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You made good money this year. That’s the good news.
The bad news? The IRS noticed too.
Here’s what we see all the time: business owners in Texas earning $150K+ think they’re doing everything right. They’ve got a decent accountant. They pay their quarterly estimates. They even keep most of their receipts.
Then April rolls around, and they’re writing a check that makes them wonder if they should’ve just worked less.
The problem isn’t that you’re earning too much. The problem is that most high earners in Texas leave tens of thousands of dollars on the table because they treat tax planning like an annual event instead of an ongoing strategy.
We’re going to fix that.
Living in Texas gives you one massive advantage: no state income tax.
But that doesn’t mean you’re off the hook. You’re still paying federal income tax, and if you’re making over $150K, you’re likely in the 24% to 37% bracket. Every dollar you can legally shield from taxation saves you real money.
The strategies that work for someone making $60K don’t scale when you’re earning $200K or $400K. You need tactics that match your income level.
Let’s walk through the moves that actually matter.
Most people know they should contribute to retirement accounts. What they don’t realize is how much more they could be putting away if they structured it correctly.
Let’s look at an example. You’re a consultant in Dallas earning $150,000. You’ve got a SEP IRA, and you’re contributing the maximum: $37,500 annually. That’s solid.
But if you switched to a Solo 401(k), you could contribute up to $62,000 in the same year. That’s an extra $24,500 in tax-deferred savings, which means an extra $6,000 to $9,000 staying in your pocket instead of going to the IRS.
If you’re 50 or older, the numbers get even better. In 2026, you can contribute up to $72,000. And if you’re between 60 and 63, the limit jumps to $83,250 thanks to enhanced catch-up provisions.
Why this matters: Every dollar you put into a Solo 401(k) lowers your adjusted gross income. Lower AGI means lower taxes. It also opens the door to other deductions and credits that phase out at higher income levels.
If you’re self-employed or run a business with no employees (other than a spouse), talk to your CPA about setting up a Solo 401(k) before year-end. The structure takes about a week to establish, but the tax savings compound for decades.
If you own a pass-through entity (S-Corp, LLC, partnership, or sole proprietorship), you probably qualify for the Qualified Business Income deduction. This lets you deduct up to 20% of your qualified business income from your taxable income.
The QBI deduction just became permanent under recent tax law changes, and the phase-in ranges expanded for 2026. If you’re single, the phase-in starts at $201,775 and goes up to $276,775. For married couples filing jointly, it’s $403,500 to $553,500.
Let’s look at an example. You run an HVAC business as an S-Corp and report $300,000 in qualified business income. If you’re married and fall within the phase-in range, you could deduct up to $60,000 from your taxable income. At the 24% tax bracket, that’s $14,400 back in your pocket.
There’s also a new $400 minimum deduction for anyone with at least $1,000 in QBI who materially participates in their business. It’s a small win, but it’s something.
Review your business structure with your accountant. If you’re operating as a sole proprietor or single-member LLC taxed as a disregarded entity, you might benefit from electing S-Corp status to maximize the QBI deduction.
Here’s where Texas business owners can save serious money.
If you run an S-Corp, you’re required to pay yourself a “reasonable salary” and withhold payroll taxes on it. But everything above that salary can be distributed as profit, which isn’t subject to the 15.3% self-employment tax.
Let’s look at an example. You’re a tech consultant in Austin earning $480,000 annually through your S-Corp. You pay yourself a W-2 salary of $120,000 (reasonable for your industry), and you take the remaining $360,000 as distributions.
On that $360,000 in distributions, you save the full 15.3% self-employment tax. That’s $55,080 in payroll taxes you don’t have to pay.
But here’s the catch: the IRS watches this closely. If your salary is too low compared to what someone in your role typically earns, you’re asking for an audit. The key is benchmarking your salary against industry standards and documenting your reasoning.
If you’re running an S-Corp, sit down with your CPA and review your salary structure. Make sure it’s defensible, documented, and optimized for tax savings.
If you have a high-deductible health plan, you’re eligible for a Health Savings Account. And if you’re not maxing it out, you’re leaving money on the table.
HSAs offer what accountants call a “triple tax benefit.” Your contributions are tax-deductible. The money grows tax-free. And when you withdraw it for qualified medical expenses, it’s tax-free.
You can contribute up to $4,300 for individual coverage or $8,550 for family coverage in 2026. If you’re 55 or older, add another $1,000.
Here’s the part most people miss: HSA contributions lower your adjusted gross income, which can make you eligible for other deductions or credits that would otherwise phase out at higher income levels.
