Maximize your wealth with these tax strategies
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To maximize wealth, Americans should look beyond smart investments and embrace savvy tax planning.
From strategies aimed at reducing taxable income to tax-efficient portfolio moves, there are a host of ways investors can build and protect their capital. However, many people aren’t taking advantage of the options available to them.
“When people are searching for ways to save money — yes, you can buy in bulk, yes, you can limit eating out — but I think sometimes people forget that you can be strategic in tax planning to save money,” said certified financial planner Kamila Elliott, co-founder and CEO of Collective Wealth Partners. “Not thinking about tax planning, it can be a significant oversight for a lot of families.”
In fact, a recent survey from the Nationwide Retirement Institute found that most Americans aren’t prepared when it comes to taxes.
While 80% expect taxes to rise in the future, only 31% of that cohort are taking steps to adjust their financial plans accordingly, the poll found. What’s more, 17% of investors said not knowing the best tax strategies for their portfolio is one of their biggest retirement-planning concerns.
That preparation can be as straightforward as taking advantage of workplace benefits to making targeted investment decisions based on your income and tax bracket.
Maximize your benefits
Employers may offer several ways to reduce your taxable income, including 401(k)s and health savings accounts.
Employees can have up to $24,500 taken out of their paychecks pretax in 2026 and invest in a 401(k) or 403(b). Those 50 and older can invest an additional $8,000 in catch-up contributions, while those ages 60 to 63 can make a “super catch-up” contribution of up to $11,250. The investments are tax-deferred until the money is withdrawn in retirement.
However, those who earned more than $150,000 from their current employer in 2025 must put their catch-up contributions in an after-tax Roth account. That means they don’t pay taxes upon withdrawal.
If you can maximize these pretax deductions, you can limit part of your income going up the progressive chart, and that’s real savings.
CFP Kamila Elliott
CEO of Collective Wealth Partners
Deposits into health savings accounts are also done 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 tool for retirement, said certified public accountant AJ Campo, president of Campo Financial Group.
“It allows you to put money away, get a pretax benefit for it, take advantage of the appreciation because it’s invested, and then use it to reimburse yourself for medical expenses later in life, or just take it as a regular retirement distribution, like as if it were a traditional IRA [individual retirement account],” he said.
Those who may not qualify for an HSA can consider a health-care flexible spending account, which is used for qualified items that must be used each year. There are also FSAs for dependent care, which can include daycare or camp costs. Health-care FSAs have a maximum contribution limit of $3,400 for 2026, while the dependent care FSA has a limit of $7,500 per household.
“If you can maximize these pretax deductions, you can limit part of your income going up the progressive chart, and that’s real savings,” said Elliott, a member of the CNBC Financial Advisor Council.
Where your investments sit matters
Strategically placing investments in the appropriate accounts is another way to reduce your tax burden and boost your wealth.
For instance, investments that give off income that is taxed at ordinary rates go into retirement accounts like IRAs, said CFP Cathy Curtis, founder and CEO of Curtis Financial Planning. Ordinary rates are almost always higher than those of capital gains.
“I don’t know how many people understand the difference between the capital gain rate and the ordinary tax rate, but it can make a substantial difference,” she said.
More tax-efficient types of investments, such as stock exchange-traded funds and municipal bonds, should go into a taxable account, said Curtis, also a member of the CNBC Financial Advisor Council.
A Roth IRA, which is funded with money already taxed, is a great place to put your highest growth assets, she noted.
“You could grow that thing like crazy your whole life and you’ll never be taxed on it,” she said.
Take advantage of sell-offs
Tax-loss harvesting is another way to lower your tax bill by selling losing investments to offset any capital gains. You can subtract up to $3,000 from regular income once losses exceed profits.
While it is a popular year-end strategy, investors should be considering it all year long — especially during times of volatility, like now, Curtis said.
“Right now, I’m looking for any short-term loss opportunities that I can take to offset gain somewhere else,” she said. “I don’t think you should overdo it, but it’s a good strategy, especially for people who have owned things with huge cap gain that’s an oversized position in their portfolio. I’ll look to see if I could sell something at a loss and take some gain from that investment.”
Timing a Roth conversion
Investors concerned about future tax rates or required minimum distributions are increasingly turning to Roth conversions, which essentially transfers funds from an IRA to a Roth IRA. They pay income taxes on the converted balance but have no tax bill once they start withdrawing.
However, investors should be careful on timing the conversions, Curtis said.
“I look at strategically at years where my client may have lower income, where they can convert a Roth and it won’t take them into too high of a marginal tax bracket,” she said.
“Generally, that’s after they retire,” she added. “Also, some people lose their job, unfortunately, and may have a lower income one year, or they decide to take a sabbatical and they’ll have lower income one year. So I’ll do a Roth conversion then.”
For high-income earners, a mega backdoor Roth is also an option, Campo said. These are for investors who have already maxed out their 401(k)s. Some are able to make after-tax 401(k) contributions and transfer the money into a Roth. The maximum total contribution limit for 401(k)s in 2026 is $72,000.
“Don’t let the tax tail wag the dog. Most people just focus on the now, and I want to save taxes now — and it’s very short sighted,” Camp said. “Five, 10, 15, 20 years from now, what do I want to pay? Or how do I mitigate my exposure long term? Sometimes you take the hit now and you’re not going to have to worry about paying anything in the future.”
Donate your investments
Donor advised funds allow investors to make tax-deductible charitable contributions, funded by cash or the appreciation of assets.
Curtis prefers using highly appreciated assets or mutual funds, since they give off capital gain income at the end of the year, within donor advised funds. The donations can be made over time.
For instance, she always suggests them to clients who own company stock that has significantly grown in value.
“The fact that you could give highly appreciated shares and forever avoid that capital gain is a huge tax benefit,” she said.
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