Maximize your wealth with these tax strategies
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To maximize wealth, Americans must look beyond smart investments and embrace conscious tax planning.
From strategies aimed at reducing taxable income to tax-efficient portfolio moves, there are many ways investors can build and protect their capital. However, many people cannot benefit from the options available to them.
“When people are looking for ways to save money — yes, you can buy in bulk, yes, you can limit eating out — but sometimes people forget that you can be strategic with tax planning to save money,” said certified financial planner Kamila Elliott, co-founder and CEO of Collective Wealth Partners. “Not thinking about tax planning can be a significant oversight for many families.”
In fact, in a recent survey Nationwide Retirement Institute He found that most Americans are unprepared when it comes to taxes.
According to the survey, while 80 percent of respondents expect taxes to increase in the future, only 31 percent of this group are taking steps to adjust their financial plans accordingly. What’s more, 17% of investors said not knowing the best tax strategies for their portfolio is one of their biggest concerns about retirement planning.
This preparation can be as simple as taking advantage of workplace benefits or making targeted investment decisions based on your income and tax bracket.
Maximize your benefits
Employers may offer a variety of ways to reduce your taxable income, including 401(k)s and health savings accounts.
But those who earn more than $150,000 from their current employers in 2025 must deposit their catch-up contributions into an after-tax Roth account. This means they won’t pay taxes when withdrawing money.
If you can maximize those pre-tax deductions, you can limit some of your income from moving up the progressive graph, and that’s real savings.
CFP Kamila Elliott
CEO of Collective Asset Partners
Deposits into health savings accounts are also made before taxes. HSAs are a way for those with high-deductible health plans to save money and pay for qualified medical expenses.
They can also be a great investment vehicle for retirement, said certified public accountant AJ Campo, president of Campo Financial Group.
“It allows you to set money aside, get a pre-tax benefit for it, get the appreciation benefit because it’s invested, and then use it to pay back medical expenses later in life or just take it as a regular retirement distribution as if it were a traditional IRA. [individual retirement account]” he said.
Those who do not qualify for an HSA may consider a flexible health care spending account that is used for qualified items that must be used each year. There are also FSAs for dependent care, which can include day care or camp expenses. Healthcare FSAs have a maximum contribution limit of $3,400 for 2026, while dependent care FSAs have a limit of $7,500 per household.
“If you can maximize those pre-tax deductions, you can limit some of your income from going up the ascending graph, and that’s real savings,” said Elliott, a member of CNBC’s Council of Financial Advisers.
Where your investments are is important
Strategically placing your investments in appropriate accounts is another way to reduce your tax burden and increase your wealth.
For example, investments that produce income taxed at normal rates go into retirement accounts like IRAs, said Cathy Curtis, CFP, founder and CEO of Curtis Financial Planning. Ordinary rates are almost always higher than capital gains.
“I don’t know how many people understand the difference between the capital gains rate and the regular tax rate, but it can make a significant difference,” he said.
More tax-efficient types of investments, such as exchange-traded funds and municipal bonds, should be transferred to a taxable account, said Curtis, who is also a member of the exchange. CNBC Council of Financial Advisors.
He noted that a Roth IRA, funded with money that has already been taxed, is a great place to get the most growth from your assets.
“You could grow this thing like crazy your whole life and it would never be taxed,” he said.
Take advantage of discounts
Tax loss harvesting is another way to lower your tax bill by selling losing investments to offset any capital gains. When losses exceed profits, you can deduct up to $3,000 from your regular income.
While this is a popular year-end strategy, investors should consider it all year long, especially during times of volatility like now, Curtis said.
“I’m currently looking for short-term loss opportunities that I can use to offset my gains elsewhere,” he said. “I don’t think you should overdo it, but it’s a good strategy, especially for those who have large capital gains things that are a very large position in their portfolio. I’ll try to sell something at a loss and see if I can make some profit on that investment.”
Scheduling a Roth conversion
Investors concerned about future tax rates or required minimum distributions are increasingly turning to Roth conversions, which essentially transfer funds from an IRA to a Roth IRA. They pay income tax on the converted balance but have no tax bill when they start withdrawing.
But Curtis said investors should be careful about the timing of conversions.
“I strategically look at years where my client can have lower income, convert a Roth, and it won’t put them in a very high marginal tax bracket,” he said.
“It usually happens after retirement,” he added. “Also, unfortunately, some people lose their jobs and may have a lower income for a year, or they decide to take a sabbatical and have a lower income for a year. Then I’ll do a Roth conversion, too.”
“Don’t let the tax tail wag the dog. Most people just focus on the now, and I want to save on taxes now — and that’s very shortsighted,” Camp said. “How much do I want to pay five, 10, 15, 20 years from now? Or how can I reduce my risk in the long run? Sometimes you take the hit now and don’t have to worry about any payments in the future.”
Donate your investments
Curtis prefers to use high-value assets or mutual funds because they provide capital gains income at the end of the year under donor-advised funds. Donations can be made over time.
For example, he always recommends them to clients who own company shares that have increased in value significantly.
“It’s a huge tax advantage that you can give away very valuable shares and avoid capital gains forever,” he said.
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