Savvy’s Top Tax Planning Strategies for Efficiency

There’s more to tax planning than simply filing on time. Good planning is about finding ways to keep more of the money you’ve earned. With tax laws set to shift in 2026 as key provisions from the Tax Cuts and Jobs Act (TCJA) expire, now’s the time to think over your approach.

At Savvy, we believe that smart tax planning can support long-term goals, whether those are growing a business, building your retirement, or passing your wealth on to the next generation. Below, we’ll discuss practical strategies to implement before the current rules change.

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The Basics of Tax Planning

Tax planning is all about looking ahead and making wise choices to manage your tax bill. It’s not the same as tax preparation, which typically occurs right before the filing deadline. Instead, tax planning happens throughout the year and helps you line things up so you’re not caught off guard.

A big part of this is knowing how tax brackets work. The U.S. has a progressive system. This means the more you earn the higher the rate on the next portion of your income. That’s why small adjustments, such as using deductions or contributing to retirement accounts, go a long way.

There’s also a difference between deductions and credits. Let’s break it down:

With this in mind, you must also decide between taking the standard deduction or itemizing. The standard deduction is a set amount, but if your itemized expenses, like mortgage interest, medical costs, or charitable donations, add up to more, itemizing may lower your bill even more.

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Four Tax Strategies for Individuals

Tax planning isn’t only for the wealthy. Even if you’re earning a moderate income or bringing in a high salary, a few thoughtful moves go a long way. Below are four common strategies that can lower your tax bill and make the most of what you earn.

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No. 1: Max Out Retirement Contributions

One of the simplest ways to lower your taxable income is to put more money into retirement accounts. There are three common strategies here:

• 401(K): If you have access to a 401(k), your contributions are pre-tax. This means the money goes in before it’s taxed, which lowers your taxable income for the year.
• IRA: You can also contribute to an IRA, either traditional or Roth. Traditional IRA contributions may be tax-deductible depending on your income. Roth IRA contributions, on the other hand, aren’t deductible. However, the money grows tax-free and can be withdrawn tax-free in retirement.
• Catch-Up Contributions: If you’re 50 or older, catch-up contributions let you put in extra. This can help you save more and reduce taxes even further.

No. 2: Tax-Loss Harvesting

This strategy involves selling investments that have lost value to offset gains from other investments that have increased in value. Doing this reduces your overall taxable gains for the year.

It’s commonly used toward the end of the year as investors review their portfolios. Just keep in mind the “wash sale rule,” which says you can’t repurchase the same or a substantially identical investment within 30 days, or the loss won’t count for tax purposes.

No. 3: Strategic Charitable Giving

Giving to causes you care about also helps reduce your tax bill, especially when done thoughtfully. Here are three strategic methods:

• “Bunching” Donations: Instead of giving the same amount each year, you group a few years’ worth of donations into one to exceed the standard deduction threshold and itemize.
• Donating Appreciated Assets: You can also donate appreciated assets like stocks. This lets you avoid paying capital gains taxes on the increase in value while still getting a deduction for the full market value.
• Qualified Charitable Distributions (QCDs): If you’re 70½ or older, Qualified Charitable Distributions (QCDs) from an IRA are another option. These donations count toward your required minimum distributions and aren’t included in your taxable income.

No. 4: Timing Income and Deductions

The timing of when you earn income or take deductions matters more than you might think. For example, if you expect to earn less next year, you might delay income to be taxed at a lower rate. If you expect to earn more, you might accelerate deductions this year to reduce your tax bill while you’re in a higher bracket.

Some people also explore income-splitting strategies. This is when you spread income across family members in lower tax brackets through gifts or business arrangements.

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Four Tax Strategies for Business

If you run a business, tax planning can seriously help your bottom line. These strategies can help any business owners, whether that business is large or small. Here are four ways to make business taxes more manageable and less expensive over time.

No. 1: Choosing the Right Entity Structure

Your business structure affects how you’re taxed, so you need to get it right. Below is a comparison of each business structure so you know what to expect:

If your business has grown or your goals have changed, it may be worth reviewing your current setup.

No. 2: Take Advantage of Business Deductions

Business owners can deduct a wide range of expenses to reduce taxable income. Some common ones include:

• Equipment and software (often under Section 179 or bonus depreciation)
• Business insurance
• Office supplies
• Marketing costs
• Travel and meals (within limits)
• Employee wages and benefits

Keep accurate records and save receipts. Small costs add up quickly over the year. Consult a tax professional If you’re not sure if something qualifies. It’s better to ask than to miss out.

No. 3: Retirement Plans for Business Owners

Setting up a retirement plan is good for your future and can lower your current tax bill. If you’re self-employed or run a small business, you have options such as:

• SEP IRAs: Easy to set up and allow large annual contributions.
• Solo 401(k)s: Great for businesses with no employees (besides a spouse).
• Defined Benefit and Cash Balance Points: Best for high-income earners looking to save a lot quickly.

Contributions are usually tax-deductible, and the money grows tax-deferred until retirement.

No. 4: Key Business Tax Credits

While deductions reduce your taxable income, tax credits reduce your tax bill directly. Businesses can qualify for several valuable credits, including:

• R&D Credit: For businesses that invest in research or improving products and processes.
• Work Opportunity Credit: For hiring employees from certain groups, like veterans or those receiving government assistance.
• Small Business Health Care Credit: For businesses that provide health insurance and meet specific requirements.

