High-Income Taxpayer Guide

High-Income Taxpayer Guide

High-income taxpayers face unique tax challenges including phaseouts, additional taxes, and complex planning considerations. This comprehensive guide addresses these issues.

Download the Complete Guide

Topics Covered

Alternative Minimum Tax (AMT)

• Parallel tax system
• AMT exemption amounts and phaseouts
• Common triggers (ISOs, SALT, tax-exempt interest)
• Planning strategies

Income Tax Phaseouts

• Itemized deduction limitations
• Personal exemption phaseout (suspended through 2025)
• Credit phaseouts
• QBI deduction limitations for SSTBs

Additional Medicare Tax

• 0.9% additional tax on wages and self-employment income
• Thresholds: $200,000 (single) / $250,000 (MFJ)
• Withholding and estimated tax considerations

Net Investment Income Tax (NIIT)

• 3.8% surtax on investment income
• Modified AGI thresholds
• Covered income types
• Planning to minimize NIIT

Qualified Business Income (QBI) Deduction

• Specified Service Trade or Business (SSTB) limitations
• Wage and property limitations
• Strategies for high-income business owners

Capital Gains Planning

• Preferential rates (0%, 15%, 20%)
• 20% rate threshold
• Coordination with NIIT
• Timing strategies

Tax Planning Strategies for High Earners

Income Deferral

• Deferred compensation
• Installment sales
• Like-kind exchanges
• Qualified opportunity zones

Charitable Giving

• Donor-advised funds
• Charitable remainder trusts
• Qualified charitable distributions (QCDs)
• Appreciated property donations

Retirement Planning

• Maximizing employer plan contributions
• Backdoor Roth IRA strategies
• Cash balance plans and defined benefit plans
• Mega backdoor Roth

Business Structure Optimization

• Entity selection for QBI deduction
• Reasonable compensation planning
• Fringe benefit strategies

Investment Planning

• Tax-loss harvesting
• Municipal bonds
• Qualified small business stock (QSBS)
• Oil and gas investments

2026 Considerations

Many provisions affecting high-income taxpayers are set to sunset after 2025:

• Current income tax rates
• Increased standard deduction
• $10,000 SALT cap
• 20% QBI deduction

Act now to take advantage of current rules.

Related Resources

• Estate Planning

Sophisticated Tax Planning

High-income taxpayers benefit most from proactive, sophisticated tax planning. Schedule a consultation for strategies tailored to your situation.