As a high earner, you’re likely always on the lookout for ways to maximize your after tax returns. Let’s explore some advanced strategies that can help you keep more of your hard earned money.

Tax Efficient Investment Strategies to Maximize After Tax Returns

One of the most effective ways to boost your after tax returns is through tax efficient investing. This approach focuses on minimizing the tax impact of your investment decisions.

Consider these strategies:

1. Asset location: Place tax inefficient investments in tax advantaged accounts like IRAs or 401(k)s, while keeping tax efficient investments in taxable accounts.
   1. For example, dividend paying investment in tax advantage accounts
   2. And non dividend or non interest paying investments in after tax accounts
2. Tax loss harvesting: Strategically sell underperforming investments to offset capital gains and reduce your tax bill.
3. Municipal bonds: These can provide tax-free income at the federal level and potentially at the state level too.
4. Index funds and ETFs: These typically have lower turnover, resulting in fewer taxable events.

By implementing these strategies, you can significantly increase your retirement savings while minimizing your tax burden.

A Bonus strategy to maximize after tax returns

In order to utilize this strategy you will have to have taxable income less than $96,700 Married Filing Jointly or $48,350 Single Filing Happy in 2025.

Or less than $94,050 Married Filing Jointly or $47,025 Single Filing Happy in 2024.

See the important numbers document here for more information.

If you are within these income tax amounts then you are able to sell investments at a gain (as long as the sale does not put you in a higher tax bracket) and you have held the investments for longer than a year. Then you are able to sell the investments in your after tax investment account at a gain and pay no tax on the gain. 

Because you are in the 0% long term tax bracket. This strategy is beneficial for those who are looking to diversify some of their investments and maximize their after tax return and pay 0 in taxes on the gain.

Not to mention if you decide to rebuy the investment you have effectively moved up your cost basis. 

Retirement Account Optimization for Higher After Tax Returns

Maximizing your after tax returns often involves making the most of your retirement accounts. Here’s how:

1. Max out your 401(k) contributions: In 2024, you can contribute up to $23,000 if you’re under 50, or $30,500 if you’re 50 or older.
   1. For 2025, you can contribute up to $23,500 if you’re under 50, or $31,000 if you’re 50 or older.
   2. Also, in 2025 you can contribute an additional catch up contribution if you are between the ages of 60-63 in the amount of $11,250 instead of the $7,500.
2. Consider a Backdoor Roth IRA: If your income is too high for a direct Roth IRA contribution, this strategy can help you still benefit from tax-free growth.
3. Explore a Mega Backdoor Roth: If your 401(k) plan allows after tax contributions, this strategy can help you save even more in a Roth account.
4. Don’t forget about Health Savings Accounts (HSAs): These offer triple tax benefits and can be a powerful tool for maximizing your after tax returns.

Celebrating financial wins like maximizing your retirement contributions can have a significant impact on your long-term financial health.

Estate Planning Techniques to Preserve After Tax Wealth

For high earners, estate planning is crucial for preserving wealth and maximizing after tax returns for future generations. Consider these strategies:

1. Gifting: Take advantage of the annual gift tax exclusion ($19,000 per recipient in 2025) to transfer wealth tax free.
2. Trusts: Various types of trusts can help minimize estate taxes and protect assets.
3. Charitable giving: Donating appreciated assets can provide tax benefits while supporting causes you care about.
4. Life insurance: This can provide liquidity to pay estate taxes and preserve wealth for heirs.

Creating a trust at the right time can be a powerful tool for protecting your assets and maximizing after tax returns for your beneficiaries.

Business Owners: Strategies to Maximize After Tax Profits

If you’re a business owner, there are additional strategies you can employ to maximize your after tax returns:

1. Choose the right business structure: S-Corps, C-Corps, and LLCs have different tax implications.
2. Maximize deductions: Keep meticulous records and work with a tax professional to ensure you’re claiming all eligible deductions.
3. Implement a retirement plan: Options like SEP IRAs or Solo 401(k)s can help you save more for retirement while reducing your taxable income.
4. Consider tax advantaged investments: Opportunity Zones or 1031 exchanges can provide tax benefits for real estate investors.

The Importance of Professional Guidance

While these strategies can be powerful tools for maximizing your after tax returns, they’re also complex and require careful planning. That’s where professional guidance comes in.

A Small Investment is a fee-only financial planning firm specializing in helping high earners and high-net-worth individuals maximize their after tax returns. Our team of experts can help you navigate these complex strategies and develop a personalized plan to achieve your financial goals.

Ready to take your financial planning to the next level? Book a complimentary mutual fit session here to see how we can help you maximize your after tax returns.

Staying Informed and Adapting Your Strategy

Tax laws and financial regulations are constantly changing. To truly maximize your after tax returns, it’s crucial to stay informed and adapt your strategy as needed.

Consider reading financial publications, attending seminars, or working with a financial advisor/planner who can keep you updated on the latest developments. The “Organize Your Financial Life” book by me; Andre Small, Certified Financial Planner with over 15 years of experience, is an excellent resource for staying on top of your finances. Learn more about Andre Small and my approach to financial planning here.

Remember, maximizing your after tax returns is an ongoing process. It requires regular review and adjustment of your financial strategies. By staying proactive and seeking professional guidance when needed, you can ensure that you’re making the most of your hard earned money and building a secure financial future.