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Estate and Wealth Transfer Planning

Passing wealth to the next generation takes more than a will. Good tax planning helps you keep more of your estate intact and reduces the amount that goes to taxes. With the current estate tax exemption set to drop in 2026, it’s especially important to review your strategy now.

Even if you’re not sure your estate would be taxed, there are smart ways to give to your family and causes you care about while complying with the rules.

Gifting Strategies

One of the simpler methods to reduce your taxable estate is by giving gifts during your lifetime. Each year, you can give up to a certain amount per person without triggering gift tax. In 2024, it was $18,000 per recipient. Married couples can give double that.

You can also pay for someone’s medical or educational expenses directly, such as tuition or hospital bills, without using up your annual gift limit, as long as the payments go straight to the provider.

Qualified Personal Residence Trusts (QPRTs)

If you have a valuable home you plan to leave to your children or heirs, a Qualified Personal Residence Trust (QPRT) could be worth a look. It allows you to move your home out of your estate while still living in it for a set number of years.

After the term ends, the home transfers to your beneficiaries, and the value for tax purposes is based on today’s (often lower) numbers, not what it may be worth in the future. This strategy can lower the potential estate tax bill.

Advanced Tax Topics for High-Income Individuals

If your income is on the higher end, your tax situation may come with a few extra layers. The more you earn, the more likely you are to run into rules that aren’t as common for others. Some examples are extra taxes on investments or limits on deductions. But a strategic plan helps you keep more of your earnings and avoid surprises.

Here are few things to keep in mind:

Alternative Minimum Tax (AMT)

The AMT was created to ensure high-income earners pay at least a minimum amount in taxes. It removes some common deductions and adds back certain income, which can lead to a higher tax bill than expected.

While fewer people are hit by the AMT today than in the past, it’s still something to watch. This is especially true if you have a lot of deductions, incentive stock options, or high state and local taxes. Running both a regular and AMT calculation helps you plan ahead.

Net Investment Income Tax (NIIT)

The NIIT is an extra 3.8% tax on investment income, such as capital gains, dividends and rental income. It applies if your modified adjusted gross income goes over $200,000 (single) or $250,000 (married filing jointly).

To reduce this, some people consider spreading out the sale of investments over multiple years, investing in tax-exempt bonds, or shifting income to lower-earning years.

Qualified Small Business Stock (QSBS)

If you own shares in a qualified small business, QSBS rules could let you exclude a big portion of your gain (up to 100% in some cases) when you sell, as long as you’ve held the stock for at least five years.

There are a few requirements to meet, including business size, type of business, and how the stock was acquired. But if you qualify, this is a great way to reduce your tax bill on a successful business investment.

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Cryptocurrency and Digital Asset Taxation

The IRS is paying closer attention to crypto and the rules are getting tighter. Starting in 2025, new reporting requirements (like Form 1099-DA) will make it harder to go undetected. Wallet-by-wallet tracking and more detailed forms mean it’s a good time to clean up your records and understand how your assets are taxed.

Crypto is treated like property, not cash. That means every time you sell, trade, or use it to purchase something, it could trigger a taxable event. Gains from crypto are taxed like other investments. Short-term gains are taxed at your regular income rate. Long-term gains (for assets held over a year), however, usually come with lower rates.

If you’re active in crypto, it’s worth reviewing your transactions and thinking about ways to manage your tax exposure.

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State Tax Optimization Strategies

Where you live and where you earn can affect your taxes. Some states have no income tax. Others have higher rates that add up fast. If you split time between states, work remotely, or have income from multiple locations, it’s worth thinking about how state taxes fit into your plan.

One common approach is managing your residency. Moving to a state with lower or no income tax could reduce your overall tax bill, but you’ll need to prove you’ve made a full transition. That includes changing your driver’s license, voter registration, and spending most of your time there.

There are also workarounds for the SALT cap (state and local tax deduction limit), especially for business owners. Some states allow pass-through entities, like partnerships or S corps, to pay income taxes at the entity level. This strategy can restore some of the deductions that individuals lost with the 2017 tax law changes.

If you earn income in more than one state, plan carefully to avoid double taxation or missed deductions.

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Proactive Planning Pays Off

Taxes are a part of life, but how much you pay and when is shaped by your choices. The earlier you start planning, the more options you have. Are you looking to lower this year’s tax bill, save for retirement, or pass wealth on to your family? A thoughtful approach makes a big difference.

Key Takeaways:

• Tax planning is not the same as tax filing. It’s something you do year-round, not just in April.
• There are strategies for everyone. From maximizing retirement contributions to reviewing your estate plan, small steps lead to big savings.
• High earners and business owners have more to consider. But with that comes more opportunity to plan ahead.
• Rules are changing. The Tax Cuts and Jobs Act provisions expire after 2025, which could impact deductions, estate taxes, and more.
• Good records matter. Keep track of expenses, donations, and investment activity to make smart, informed decisions.

Next Steps to Consider:

• Review your current tax situation with a professional.
• Set goals for the upcoming year. This could be saving more, giving more, or simplifying your finances.
• Update your estate plan, especially with the 2026 tax changes in mind.
• Look for areas where you can take action now, like contributing to retirement accounts or harvesting investment losses.
• Revisit your business structure or deductions if you’re a business owner.

Thinking about your taxes before the year ends helps you stay ahead, rather than catching up later.

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