High Earner Tax Planning ($350-500K)

This income range triggers QBI deduction phase-out for service businesses and exposes you to multiple surtaxes. Strategic planning becomes essential to avoid losing deductions.

Additional Medicare Tax. On top of the standard 1.45% Medicare tax, you owe an additional 0.9% on earned income above $200,000 (single) or $250,000 (married filing jointly). Unlike regular Medicare tax, your employer does not match this surcharge. Combined with NIIT on investment income, high earners in this range face a consistent 3.8% surtax layer.

Most credits are gone. Education credits (American Opportunity, Lifetime Learning), the student loan interest deduction, and traditional IRA deductibility are fully phased out at this income. Charitable deductions and mortgage interest remain, but the $10,000 SALT cap limits the state tax deduction regardless of what you actually pay.

Retirement maximization is critical. Every dollar sheltered in tax-advantaged accounts reduces your taxable income at a 35% rate. Maxing out a 401(k) at $23,500 saves roughly $8,200 in federal taxes alone. If you are self-employed, a SEP-IRA or defined benefit plan can shelter dramatically more.

The tradeoff: At this level, the strategies that remain are mostly about maximizing retirement contributions, timing income and deductions, and managing investment tax exposure. A CPA who works with clients in this range knows which levers still move.