The Tax Strategy Guide

Choosing the right business entity (LLC, S-Corp, C-Corp, partnership) can dramatically impact your tax liability. Each structure offers distinct advantages for liability protection, self-employment tax savings, and flexibility in distributing profits.

Section 199A allows eligible pass-through business owners to deduct up to 20% of their qualified business income, effectively reducing the top marginal rate from 37% to 29.6% on qualifying income.

PTET elections allow S-Corps and partnerships to pay state income tax at the entity level. While the OBBBA raised the SALT cap to $40,000 for 2026, PTET still provides benefits for owners with state tax liability exceeding that amount.

Proactive year-round tax planning helps business owners strategically time income and deductions, choose optimal filing methods, and coordinate business and personal tax positions for the lowest overall liability.

Business owners have access to powerful retirement plans like SEP IRAs, SIMPLE IRAs, Solo 401(k)s, and defined benefit plans that allow significantly higher contribution limits than standard employee plans.

An accountable plan allows businesses to reimburse employees (including owner-employees) for legitimate business expenses tax-free, avoiding payroll taxes on those amounts.

Section 1202 allows founders and early investors in qualifying C-Corporations to exclude up to 100% of capital gains (up to $10M or 10x basis) when stock is held for more than 5 years.

Employer profit-sharing contributions allow business owners to contribute additional amounts to employee retirement accounts (including their own) beyond standard elective deferrals.

A defined benefit plan that allows significantly higher annual contributions than a 401(k) alone. Ideal for high-earning business owners over 40 who want to accelerate retirement savings.

Employing family members shifts income to lower tax brackets and can create tax-advantaged benefits. Children under 18 employed by a sole proprietorship are exempt from FICA taxes.

Interest from municipal bonds is generally exempt from federal income tax, and often from state tax if issued in your home state. An excellent tool for high-bracket taxpayers seeking tax-efficient income.

Rent your personal home to your business for up to 14 days per year without reporting the rental income. The business deducts the fair-market rent, creating a tax-free transfer.

HSAs offer a triple tax benefit: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. One of the most powerful savings vehicles available.

Strategically timing when you recognize income and deductions across tax years can keep you in lower brackets, optimize deduction phase-outs, and reduce overall lifetime tax liability.

Business credit card rewards earned from business spending are generally not taxable income. Using those points for personal travel, dining, or cashback creates a tax-free personal benefit.

Strategic charitable giving through donor-advised funds, appreciated stock donations, or bunching strategies can maximize deductions while supporting causes you care about.

Real estate offers depreciation deductions, 1031 exchanges, cost segregation studies, and potential real estate professional status to offset active income with passive losses.

Proactive estate planning reduces estate and gift taxes, protects assets, and ensures efficient wealth transfer through trusts, gifting strategies, and business succession planning.

Proper tax planning before selling a business can save hundreds of thousands or millions in taxes through installment sales, QSBS exclusions, charitable remainder trusts, and asset vs. stock structuring.