How to Pay Less Taxes in 2025: A Practical Guide for High-Income Households

Imagine this: it’s April 2026, you’re staring at your tax return, and the number at the bottom is… bigger than last year, even though your life doesn’t feel that different. Same job, same company, same RSUs.
If your household is in a top tax bracket, that moment isn’t just about writing a bigger check - it’s often the moment you realize something:

You could have pulled more levers, but you just didn’t know which ones or when.

Here’s the catch: most of those levers are tied to the calendar. By the time you’re filing in 2026, many of the smartest moves for 2025 are gone for good.
This guide is about doing it differently: clean, boring, fully above-board strategies. No gimmicks, no grey areas, so high-income households like yours pay less tax over a lifetime, not just in a single lucky year.

1) Max Out the “Obvious” Tax Shelters (They Add Up Fast)

Before fancy strategies, squeeze the basics. For 2025, key limits to sanity-check:

• 401(k)/403(b) elective deferrals (2025): $23,500 (plus catch-up rules depending on age/plan) (Internal Revenue Service)
• IRA contribution limit (2025): $7,000 ($8,000 if age 50+) (Internal Revenue Service)
• HSA contribution limits (2025): $4,300 self-only / $8,550 family (plus $1,000 catch-up at 55+) (Internal Revenue Service)

Why this matters for high-income households

At your income level, a dollar of deduction isn’t “just a dollar” - it’s a dollar taxed at your marginal rate. That’s why maxing these isn’t “basic”; it’s high-leverage.

What to do in 2025

• Adjust payroll now so you actually hit the 401(k) max by year-end. (Internal Revenue Service)
• If doing Roth strategies via IRA, make sure you understand the IRA contribution rules and limits. (Internal Revenue Service)
• If you have an HSA-eligible plan, treat the HSA like a long-term tax-advantaged account, not a checking account. (Internal Revenue Service)

2) Use Tax-Loss Harvesting to Offset Gains (Without Breaking Your Strategy)

High-income households often have capital gains from:

• RSU sales
• taxable brokerage portfolios
• ESPP stock
• concentrated positions

Tax-loss harvesting is the habit of realizing losses to offset gains while staying invested.

The rule people mess up: wash sales

A wash sale happens when you sell at a loss and buy “substantially identical” securities within the window (commonly summarized as 30 days before or after the sale). (investor.gov)

This is where “quickly re-buying the same thing” can erase the immediate tax benefit.

What to do in 2025

• Run a gains/losses review in Q4 (or monthly if you’re actively selling RSUs).
• Harvest losses deliberately, and reinvest in similar exposure (not substantially identical). (investor.gov)

3) Shift Future Income Into Better Tax Buckets (Roth & Lower-Income Years)

High income isn’t always permanent. There are often “down years”:

• sabbaticals
• job transitions
• early retirement years
• post-liquidity, pre-withdrawal years

The bigger idea: don’t just ask “How do I pay less tax in 2025?” Ask:
“How do I structure my assets so I’m not trapped paying peak tax rates forever?”

One relevant concept: after-tax dollars into Roth (where allowed)

Some plans allow after-tax contributions and rollovers/conversions mechanics that can route after-tax dollars into Roth (often discussed in “mega backdoor Roth” conversations). The IRS has guidance on rolling after-tax amounts and related allocation rules. (Internal Revenue Service)

(These are plan-specific and execution details matter - this is absolutely “measure twice, cut once.”)

4) Build a Smarter Charitable Giving Plan (If You Already Give)

If you already give meaningfully, the question isn’t “should I donate?” - it’s “what’s the most tax-efficient way to donate?”

Two high-impact moves

Donate appreciated securities instead of cash

• Potentially avoids capital gains tax you’d incur if you sold first. (Schwab Brokerage)

Use a Donor-Advised Fund (DAF) for bunching

• A DAF is maintained by a 501(c)(3) sponsoring organization; you contribute now (deduction now, subject to rules) and grant later. (Internal Revenue Service)

This can be especially useful when you have a spike year (big bonus, large RSU sale, liquidity event).

5) Don’t Ignore Underwithholding (Penalties Are Common and Avoidable)

This is the one that shocks people: plenty of high earners pay penalties not because they didn’t have the money, but because withholding/estimated payments didn’t track their real income.
The IRS lays out how to avoid the underpayment penalty, commonly summarized via paying at least 90% of current-year tax or 100% of prior-year tax (110% for higher AGI thresholds). (Internal Revenue Service)
If your RSU income or bonus pattern shifted in 2025, don’t assume payroll withholding “handled it.”

6) State Taxes: Treat Them Like a Headline, Not a Footnote

For high earners, state tax planning can matter as much as federal planning, especially with:

• remote work across states
• mid-year moves
• equity comp tied to where services were performed

Even if you don’t “optimize” state taxes, you at least want to avoid accidental mistakes.

7) Use a Real Tax Projection, Not Last Year’s Return

The single most underrated move:
Get a forward-looking tax projection done before December 31, 2025.

It helps you quantify:

• whether you’re likely to owe (and potentially owe penalties) (Internal Revenue Service)
• whether harvesting losses changes your outcome materially
• whether charitable bunching or DAF funding is worth it (Internal Revenue Service)
• whether retirement contributions are on track (Internal Revenue Service)

When you can see the numbers, decisions get easy.

Year-End Checklist for 2025 (Quick Run-Through)

• On track to max 401(k)/403(b) for 2025? (Internal Revenue Service)
• IRA contributions planned correctly (limits/eligibility)? (Internal Revenue Service)
• HSA maxed if eligible? (Internal Revenue Service)
• Gains/losses reviewed; harvesting executed without wash-sale mistakes? (investor.gov)
• Charitable giving structured (appreciated stock / DAF if relevant)? (Schwab Brokerage)
• Withholding/estimated payments checked to avoid underpayment penalties? (Internal Revenue Service)
• Tax projection completed before 12/31?

Want to Go Deeper?

Every household’s situation is different, especially when it comes to RSUs, bonuses, multi-account portfolios, and state tax complexity.
If you’d like to walk through these strategies and see how they apply specifically to you, book a deep-dive session with us:

👉 Book a deep-dive session: https://alphanso.ai/request-a-callback