December 3, 2025

FAQs: How High-Income Earners Can Still Save on 2025 Taxes

Straight answers. No myths. Just real strategies high earners can use before December 31.

If you’re a high-income earner, you’ve probably been conditioned to believe the tax game is fixed:

“You make a lot, so you pay a lot. That’s just how it is.”
“Once you max your 401(k), you’re done.”
“If you take that deduction, the IRS will audit you.”
“A 35–40% tax rate means you’re doing great.”

These statements are the reason so many high earners overpay by tens of thousands of dollars every single year.

FAQ #1: “Is it actually possible to pay less than 30% as a high-income earner?”

Yes, and many high earners legally do.

It is not uncommon to see people earning $1M+ paying effective rates in the teens. Not because of loopholes, but because:

Their income is structured correctly
They’re deducting what the law allows
They’re using investments that generate tax-advantaged losses
They’re changing their facts instead of accepting “this is how taxes work.”

The tax code rewards certain behaviors (like investing, hiring, building businesses, and managing real estate). When you take advantage of these incentives, your tax bill can change dramatically.

If your tax rate hasn’t moved in years, something is wrong — not with the tax code, but with your strategy.

FAQ #2: “My CPA says there's nothing left to do. Is that true?”

Almost never.

Most CPAs are tax preparers (AKA they file your returns). They’re necessary, but they’re not strategists.

A tax strategist will ask questions like:

How is your income classified?
Should any be shifted to a business?
Are you capturing all active deductions?
Are you positioned for bonus depreciation?
Is your spouse involved in a tax-efficient way?
What investments would reduce your active income?

If you’re only hearing, “Max your 401(k) and itemize if you can,” that’s not planning. That’s paperwork.

Ask your CPA, “What specific tax strategies are you recommending this year, and how much will each save me?” If they can’t answer, get a second opinion.

FAQ #3: “Isn’t aggressive tax planning risky?”

Illegal tax planning is risky. Proactive, documented tax planning is not.

A common misconception is that taking legal deductions will “draw attention” from the IRS. But the IRS does not penalize taxpayers for using the tax code correctly. They penalize unsupported claims. In reality:

The home office deduction is legal
Bonus depreciation is legal
Shifting income is legal
Working-interest oil and gas deductions are legal
Fair-market-value charitable contributions are legal

If the strategy is legal and well-documented, fear should never hold you back from saving money.

FAQ #4: “What’s the first thing I should do before year-end?”

Run a real tax projection.

This is the foundation of all high-income planning:

Build your baseline (or what happens if you change nothing)
Sort income into the three buckets:
- Active
- Passive
- Portfolio
Find the real problem. If you don’t know your real problem, you can’t apply the right solution.
Layer in strategies that match your facts

This matters because strategies are not interchangeable:

Passive losses don’t offset W-2 income
Portfolio losses cap at $3,000
Active losses can offset everything

FAQ #5: “What deductions do high earners miss most often?”

More than you think, and almost always because their CPA told them they were “red flags.”

1. Home office

One of the most over-feared, under-used legal deductions. If used appropriately, it’s powerful.

2. Business-use tech

Phones, laptops, monitors, software, tablets, nearly every high earner under-deducts here.

3. Equipment + bonus depreciation

If it’s placed in service before December 31, you can often write off a massive portion immediately.

4. Family involvement

Kids and spouses legitimately working in the business create real deductions and real tax shifts.

5. Charitable contributions (fair market value)

You’re not limited to deducting what you paid. FMV donations can create multiples of your basis.

High earners leave thousands on the table every single year because of bad CPA advice — not because the law forbids it.

FAQ #6: “I’m W-2 only. Is there still anything I can do?”

Yes, but the strategies look different from self-employment planning:

Starting a spouse-run business that generates active deductions
Investing in working-interest oil and gas to create active losses
Using charitable planning with appreciated assets
Leveraging year-end income timing
Creating legitimate business activity that shifts income buckets
Using real estate in ways that generate active tax reductions

W-2 doesn’t mean stuck. W-2 means you need a strategist who knows the moves available to you.

FAQ #7: “What about my stocks and crypto?”

Year-end is when investment tax strategy matters most.

Capital losses offset gains, but only $3,000 can offset active income
Wash sale rules apply to stocks
Crypto has no wash sale rules

You can sell a crypto position at a loss on December 30, harvest the loss, and buy it back on January 1, effectively keeping your position and the deduction.

If you have gains this year, strategic harvesting can make a massive difference.

FAQ #8: “What if I’m late to tax planning?”

Unless it’s January, you’re not too late for tax planning. Even in October, November, or December, you still have:

Deduction timing opportunities
Depreciation opportunities
Retirement contribution options
High-impact investments that generate active losses
Real estate classifications to qualify for
Charitable strategies to execute

The window doesn’t close until 11:59 PM on December 31.

FAQ #9: “Are IRS audits something to fear?”

No, not if you’re doing things correctly.

Audits are simply examinations. They’re not accusations. People win them every single day.

What matters is:

Documentation
Intent
Consistency
Legislative support
A CPA who understands the rules

The tax code is mostly gray. Your job is to understand the gray, not avoid it.

Fear of audit is one of the most expensive emotions high-income earners have.

FAQ #10: “How do I know if I’m overpaying?”

Ask yourself:

Has my effective tax rate been the same for years?
Do I only talk to my CPA at tax time?
Have I ever received a true tax projection?
Have I been told “you can’t do that” without explanation?
Does my CPA avoid deductions because they “draw attention”?

If any of these are true, you’re almost certainly paying more than the law requires.

Final Word: You Don’t Save Money by Accident

Most high-income earners dramatically overpay the IRS for one simple reason: they wait. They wait for their CPA to bring them ideas. They wait until filing season. They wait because they think “this is just how taxes work.”

But the tax code was never built for passive taxpayers — it was built for people who take action before December 31.

When you diagnose your income buckets, use the incentives Congress created, and stop believing outdated CPA myths, your tax bill can change faster than you think.

If you’re earning at a high level, you should be saving at a high level.
The IRS already gave you the rulebook — most people just never open it.

Download the 2025 End-of-Year Tax Planning Checklist

Want the exact steps our tax professionals recommend high-income clients follow before the year closes?

Download the 2025 End-of-Year Tax Planning Checklist: A simple, high-impact guide you can use today to reduce your tax bill before it’s too late.

‍