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 in low-income years before RMDs begin
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
The TCJA Sunset That Didn't Happen
The Tax Cuts and Jobs Act (TCJA) of 2017 was scheduled to expire after 2025 — but the One Big Beautiful Bill Act (OBBBA, signed July 2025) made its core provisions permanent. Here's what was scheduled to happen versus what the law actually is now.
Timeline
Tax Cuts and Jobs Act signed into law
Lower rates, higher standard deduction, SALT cap begins
One Big Beautiful Bill Act makes TCJA rates permanent; SALT cap raised to $40,000
TCJA structure continues with inflation adjustments — no sunset
The expanded SALT cap is scheduled to return to $10,000
Scheduled Sunset vs. Actual Law
The OBBBA replaced the scheduled 2026 changes with permanent rules
| Provision | Scheduled Sunset (old law) | Actual 2026 (OBBBA) |
|---|---|---|
| Top marginal rate | 39.6% | 37% (unchanged) |
| Standard deduction (MFJ) | ~$15,000 | $32,200 |
| Personal exemption | ~$5,000 returns | $0 (stays repealed) |
| SALT cap | $10,000 | $40,400 (through 2029) |
| QBI deduction | Expires | 20% (permanent) |
| Child tax credit | $1,000 | $2,200 |
Planning Opportunity: With rates permanent, planning shifts from beating a deadline to optimizing year by year: use the expanded $40,400 SALT cap before it reverts to $10,000 in 2030, take 100% bonus depreciation on qualifying property, and use Roth conversions in low-income years to reduce future RMD taxes.
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