Tax Strategies to Help Keep More of What You Earn
Updated: 9/15/2026
Taxes shouldn't drive every financial decision. But they should be part of the decision.
As income and wealth grow, tax planning becomes less about finding a single deduction and more about coordinating a series of decisions: what you own, where you own it, when you recognize income or gains, and how those choices fit with the rest of your financial plan.
The goal isn't simply to pay the least amount of tax this year. It's to make thoughtful decisions that improve your after-tax outcome over time.
Here are five areas worth considering.
1. Put the Right Investments in the Right Accounts
Two portfolios can own the same investments and still produce different after-tax results depending on where those investments are held.
This concept is known as asset location.
Tax Deferred Accounts
Traditional IRAs, 401(k)s, TSPs, and similar accounts generally allow investments to grow without current taxation. Taxes are typically due when funds are withdrawn.
Because of that tax deferral, these accounts can be useful places to hold investments that regularly generate taxable income, such as certain bonds, REITs, or other income-producing assets.
That doesn't mean every bond belongs in an IRA or every stock belongs in a brokerage account. The right answer depends on your overall portfolio, tax bracket, withdrawal strategy, and time horizon.
Taxable Accounts
Individual and joint brokerage accounts generally create taxes as interest, dividends, and capital gains are realized.
But taxable accounts also provide significant flexibility.
Long-term capital gains may receive preferential tax treatment compared with ordinary income, losses can potentially offset gains, and investors have more control over when gains are realized.
Tax-efficient ETFs, growth-oriented investments, and other holdings that generate relatively little current taxable income may fit well here.
Roth Accounts
Roth IRAs and Roth 401(k)s are funded with after-tax dollars. When applicable requirements are met, qualified withdrawals are generally tax-free.
That makes Roth assets particularly valuable because future growth may never be taxed again.
For that reason, investors sometimes choose to place assets with greater expected long-term growth potential in Roth accounts. But expected return is only one factor. Risk, diversification, liquidity needs, and the broader retirement strategy still matter.
The point is not to optimize each account independently. It is to make the accounts work together.
2. Pay Attention to the Tax Characteristics of What You Own
Not all investment returns are taxed the same way.
Understanding how an investment generates its return can be just as important as the return itself.
Municipal Bonds
Interest from many municipal bonds is exempt from federal income tax. Depending on the bond and the investor's state of residence, the interest may also receive favorable state tax treatment.
For investors in higher tax brackets, that can make municipal bonds attractive.
But the tax benefit alone does not determine whether a municipal bond is the better investment. Credit quality, duration, yield, and the investor's marginal tax rate all need to be considered.
A lower stated yield can sometimes produce a better after-tax result - but not always.
Exchange Traded Funds
Many ETFs are relatively tax-efficient because of the way shares are created and redeemed.
That structure can reduce the likelihood of taxable capital-gain distributions compared with some traditional mutual funds.
Taxes can still be generated by dividends, interest, portfolio activity, and the eventual sale of the investment, so ETF does not automatically mean tax-free.
Tax Managed Investments
Some mutual funds and separately managed strategies are specifically designed to limit taxable distributions or actively manage gains and losses.
For investors with significant taxable assets, tax management can become an important part of portfolio construction.
The key is not simply minimizing taxes. It is balancing taxes with investment performance, risk, cost, and the purpose of the account.
3. Manage Capital Gains Deliberately
Selling an investment creates more than an investment decision. It can create a tax decision as well.
That makes timing important.
Short Term and Long Term Gains
Investments held for one year or less generally produce short-term capital gains, which are taxed at ordinary income tax rates.
Investments held for more than one year may qualify for long-term capital-gains rates.
That difference can be meaningful, particularly for higher-income households.
But holding an investment solely to reach the one-year mark is not always appropriate. If the investment no longer belongs in the portfolio, taxes should be weighed against the risk of continuing to own it.
Look Across Tax Years
Income does not stay constant forever.
Retirement, a career transition, the sale of a business, equity compensation, bonuses, Roth conversions, or other events can cause taxable income to change significantly from one year to another.
That creates planning opportunities.
In some situations, deliberately realizing a gain during a lower-income year may produce a better long-term result than simply deferring the gain indefinitely.
Tax planning works best when it looks ahead - not when it begins in December.
4. Manage the Income Your Portfolio Creates
A portfolio can generate a meaningful tax bill without selling anything.
Interest, dividends, mutual-fund distributions, real estate income, and business income may all add to taxable income.
That makes the type and location of income-producing assets important.
Dividends and Interest
Qualified dividends may receive preferential federal tax treatment, while ordinary dividends and most taxable interest are generally taxed at ordinary income rates.
For investors with large taxable portfolios, those differences add up.
That does not mean avoiding dividend-paying stocks or bonds. It means understanding what income the portfolio is producing, how that income is taxed, and whether those investments are being held in the most appropriate accounts.
Other Income Producing Assets
Real estate, private businesses, partnerships, and other investments can create additional layers of tax complexity.
Those investments may generate ordinary income, capital gains, depreciation, distributions, or pass-through income depending on their structure.
Before focusing on the potential tax benefit of an investment, it is important to understand how the investment actually works - including its liquidity, risk, fees, tax reporting, and role in the broader financial plan.
Complexity by itself is not a strategy.
5. Use Investment Losses Strategically
Investment losses are never the goal. But once a loss exists, it can sometimes be put to work.
Tax-loss harvesting involves selling an investment at a loss and using that loss to offset realized capital gains elsewhere in a taxable portfolio.
If capital losses exceed capital gains, up to $3,000 of net capital losses can generally be used to offset ordinary income each year, with unused losses carried forward to future tax years.
Keep the Portfolio Invested
Selling an investment for tax purposes does not necessarily mean abandoning the investment strategy.
The proceeds can often be reinvested into another investment that provides similar market exposure while maintaining the intended asset allocation.
The challenge is the IRS wash-sale rule. If the same or a substantially identical security is purchased within the applicable wash-sale period, the loss may not be immediately deductible.
Tax-loss harvesting therefore needs to be coordinated with the investment strategy rather than treated as a year-end tax exercise.
Tax Planning Is Really Coordination
For households with multiple investment accounts, retirement plans, pensions, stock compensation, business interests, or significant income, taxes touch almost every part of the financial picture.
That is why tax-efficient investing is rarely about one tactic.
It is about coordinating:
· What you own
· Where you own it
· When you recognize income
· When you realize gains or losses
· How you withdraw money
· How today's decisions affect future tax years
The objective is not to let taxes dictate the plan. It is to make sure taxes are considered before decisions are made rather than discovered afterward.
At Taurus Wealth Management, tax considerations are incorporated into the broader financial planning process so investment, retirement, cash-flow, and estate decisions remain pointed in the same direction.
If your financial life has become more complex, this is exactly the type of coordination financial planning should provide.
If you would like to see how these decisions apply to your own accounts and financial plan, schedule a conversation with Taurus Wealth Management.
Set your vector.
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera nor any of its representatives may give legal or tax advice.
Investing in mutual funds/ETFs is subject to risk and loss of principal. There is no assurance or certainty that any investment strategy will be successful in meeting its objectives.
Investors should consider the investment objectives, risks, charges, and expenses of the funds carefully before investing. The prospectus contains this and other information about the funds.
This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.