Key Takeaways
For high-income investors, tax planning works best as a year-round habit built off the last filing, not a December scramble. Your return shows exactly where money leaked to taxes and where the plan needs work.
- Read your return like a diagnostic, not a receipt.
- Move investments into accounts that fit their tax profile.
- Time contributions, conversions, and gains around your bracket.
- Harvest losses throughout the year, not just in December.
Tax planning for high-income investors doesn’t end when you file your return. In many ways, that’s where it starts. Your filing tells you what actually happened last year: how your portfolio performed after tax, where you paid more than you had to, and what your income and deductions looked like in practice.
That data is the best planning tool you have for the next twelve months. Most of the moves that lower a high earner’s tax bill happen well before April — the return just shows you which ones you missed.
This guide walks through how to read your return like your advisor would, then turn it into a year-round plan. It’s written for high earners in Utah working with a fiduciary financial advisor who coordinates tax strategy alongside investments and estate planning.
Why the Stakes Are Higher at Higher Incomes
The reason tax planning matters more as income grows isn’t just larger dollar amounts. It’s that taxes stack. Once your income crosses certain thresholds, additional taxes turn on, and old ones get worse.
For a married couple filing jointly in 2026, income over roughly $250,000 triggers the 3.8% net investment income tax on interest, dividends, and capital gains. An extra 0.9% Medicare tax kicks in on wages above the same threshold. Long-term capital gains move from 15% to 20% once taxable income clears the top bracket. Utah’s flat state income tax then layers on top of every dollar of ordinary income.
The practical result: a high earner selling a concentrated stock position can face an effective marginal rate north of 37% on that gain before Utah state tax. That’s the environment year-round tax planning is designed for. The moves in this guide save more at high incomes precisely because the stacked rates are so much higher.
How to Turn Your Tax Return Into Next Year’s Plan
Your return is a diagnostic. Read alongside your investment statements, it shows where your money gets leaked to taxes and where you can plug the holes. Work through it in this order.
1. Find portfolio inefficiencies that cost you after-tax
Look for heavy short-term capital gains. Anything held under a year gets taxed at your ordinary income rate. For a high earner in Utah, that combined federal, state, and 3.8% net investment income tax bill can top 40% of the gain.
Then check asset location. Bonds sitting in taxable accounts while stock-heavy ETFs sit in an IRA is usually backwards. Where you hold an investment can matter as much as what you hold. (J.P. Morgan)
2. Look at how you realized gains and used losses
Did an income spike push you into a higher bracket? Did you sell a position in December that would have cost less if you’d waited three weeks into the new year, or potentially split the transaction between the two years? Your return shows whether last year’s timing helped or hurt you — and that pattern usually repeats unless you plan for it.
3. Check how well tax-loss harvesting worked
Tax-loss harvesting only helps when it runs all year, not in a scramble the last week of December. Compare your realized losses against your realized gains on Schedule D. If losses only showed up in Q4, you probably missed the market dips earlier in the year. (Schwab)
4. Review your retirement contributions
Did you use every deferral available — 401(k), Roth conversion opportunities, backdoor Roth, SEP-IRA, or solo 401(k) if you run a business? Your return shows your adjusted gross income, and that number tells you whether more deferral would have moved you into a lower bracket for the year
5. Look at your charitable giving
If you gave cash, ask whether you could have given appreciated stock instead. Donating a stock you bought at $50 that’s now worth $150 lets you deduct the full $150 and skip the capital gains tax on the $100 of growth. On a $25,000 gift, that difference can run into several thousand dollars. (Fidelity)
6. Spot the gaps between your investment plan and your estate plan
High earners often build wealth faster than they update their plan for what happens to it. If your return shows a big jump in account values, your beneficiary designations, trust structures, and gifting strategy probably need a look too.
7 Moves to Lower Your Tax Bill Next Year
Now use what your return told you. These are the changes that pay off across the whole year, not just at year-end.
1. Rebalance without triggering unnecessary tax
Rebalancing keeps your risk in check, but doing it inside taxable accounts can create gains you didn’t need. Do most of your rebalancing inside IRAs and 401(k)s, where trades don’t generate a tax bill. Save the taxable-account moves for when you have losses to pair them with.
2. Get asset location right
Bonds, REITs, and actively managed funds throw off income taxed at ordinary rates. Hold those in tax-deferred accounts. Keep index funds, ETFs, and long-term growth stocks in taxable accounts where you control when gains are recognized. A deeper walk-through lives in our post on tax-efficient investing.
