Tax Law and News 7 tax strategies for business owners earning $150,000+ Read the Article Open Share Drawer Share this: Click to share on X (Opens in new window) X Click to share on Facebook (Opens in new window) Facebook Click to share on LinkedIn (Opens in new window) LinkedIn Written by Christopher J. Picciurro, CPA/PFS, MBA, ARA Modified Oct 15, 2025 4 min read For business owners earning more than $150,000 annually, tax planning isn’t just about reducing liabilities; it’s about maximizing efficiency while staying compliant. As income grows, so does exposure to higher tax brackets, self-employment taxes, deduction phaseouts, and additional surtaxes. Implementing strategic tax planning can help clients retain more income and reinvest in their businesses. In no certain order, here are some proven strategies to help high-earning business owners minimize their tax burden, optimize deductions, and build long-term wealth. #1: Maximize retirement contributions One of the most effective ways to reduce taxable income is through retirement plans. High-income business owners can use these to defer income while securing future financial stability. Retirement plan options: Solo 401(k): Ideal for self-employed individuals without employees, except a spouse. Contributions in 2025 can reach $70,000 or $77,500 for those 50+. SEP IRA: Allows contributions up to 25% of compensation or a $70,000 maximum for 2025. Cash balance pension plans: Suitable for businesses with stable cash flow. Contributions can reach six figures, depending on age. Tax planner pro tip: Consider a Roth 401(k) for tax-free growth if the client expects higher future tax rates. Roth IRA phaseout rules do not apply. #2: Implement the Qualified Business Income (QBI) deduction The QBI deduction lets eligible pass-through businesses, including LLCs, S Corporations, and sole proprietors, deduct up to 20% of qualified business income. However, certain service-based businesses face income-based phaseouts. Ways to optimize QBI: Income threshold management: Keep taxable income below $394,600 (married) or $197,300 (single) for 2025 using retirement contributions, HSAs, or depreciation strategies. Shifting income to family: Employ family members to spread income and stay under OBI limits. S Corporation conversion: Helps reduce self- employment taxes and optimize the OBI deduction. #3: Use tax-advantaged accounts Tax-advantaged accounts offer additional ways to reduce taxable income while funding future needs. Health Savings Accounts (HSAs): For those with high-deductible health plans (HDHPs), HSAs provide triple tax benefits: Contributions are tax-deductible. Growth is tax-free. Withdrawals for medical expenses are tax-free. 2025 contribution limits: $4,300 for individuals. $8,550 for families. $1,000 catch-up for those 55+. Tax planner pro tip: After age 65, HSA funds can be used for non-medical expenses penalty-free, making it a supplemental retirement tool. 529 plans for education: Contributions grow tax-free, and many states offer tax deductions or credits. High earners benefit the most from tax-free growth in high-bracket situations. #4: Accelerate depreciation and use Section 179 For business owners investing in equipment or real estate, accelerated depreciation strategies offer significant upfront deductions. Key depreciation strategies: Section 179: Deduct up to $2,500,000 in 2025 on qualifying business assets. Bonus depreciation: 100% bonus depreciation is available in 2025 for new and used property. Cost segregation studies: Accelerate depreciation by identifying shorter-lived assets within real estate purchases. Tax planner pro tip: If real estate was purchased in a previous year, a 481(a) adjustment can be used to retroactively apply cost segregation benefits. #5: Income splitting and shifting Strategic income distribution can lower overall tax liability by spreading income across lower tax brackets within the family. Hiring family members: Employing a spouse or children helps shift income while keeping wealth within the family. Children under 18 can earn up to $15,750 tax-free (2025 standard deduction). Sole proprietors or LLCs avoid payroll taxes when paying minor children. Income earned can fund a Roth IRA for children, promoting long-term, tax-free growth. Family management companies: Set up a separate entity for administrative work, shifting income to family members and optimizing tax brackets. #6: Charitable giving and donor-advised funds Charitable contributions not only support meaningful causes but also offer tax benefits. Strategies for giving: Donor-Advised Funds (DAFs): Contribute assets for immediate tax deductions while granting funds over time. Qualified Charitable Distributions (QCDs): Business owners over age 70½ can donate directly from IRAs, reducing taxable income and meeting required minimum distributions (RMDs). Gifting appreciated assets: Donate stocks or real estate to avoid capital gains tax while still receiving a charitable deduction. #7: Structure the business for tax efficiency The legal structure of a business has a significant impact on taxes. Optimizing the entity type can lead to substantial savings. S Corporation election: Sole proprietors or LLCs can elect S corporation status to reduce self-employment taxes. Owners can pay themselves a reasonable salary and take additional profits as distributions, which aren’t subject to payroll taxes. Tax planner pro tip: Conduct a tax analysis to ensure the tax savings outweigh the increased administrative work. Always ensure owners receive a reasonable salary for services performed. C Corporation considerations: The 21% flat corporate tax rate can be advantageous for businesses reinvesting profits. C Corporations allow for fringe benefits, deductible business expenses, and employee stock ownership plans (ESOPs). Final thoughts: Proactive tax planning pays off Business owners earning more than $150,000 face complex tax challenges, but they also have access to powerful strategies for minimizing liability and building wealth. Tax professionals play a vital role in helping these clients leverage tax-advantaged accounts, structure income efficiently, and capitalize on available deductions. The key is proactive planning. By staying ahead of the curve and tailoring strategies to individual client needs, tax professionals can help high-earning business owners reduce their tax burden, while setting the stage for long-term financial success. Previous Post November 2025 tax and compliance deadlines Written by Christopher J. Picciurro, CPA/PFS, MBA, ARA Chris Picciurro is a highly respected expert in U.S.-based tax planning and strategy for real estate investors. Based in Franklin, TN, where he resides with his family, Chris is an accomplished public speaker, recognized for delivering informative and engaging presentations at notable events hosted by organizations such as the National Association of Tax Professionals (NATP), Michigan Association of CPAs, and the Memphis Investment Group. He also previously participated as an Adjust Professor at Baker College and Davenport University. Chris served on the Intuit Tax Council from 2017-2020, and is a co-founder and executive officer of the Integrated CPA Group, founder of Teaching Tax Flow, and the Monthly Recurring Revenue Institute. More from Christopher J. Picciurro, CPA/PFS, MBA, ARA Leave a Reply Cancel replyYour email address will not be published. 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