You don’t even need to use the money right away. You can invest it, let it grow for decades, and use it for medical expenses in retirement. Or, after age 65, you can withdraw it for any reason and just pay ordinary income tax (like a traditional IRA).
If you have an HSA-eligible health plan, max out your contributions before December 31. If you don’t have an HSA yet, check if your health plan qualifies and open one.
If you’re giving to charity anyway, you might as well do it in a way that maximizes your tax benefit.
A $500 donation from someone in the 37% tax bracket saves $185 in taxes. The same donation from someone in the 10% bracket saves $50. High earners get 7x more tax savings from the same charitable contribution.
You can deduct charitable contributions up to 60% of your adjusted gross income. If you give more than that in a single year, you can carry the excess forward for up to five years.
For 2026, even if you take the standard deduction, you can deduct up to $1,000 (single) or $2,000 (married filing jointly) in cash charitable contributions.
If you’re planning to make large charitable donations, consider bunching multiple years of giving into one year to exceed the standard deduction threshold. Or explore donor-advised funds, which let you take an immediate tax deduction while distributing the funds to charities over time.
Tax laws change, and 2026 brought some big shifts that affect high earners.
The SALT deduction cap increased. The state and local tax deduction jumped from $10,000 to $40,000 for married couples filing jointly. But there’s a phaseout: if your modified adjusted gross income exceeds $500,000, the deduction is reduced by 30 cents for every dollar above that threshold until it drops back to $10,000.
If you’re a Texas business owner with significant property taxes and you fall just below the phaseout range, this creates a planning opportunity.
High earners’ deductions are worth less. Taxpayers in the top 37% bracket will only save 35 cents per dollar deducted starting in 2026, down from 37 cents in 2025. For someone deducting $100,000 in mortgage interest, state taxes, or charitable giving, tax savings drop by $2,000 annually.
This makes proactive planning even more important. Every deduction you can legitimately claim matters more when the value of those deductions is shrinking.
Here’s the thing about tax planning: it doesn’t work if you wait until tax season to think about it.
The moves that lower your tax bill happen throughout the year. Retirement contributions. Estimated tax payments. Business structure decisions. Charitable giving timing. S-Corp salary adjustments.
You can’t retroactively fix your tax situation in March when you’re staring at a six-figure tax bill.
We work with business owners who used to panic every April. Now they know exactly what they owe, and they know it months in advance. That’s not because they got smarter about taxes. It’s because they started treating tax strategy like an ongoing process instead of an annual scramble.
If you made over $150K this year and you’re not actively managing your tax strategy, you’re probably overpaying.
The good news? Most of these strategies are still available to you.
But the clock is ticking. Retirement contributions have deadlines. Estimated payments have due dates. Business structure changes take time to implement.
You don’t need to become a tax expert. You just need someone in your corner who’s thinking about this stuff before it becomes a problem.
If you want to stop overpaying and start keeping more of what you earn, let’s talk.
We’ll review your situation, identify the opportunities you’re missing, and build a plan that actually works for your business.
Texas earners over $150K should focus on three levers: maximizing retirement contributions (Solo 401(k) over SEP IRA can save $24,500+ extra per year), S-Corp election to reduce self-employment tax once net income clears $60-80K, and strategic deduction timing across multiple tax years.
For owner-operators earning $150K+, a Solo 401(k) typically beats a SEP IRA. You can contribute up to $62,000 annually (vs SEP’s lower cap), and the Solo 401(k) supports both employee deferrals and employer profit-sharing contributions. For higher earners with stable income, a defined benefit plan layered on top can push contributions to $200K+ per year.
Texas has no state income tax, which saves Texas earners 5-13% compared to high-tax states. But federal taxes still apply, and high earners in Texas at $150K+ are typically in the 24-37% federal bracket. The Texas advantage compounds with smart federal planning, not replaces it.
S-Corp election makes sense once your business consistently nets $60-80K or more. Below that, the administrative cost of running an S-Corp (payroll setup, quarterly filings, separate tax return) eats the self-employment tax savings. Above $80K, the savings start to clearly outweigh the overhead.
Tax preparation is filing the return after the year ends — recording what already happened. Tax planning is making decisions throughout the year that change what happens. High earners typically save 5-10x more from planning than from preparation alone, because planning lets you time income, deductions, and major purchases for tax efficiency.
Adam Traywick, CPA is the President and founding CPA of Adam Traywick, LLC, a Adam Traywick CPA small-business accounting firm. He has over 20 years of experience helping small business owners across home-services trades, hair salons, real estate, and insurance agencies optimize taxes, run cleaner books, and avoid the surprises that come from once-a-year accountants.
