), rental losses can offset any type of income. For a high-income household, this can create significant tax savings through depreciation deductions on rental properties.
Build a Comprehensive Strategy
At high income levels, individual tactics are not enough. You need a coordinated strategy across income, investments, retirement, charitable giving, and business structure. Contact the Law Offices of Darrin T. Mish, P.A. at (813) 229-7100 for a comprehensive tax planning review.
