Increase your wealth with these tax strategies

To increase wealth, Americans should look beyond smart investments and embrace smart tax planning.

From strategies aimed at reducing taxable income to more efficient tax moves, there are many ways investors can build and protect their investments. 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 more, yes, you can cut back on consumption – but I think sometimes people forget that you can have a tax planning strategy to save money,” said certified financial planner, Kamila Elliott, co-founder and CEO of Collective Wealth Partners. “Not thinking about tax planning, it can be a big concern for many families.”

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

Although 80% expect that taxes will rise in the future, only 31% of that group is taking steps to change their financial plans accordingly, the survey found. Additionally, 17% of investors said that not knowing the best tax strategies for their portfolio is one of their biggest challenges in retirement.

That preparation can be as obvious as taking advantage of workplace benefits or making targeted investment decisions based on your income and taxes.

Employers can offer many ways to reduce your tax bill, including 401(k) and health savings accounts.

Employees can have up to $24,500 deducted from their first tax bill in 2026 and invest in a 401(k) or 403(b). Those aged 50 and over can contribute an extra $8,000 to catch-up, while those aged 60 to 63 can make a “super catch-up” contribution of up to $11,250. Investments are tax-deferred until the money is withdrawn during retirement.

However, those who earned more than $150,000 from their current employer in 2025 must put their contributions into an after-tax Roth account. That means they don’t pay taxes when they retire.

Deposits in health savings accounts are also made before taxes. HSAs are a way for those with high-deductible health plans to save money and pay for qualified medical expenses.

It can also be a good investment tool for retirement, said certified public accountant AJ Campo, president of Campo Financial Group.

“It allows you to put money away, get a tax benefit for it, take advantage of the appreciation because it’s invested, and then use it to pay for medical expenses later in life, or take it as a regular retirement distribution, just like a traditional IRA. [individual retirement account],” he said.

Those who may not qualify for an HSA may consider a variable spending account, which is used for qualifying items that must be spent each year. There are also FSAs for dependent care, which may include day care or camp expenses. Health care FSAs have an upper contribution limit of $3,400 for 2026, while a dependent care FSA has a limit of $7,500 per household.

“If you can add these pre-tax deductions, you can reduce the amount of money you get going up on the chart, and that’s real money,” said Elliott, a member of CNBC’s Financial Advisor Council.

Strategically investing in the right accounts is one way to reduce your tax burden and increase your wealth.

For example, investments that provide taxable income at regular rates go into retirement accounts like IRAs, said CFP Cathy Curtis, founder and CEO of Curtis Financial Planning. Normal interest rates tend to be higher than interest rates.

“I don’t know how many people understand the difference between the capital gains rate and the average tax rate, but it can make a big difference,” he said.

Many tax-efficient investment types, such as mutual funds and municipal bonds, should go into a taxable account, said Curtis, who is also a member of CNBC’s Financial Advisory Council.

A Roth IRA, funded with tax-deferred income, is a great place to put your assets for the highest growth, he said.

“You can grow that thing like crazy for the rest of your life and never get taxed on it,” he said.

Tax loss harvesting is another way to lower your tax liability by selling investment losses to offset any capital gains. You can withdraw up to $3,000 from regular income once the loss exceeds the gain.

Although it’s a popular year-end strategy, investors should think about it throughout the year — especially during times of uncertainty, like now, Curtis said.

“Right now, I’m looking for any temporary loss opportunities that I can take to cut profits elsewhere,” he said. “I don’t think you should overdo it, but it’s a good strategy, especially for people who have things with large cap gains that are an extreme position in their portfolio. I’ll look to see if I can sell something at a loss and get a profit from that investment.”

Investors concerned about future tax payments or required minimum deductions are turning to Roth conversions, which essentially transfer money from an IRA to a Roth IRA. They pay income tax at the adjusted rate but have no tax liability once they start withdrawing.

Still, investors should be careful when timing the changes, Curtis said.

“I’m looking at the ideal age where my client can have a low income, where they can convert to a Roth and it won’t put them in a lower tax bracket,” he said.

“Generally, it’s after they retire,” he added. “Also, some people lose their jobs, unfortunately, and they may have a lower income for one year, or they decide to take a sabbatical and they will have a lower income for a year. So I will do a Roth conversion at that time.”

For high-income earners, the mega backdoor Roth is also an option, Campo said. These are for investors who have already maxed out their 401(k). Some are able to make late 401(k) contributions and transfer the money to a Roth. The maximum contribution limit for 401(k)s in 2026 is $72,000.

“Don’t let the tax tail wag the dog. A lot of people are just focused on the now, and I want to save the tax now – and that’s a very short-sighted view,” Camp said. “Five, 10, 15, 20 years from now, what do I want to pay? Or how can I reduce my long-term exposure? Sometimes you buy now and you don’t have to worry about paying anything in the future.”

Donor-advised funds allow investors to make tax-deductible charitable contributions, backed by cash or property appreciation.

Curtis prefers to use highly appreciated stocks or mutual funds, as they provide income at the end of the year, within donor-advised funds. Donations can be made in time.

For example, he always recommends them to clients who own a company’s stock that has grown significantly.

“The fact that you can issue highly appreciated shares and avoid that capital gain forever is a huge tax advantage,” he said.

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