From the state residency switch that saved Tiger Woods an estimated $200M, to the 401(k) math that adds $5,000 to any $75k salary. Real strategies, explained with real numbers.
State income tax is the largest variable most people can control — and it applies to every dollar of income, every year, indefinitely. Nine states have no income tax at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Moving from California (13.3% top rate) or New York (10.9%) to any of these states is — dollar for dollar — the highest-impact tax move available to high earners.
The catch: you have to actually move. California's Franchise Tax Board is one of the most aggressive tax authorities in the country. They audit people who claim to move but maintain California ties — a mortgage, frequent visits, a business presence, a spouse who stays. True domicile change requires moving your primary home, driver's license, voter registration, doctors, accountants, and daily life.
Woods moved from California to Jupiter, Florida at age 20 — before he had won a single major. Over a career earning an estimated $1.7 billion, avoiding California's state income tax saved an estimated $200M+. Florida has zero state income tax. Every endorsement check, every tournament purse — the state took nothing.
Moving from California to Texas on a $150,000 salary saves approximately $12,000–$14,000 per year in state income tax. Over 10 years, that's $120,000–$140,000 in additional take-home — enough to pay off a car, fund a college education, or max a Roth IRA for a decade.
Traditional 401(k) contributions reduce your taxable income dollar-for-dollar. That means a $23,500 contribution doesn't reduce your take-home by $23,500 — it reduces it by $23,500 minus the taxes you would have paid on that money. At the 22% federal bracket, the actual cost to your paycheck is about $18,330. You contribute $23,500 and it only "hurts" by $18,330. The government funded the rest.
| Your Tax Bracket | 401(k) Contribution | Federal Tax Saved | CA Tax Saved (if applicable) | Total Saved |
|---|---|---|---|---|
| 22% bracket | $23,500 | $5,170 | $2,186 (9.3%) | $7,356 |
| 24% bracket | $23,500 | $5,640 | $2,186 | $7,826 |
| 32% bracket | $23,500 | $7,520 | $2,660 (11.3%) | $10,180 |
| 37% bracket | $23,500 | $8,695 | $3,126 (13.3%) | $11,821 |
The 2026 401(k) contribution limit is $23,500 for employees under 50, and $31,000 for those 50 and older (catch-up contributions). If your employer matches, contribute at least enough to capture the full match — that's an instant 50–100% return before any tax savings are counted.
Shohei Ohtani deferred $680M of his Dodgers contract to future years — the same principle as a 401(k), applied to a $700M contract. Take less now, potentially pay less later when in a different tax environment. His potential savings: ~$90M in avoided California state tax.
At $85,000, you're in the 22% federal bracket. Maxing your 401(k) at $23,500 costs your paycheck only $16,144 after taxes — but you put away $23,500. Over 30 years at 7% average return, that difference compounds to over $2.3 million at retirement.
A Health Savings Account (HSA) is the only savings vehicle in the US tax code that provides three separate tax advantages simultaneously. You must be enrolled in a High-Deductible Health Plan (HDHP) to contribute, but for eligible earners it is — per dollar contributed — the most tax-efficient savings account available, even compared to a 401(k).
1. Contributions: Pre-tax (or tax-deductible), reducing federal, state, and FICA taxes.
2. Growth: Invest the balance in index funds — gains are never taxed.
3. Withdrawals: Tax-free for any qualified medical expense, now or in retirement.
Individual HDHP: $4,300
Family HDHP: $8,550
Age 55+ catch-up: +$1,000
At the 24% federal bracket + 7.65% FICA, the tax savings on $4,300 is approximately $1,360.
After age 65, HSA funds can be withdrawn for any purpose — not just medical — and are taxed as ordinary income, making them functionally identical to a traditional IRA at that point. Before 65, non-medical withdrawals incur a 20% penalty. The strategy: pay current medical expenses out of pocket if possible, let the HSA grow tax-free for decades, and use it in retirement when medical costs are highest.
See your paycheck with HSA contributions →When you are self-employed and file a Schedule C, the IRS treats all your net profit as wages — subject to the full 15.3% self-employment tax (Social Security + Medicare) up to $184,500, plus 2.9% Medicare on everything above. An S-Corporation changes the math: you pay yourself a reasonable salary (taxed normally), and take the remainder as owner distributions — which are not subject to SE tax.
SE tax: 15.3% on first $184,500
$150,000 × 92.35% (SE adjustment) = $138,525 × 15.3% = $21,194 in SE tax
Plus federal income tax on top.
SE tax on salary only: $75,000 × 15.3% = $11,475
SE tax on distribution: $0
Annual savings: ~$9,719
vs. Schedule C.
Important: The IRS requires the S-Corp salary to be "reasonable compensation" for the work performed. Taking a $1 salary and $149,999 in distributions will trigger an audit. Most tax advisors recommend a salary of 40–60% of net profit, varying by industry. Costs of maintaining an S-Corp (state fees, payroll processing, additional tax filing) run $1,000–$3,000/year, so the net benefit typically starts at $80,000+ in profits.
