Maximize your wealth with these tax strategies

To maximize wealth, Americans must look beyond smart investments and adopt smart tax planning.

From strategies aimed at reducing taxable income to moving to a tax-efficient portfolio, there are many ways investors can build and protect their capital. However, many people do not take advantage of the options available to them.

“When people are looking for ways to save money, yes, you can buy in bulk or limit eating out, but I think sometimes people forget that you can strategically plan your taxes to save money,” said Camilla Elliott, co-founder and CEO of Collective Wealth Partners and certified financial planner. “Not thinking about tax planning can be a major oversight for many families.”

In fact, a recent survey from the Nationwide Retirement Institute found that most Americans are unprepared when it comes to taxes.

The poll found that while 80% of people expect future tax increases, only 31% of them are taking steps to adjust their fiscal plans accordingly. Additionally, 17% of investors said that not knowing the best tax strategy for their portfolio is one of their biggest concerns in retirement planning.

Preparing for it can be as simple as taking advantage of workplace benefits or making targeted investment decisions based on your income and taxes.

Your employer may offer several ways to reduce your taxable income, such as a 401(k) or health savings account.

Employees can have up to $24,500 pre-tax withheld from their 2026 paycheck and invested in their 401(k) or 403(b). People aged 50 and over can invest an additional $8,000 in catch-up contributions, while those aged 60 to 63 can make a ‘super catch-up’ contribution of up to $11,250. Investments are tax deferred until the funds are withdrawn at retirement.

However, those who earned more than $150,000 from their current employer in 2025 must put their catch-up contributions into an after-tax Roth account. This means you won’t pay taxes on withdrawal.

Deposits to medical savings accounts are also made pre-tax. HSAs are a way for people 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 AJ Campo, a certified public accountant and president of Campo Financial Group.

“You can keep your money, receive pre-tax benefits, and take advantage of the appreciation from your investments to reimburse your medical expenses later in life, or take them as regular retirement distributions like in a traditional IRA (Individual Retirement Account),” he said.

If you don’t qualify for an HSA, you can consider a Health Flexible Spending Account, which is used for eligible items that you need to use each year. There is also an FSA for dependent care, which can include day care and camp costs. The 2026 contribution limit for health care FSAs is $3,400, while the limit for dependent care FSAs is $7,500 per household.

“If you can maximize these pre-tax deductions, you can limit the portion of your income that goes up the progressive chart, and that’s the real savings,” said Elliott, a member of the CNBC Financial Advisors Council.

Investing strategically in the right accounts is another way to reduce your tax burden and grow your wealth.

For example, investments that produce income that is taxed at ordinary rates are moved into a retirement account such as an IRA, says Kathy Curtis, CFP, founder and CEO of Curtis Financial Planning. Regular interest rates are almost always higher than capital gains interest rates.

“I’m not sure how many people understand the difference between capital gains rates and regular tax rates, but it can make a big difference,” she says.

Curtis, who is also a member of the CNBC Financial Advisor Council, said more tax-efficient types of investments, such as exchange-traded funds and municipal bonds, should be moved into taxable accounts.

She noted that Roth IRAs, which are funded with money that has already been taxed, are the best place to put your assets with the highest growth rates.

“You can grow it like crazy for a lifetime and never pay taxes on it,” she said.

Loss recovery is another way to lower your tax bill by selling investments that have suffered losses and offsetting capital gains. If your losses exceed your gains, you can deduct up to $3,000 from your ordinary income.

Although it’s a popular year-end strategy, Curtis said investors should consider it throughout the year, especially during volatile times like now.

“Right now, I’m looking for an opportunity to take a short-term loss and offset the gains somewhere else,” she said. “I don’t think you can overdo it, but it’s a good strategy, especially if you own something with a high cap gain that’s an oversized position in your portfolio. Think about whether you can sell something at a loss and get some return on your investment.”

Investors concerned about future tax rates and 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 there is no tax charge once you initiate the withdrawal.

However, investors need to be careful about the timing of the switch, Curtis said.

“I strategically look at years where a client’s income may be lower, they can convert the Roth, and their marginal tax rate won’t be too high,” she said.

“Generally, that’s after they retire,” she added. “Also, some people unfortunately lose their jobs and end up making less money for a year. Or maybe they decide to take a sabbatical and make less money for a year. So I do a Roth conversion.”

For high-income earners, Campo said the giant backdoor Roth is also an option. These are for investors who have already maxed out their 401(k)s. Some people can make after-tax 401(k) contributions and transfer the funds to a Roth. The maximum total 401(k) contribution limit for 2026 is $72,000.

“Don’t get caught up in taxes. Most people only focus on the now, and I want to save on taxes right now, and that’s very short-sighted,” Camp said. “What do I want to pay five, 10, 15, 20 years from now? Or how can I reduce my long-term risk? In some cases, if I take that hit now, I won’t have to pay anything in the future.”

Donor-advised funds allow investors to make tax-deductible charitable contributions using cash or the appraised value of assets.

Mr. Curtis prefers to use highly appreciated assets and mutual funds because they provide capital gains income at the end of the year within donor-promoted funds. Donations can be made over time.

For example, she always suggests them to clients who own stocks in companies that have increased significantly in value.

“The fact that you can transfer appreciated stock and avoid that capital gain forever is a huge tax benefit,” she said.

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