3. Harvest losses all year, not just in December
Set a systematic process. When a position drops meaningfully below your cost basis, capture the loss and reinvest in a similar — not identical — holding to stay in the market and avoid the wash-sale rule. You can offset unlimited capital gains and up to $3,000 of ordinary income per year, then carry the rest forward. (IRS)
4. Time your income
If you can control when income lands — bonus timing, Roth conversion size, business distributions, when to sell a concentrated position — model the tax cost first. A Roth conversion done in a lower-income year can save six figures over a decade. The same logic applies to planning around large capital gains.
5. Front-load retirement contributions
Max the 401(k), the HSA if you have one, and any deferred compensation your employer offers. If you own a business, a defined benefit or cash balance plan can shelter hundreds of thousands more on top of the 401(k) — often the single biggest tax lever available to a profitable owner.
6. Give with appreciated assets, and consider bunching
Instead of writing a check, donate the stock. If your annual giving sits close to the standard deduction, consider bunching two or three years of gifts into a donor-advised fund in one year — you itemize that year and take the standard deduction the others. (BDO USA)
7. Watch what’s changing in the law
Federal tax law shifts often. The One Big Beautiful Bill Act (OBBBA) altered several rules that hit high earners specifically, and state-level changes in Utah and elsewhere layer on top. Review your plan against the current code at least once a year — ideally right after you file, when the last year’s return is still fresh.
A Real Example: A Utah Business Owner Preparing for a Sale
A Utah business owner in his early 60s came to Tencap the year before selling his manufacturing company. He had roughly $8M in investable assets — about 60% in a taxable brokerage account, 30% in his 401(k), and the rest tied up in the operating business. His CPA had modeled the sale, but stacking it on top of a strong W-2 year was going to push him well into the top federal bracket and trigger the full 3.8% net investment income tax.
We worked directly with his CPA to stage the sale across two tax years, front-load his charitable giving into a donor-advised fund in the high-income year, and complete a partial Roth conversion in the following year when his income dropped. We also rebuilt his asset location so his bond allocation moved into the IRA, and his stock positions stayed in the taxable account.
The family kept thousands more of the after-tax sale proceeds than the original one-year timeline would have produced. Every client’s situation is different, and outcomes depend on the details of your circumstances.
Working With a Fiduciary on Year-Round Tax Planning
Coordinating investment decisions with tax strategy isn’t a one-time exercise. It works best when the same team looks at your portfolio, your income, and your tax return together, all year long. That’s how the moves in this guide actually get executed instead of being forgotten by November.
If you’re looking for a financial advisor in Utah who plans this way, Tencap works as a fiduciary and coordinates directly with your CPA and estate attorney. We build the plan around your situation — not the other way around — and it’s the same year-round planning approach we bring to every client relationship.
A first year working together with Tencap usually starts with a review of your last two returns, your account statements, and a call with your CPA. From there, we map the moves that make sense before December, such as deferrals, Roth conversion sizing, harvesting cadence, gifting strategy, and the ones that need to wait until the following year. Nothing gets executed until you sign off.
Schedule a call to walk through your last return together.
FAQs
What is tax planning for high-income earners?
Tax planning for high-income earners is the ongoing work of coordinating investment decisions, retirement contributions, charitable giving, and business income so you don’t overpay when you file. It’s different from tax preparation, which is filing the return. Planning happens all year; preparation happens in April.
When should I start planning for next year’s taxes?
Start the day after you file. Your return is the best diagnostic tool you have, and the earlier in the year you act on it, the more room you have to make changes. Waiting until October or November limits you to a handful of year-end moves instead of a full twelve months of planning.
How much can tax-loss harvesting actually save me?
It depends on your bracket and the size of your gains, but for a high earner in the top bracket, harvesting losses to offset $100,000 of gains can save $30,000 or more in combined federal and state tax. The savings come from doing it throughout the year, not from a December scramble.
Do I need both a financial advisor and a CPA?
Most high earners benefit from both, and those two professionals should talk to each other. Your CPA files the return; your advisor handles the year-round decisions that show up on it. When they coordinate, you catch opportunities neither would find alone — which is a big part of how a fiduciary advisor adds value.
What’s the biggest tax mistake high earners make?
Treating tax planning as an April event. By the time you file, most of the moves that would have lowered the bill are locked in. The bigger wins come from decisions made in June and September — when to sell, when to convert, when to give, etc — not in the week before the deadline.
Greg Black is the owner and founder of Tencap Wealth Coaching, an independent investment advisory firm founded on academic investing principles. As a Certified Financial Planner, Greg takes an educational approach to helping his clients be settled and responsible with their financial circumstances. Greg specializes in helping his clients create a proactive plan to minimize the exposure of market conditions while still harnessing the incredible power of global financial markets.
Greg specializes in "complexity" and is skilled at turning a complicated situation into an organized strategy for the families he serves. Greg, and each advisor of Tencap, is a stated fiduciary. You never have to wonder if your best interest is being served. Greg has been transforming the investor experience since 2012.
