Tax Planning Guide
A comprehensive resource for understanding tax strategies, federal brackets, and the upcoming 2026 changes. Make informed decisions to optimize your tax situation.
2025 Federal Tax Brackets
Understanding tax brackets is fundamental to effective planning. Remember: you're only taxed at the higher rate on income above each threshold, not your entire income.
Single / Married Filing Separately
| Tax Rate | Income Range |
|---|---|
| 10% | $0 – $11,925 |
| 12% | $11,925 – $48,475 |
| 22% | $48,475 – $103,350 |
| 24% | $103,350 – $197,300 |
| 32% | $197,300 – $250,525 |
| 35% | $250,525 – $626,350 |
| 37% | $626,350 – + |
Married Filing Jointly
| Tax Rate | Income Range |
|---|---|
| 10% | $0 – $23,850 |
| 12% | $23,850 – $96,950 |
| 22% | $96,950 – $206,700 |
| 24% | $206,700 – $394,600 |
| 32% | $394,600 – $501,050 |
| 35% | $501,050 – $751,600 |
| 37% | $751,600 – + |
Key Insight: The goal of tax planning is often to "fill up" lower brackets strategically—timing income and deductions to minimize the amount taxed at higher rates.
Strategy Deep Dives
Detailed breakdowns of the most impactful tax planning strategies evaluated by our planner.
Maximize Retirement Contributions
The foundation of tax-advantaged wealth building
Key Benefits
- Immediate tax deduction (Traditional)
- Tax-free growth and withdrawals (Roth)
- Employer matching is free money
- Lower your AGI for other benefits
2025 Contribution Limits
| Account | Limit | Catch-Up |
|---|---|---|
| 401(k)/403(b) | $23,500 | +$7,500 if 50+ |
| Traditional/Roth IRA | $7,000 | +$1,000 if 50+ |
| SEP-IRA | 25% of comp, up to $70,000 | N/A |
| HSA (Self) | $4,300 | +$1,000 if 55+ |
| HSA (Family) | $8,550 | +$1,000 if 55+ |
Pro Tip: Contribute early in the year for more tax-advantaged growth
S-Corporation Election
Reduce self-employment taxes through entity structure
Key Benefits
- Save 15.3% SE tax on distributions
- Maintain pass-through taxation
- Qualify for QBI deduction
- Build retirement faster with Solo 401(k)
How It Works
- 1Pay yourself a "reasonable salary" (subject to payroll taxes)
- 2Take remaining profits as distributions (no SE tax)
- 3Still taxed at ordinary income rates
- 4Save up to ~$20,000+/year in SE taxes
Pro Tip: Typically beneficial when SE income exceeds $60,000-$80,000
Roth Conversion Ladder
Strategic tax bracket filling for tax-free retirement
Key Benefits
- Tax-free growth and withdrawals
- No RMDs (required minimum distributions)
- Tax diversification for retirement
- Hedge against future tax increases
Strategy
- Convert Traditional → Roth in low-income years
- Fill up current tax bracket without jumping to next
- Pay taxes now at known rates vs. unknown future rates
- Especially valuable before 2026 TCJA sunset
Pro Tip: Years with lower income: sabbaticals, early retirement, business losses
QBI Deduction (Section 199A)
Up to 20% deduction on qualified business income
Key Benefits
- 20% deduction on pass-through income
- Reduces effective tax rate significantly
- Available regardless of itemizing
- Can save $10,000s for business owners
Limitations
- SSTB phase-out: $232,100 single, $464,200 MFJ (2025)
- W-2 wage and capital limitations at high incomes
- Cannot exceed 20% of taxable income
- Must be from qualified trade or business
Pro Tip: Time income/deductions to stay under SSTB thresholds
2026 TCJA Sunset
The Tax Cuts and Jobs Act (TCJA) of 2017 included many provisions that are scheduled to expire after 2025. Understanding these changes is critical for long-term planning.
Timeline
Tax Cuts and Jobs Act signed into law
Lower rates, higher standard deduction, SALT cap begins
Final year to maximize current lower rates
Many provisions expire; rates may increase
What Changes After 2025?
Unless Congress acts, these changes take effect January 1, 2026
| Provision | 2025 (Current) | 2026+ (Projected) |
|---|---|---|
| Top marginal rate | 37% | 39.6% |
| Standard deduction (MFJ) | $30,000 | ~$15,000 |
| Personal exemption | $0 | ~$5,000 per person |
| SALT cap | $10,000 | Unlimited |
| QBI deduction | 20% | Expires |
| Child tax credit | $2,000 | $1,000 |
Planning Opportunity: 2025 may be an excellent year for Roth conversions, accelerating income, or other strategies that benefit from current lower rates—especially if you expect to be in a higher bracket after TCJA expires.
Ready to Plan Your Tax Strategy?
Use our Multi-Year Tax Planner to see how these strategies apply to your specific situation and get personalized recommendations.
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