If you're earning $250K, $500K, or even $1M+ in California, you're probably paying a lot in taxes.
Between federal brackets, California’s top state income tax rates, and the loss of key deductions, it can feel like you’re working for the IRS half the year.
But with smart planning, you can reduce your tax burden and keep more of what you earn.
Here’s how high-income Californians can lower their taxes... without moving to Nevada.
1. Max Out Tax-Advantaged Retirement Plans
High earners should take full advantage of every retirement account available:
401(k): Up to $23,000 (plus $7,500 catch-up if 50+)
Backdoor Roth IRA: Use non-deductible contributions to fund tax-free growth
SEP or Solo 401(k): If you have self-employment income
Defined Benefit Plans: Ideal for business owners looking to shelter large amounts
These reduce your taxable income now and build wealth for the future.
2. Use an HSA—Even If You Don’t Plan to Spend It Soon
If you’re on a high-deductible health plan, contribute the max to a Health Savings Account:
Contributions are tax-deductible
Growth is tax-deferred
Withdrawals are tax-free for qualified expenses
Triple tax advantage = serious long-term savings.
3. Leverage the Mega Backdoor Roth
If your employer offers after-tax 401(k) contributions and in-plan Roth conversions, you may be able to contribute up to $70,000 total into your 401(k)—most of it ending up in Roth.
This strategy can be a game-changer for high-income earners looking to build future tax-free income.
4. Time Capital Gains and Tax-Loss Harvesting Strategically
If you hold investments in a taxable brokerage account:
Be mindful of short-term vs. long-term capital gains
Consider harvesting losses to offset gains (or up to $3,000 of ordinary income)
Use appreciated assets for charitable giving to avoid capital gains entirely
These small decisions can have big tax impacts.
5. Make Charitable Giving Work Harder
Consider these advanced giving strategies:
Donor-Advised Funds (DAFs): Bunch multiple years of giving into one tax year
Gift appreciated stock instead of cash
Qualified Charitable Distributions (QCDs) if you’re 70½+ and have IRAs
The more intentional your giving, the more tax-efficient it can be.
6. Reevaluate Your Business Entity and Compensation Mix
If you own a business, professional practice, or side hustle:
Are you structured as an S-Corp, LLC, or sole proprietor?
Are you taking advantage of the Qualified Business Income (QBI) deduction?
Should you be using an accountable plan or retirement plan contributions to reduce income?
Even small tweaks in structure and strategy can lead to big savings.
7. Explore California’s PTET (Pass-Through Entity Tax) Strategy
California allows certain S-Corps and partnerships to pay state taxes at the entity level—making them deductible on federal returns.
This can help circumvent the $10K SALT cap that limits state tax deductions for individuals.
For many high earners with business income, it’s a valuable planning opportunity.
How RYSE Financial Helps High-Income Californians Reduce Taxes
We work with:
Tech professionals with RSUs and deferred comp
Physicians, attorneys, and business owners with multiple income streams
Dual-income households earning $300K–$1M+
Our approach:
Identify tax optimization opportunities across income, investments, and benefits
Coordinate with your CPA for seamless execution
Build a long-term plan that balances growth, lifestyle, and legacy
If you’re a high-income earner in California and tired of feeling overtaxed, let’s talk. Many of our clients come to us looking for smarter strategies—and leave with more money in their pocket and a plan they can trust.
👉 Book a free consultation and start reducing your tax burden today.