Calculate your 1099 / self-employment taxes →Your filing status determines your standard deduction and your bracket thresholds. Most people assume they're stuck with whatever status applies to them — but if you are unmarried, have a qualifying child living with you, and paid more than half the household expenses for the year, you may qualify for Head of Household instead of Single.
| Filing Status | Standard Deduction (2026) | 10% Bracket Ends | 22% Bracket Ends |
|---|---|---|---|
| Single | $16,100 | $12,400 | $105,700 |
| Head of Household | $24,150 | $17,700 | $105,700 |
| Married Filing Jointly | $32,200 | $24,800 | $211,400 |
The HOH standard deduction is $8,050 higher than single. At the 22% bracket, that saves $1,771 in federal taxes. Combined with the wider bracket thresholds and lower applicable rates at each income level, the total benefit of qualifying for HOH over Single can reach $3,000–$5,000 per year — without changing anything about your income or spending.
1. Unmarried (or legally separated) as of Dec 31
2. Paid more than half the cost of keeping up a home
3. A qualifying child or dependent lived with you for more than half the year
The IRS estimates millions of eligible single parents file as Single every year, overpaying taxes. If you have a child and are the primary household provider, verify your HOH eligibility before filing. An amended return (Form 1040-X) can recover past overpayments up to 3 years back.
Tax brackets are marginal — only the income above each threshold is taxed at the higher rate. But this creates high-value opportunities near bracket boundaries. If your taxable income is $260,000 as a single filer in 2026, you're $3,775 into the 35% bracket (which starts at $256,225). A $3,775 pre-tax 401(k) contribution, traditional IRA contribution, or charitable donation drops your entire taxable income below the 35% threshold — saving 35 cents on every one of those dollars instead of the 32 cents you'd save elsewhere in the bracket.
California's 13.3% millionaire surtax kicks in above $1,000,000. Earning $1,005,000 triggers 13.3% on that top $5,000. Strategic pre-tax contributions to keep income below $1M — via 401(k), deferred comp plans, or qualified retirement plans — can be worth $133 in CA tax per $1,000 managed near that threshold.
The 24% bracket begins at $105,700 (single). If you earn $110,000, you have $4,300 in the 24% bracket. A $4,300 traditional IRA contribution (if deductible) saves you $1,032 in federal taxes — more efficiently than the same contribution made deeper in the 22% bracket, where it would save $946.
Bracket management also applies to capital gains. Long-term capital gains rates step up at $533,400 (single) from 15% to 20%. Harvesting gains in years when your income is below this threshold locks in the 15% rate. The difference on a $50,000 gain: $7,500 at 15% vs. $10,000 at 20% — a $2,500 swing on one timing decision.
See how a raise pushes you into the next bracket →For high earners, moving to a state with no income tax is typically the highest-impact single move. On a $500,000 income, leaving California saves $66,500 per year — every year, indefinitely. For most earners, maximizing pre-tax retirement contributions (401k, $23,500/year) is the most accessible high-impact strategy, saving $5,170–$8,695 in federal taxes annually depending on your bracket.
At the 22% bracket: $5,170 in federal taxes saved. At 24%: $5,640. At 32%: $7,520. At 37%: $8,695. Add state savings — in California at 9.3–13.3%, that's an additional $2,186–$3,126 — for a total of up to $11,821 saved on a $23,500 contribution. The money doesn't disappear — you just pay taxes when you withdraw it in retirement, often at a lower rate.
Yes — significantly for high earners, but only if you genuinely change your domicile. California audits people who claim to move but maintain California ties. Tiger Woods moved from California to Florida in 1996 — on an estimated $1.7B career, that decision saved an estimated $200M+. For a $150,000 salary, the move saves approximately $12,000–$14,000 per year.
Deferred compensation means agreeing to receive income in a future year. If you defer to a year when you're in a lower bracket — or a lower-tax state — you pay less overall. Shohei Ohtani deferred $680M to 2034–2043, potentially saving ~$90M in California state taxes if he's no longer a CA resident when payments arrive. For most workers, 401(k) and traditional IRA contributions work on the same principle.
Self-employed individuals who elect S-Corp status pay themselves a reasonable salary — subject to payroll/SE taxes — and take remaining profits as owner distributions, which are not subject to self-employment tax (15.3%). On $150,000 in self-employment income split 50/50 salary/distribution, the SE tax savings is approximately $9,719 per year. The strategy typically makes financial sense above $80,000 in net self-employment profit.
Head of Household provides a $24,150 standard deduction (vs. $16,100 for single) and wider tax brackets. If you are unmarried, have a qualifying dependent, and paid more than half the household costs, you may qualify. The total annual benefit compared to Single filing can reach $3,000–$5,000. Millions of eligible single parents file as Single every year — check your eligibility before filing.
An HSA (Health Savings Account) provides three tax advantages: pre-tax contributions, tax-free growth, and tax-free withdrawals for medical expenses. In 2026, the limit is $4,300 (individual) or $8,550 (family). At the 24% bracket, contributing the individual max saves approximately $1,360 in taxes — and the money is never taxed if used for medical expenses.
Brackets are marginal — only income above each threshold is taxed at the higher rate. Small moves near bracket boundaries (contributing to a 401k, making a charitable donation, timing a capital gain) can shift thousands of dollars from a higher bracket to a lower one. A $6,000 contribution near the 35% bracket threshold saves $2,100 — 35 cents per dollar instead of the 32 cents you'd save at the same contribution deeper in the 32% bracket.
All strategies on this page are legal under current US tax law (2026). Tax laws change — consult a licensed CPA or tax attorney before implementing any strategy. Dollar amounts use 2026 IRS brackets (Rev. Proc. 2025-32) and California 2025 rates. This page is educational, not financial or legal advice.