Tax Planning for Millionaires: Your 2026 Strategy Guide

Eight levers that matter at $1M–$5M — and how to find which ones apply to your situation.

The $1M–$5M Tax Problem

Crossing $1M in investable assets creates a tax situation that generalist advice doesn't address well. You're almost certainly past the 22% bracket. Your taxable accounts generate ordinary income that's taxed alongside your salary. RMDs are a future liability that's building quietly. And the IRMAA surcharge clock starts 2 years before you enroll in Medicare.

The good news: the planning levers available at this wealth tier are genuinely powerful. Someone with $2M in taxable and pre-tax accounts who uses asset location, tax-loss harvesting, a Roth conversion strategy, and a charitable giving plan can realistically defer or eliminate $20,000–$60,000/year in federal taxes — permanently, if they hold until step-up in basis.

The eight strategies below are the highest-ROI levers for the $1M–$5M investor. The interactive finder below shows which ones apply to you and a rough estimate of the annual value for each.

Tax Savings Opportunity Finder

Enter your situation to see which strategies apply and their estimated annual value. Estimates are illustrative — a fee-only advisor can model your specific numbers precisely.

Filing Status Annual Ordinary Income (W-2 + business) Taxable Brokerage Account Balance Pre-Tax Retirement Balance (IRA + 401k) Age Already maxing 401k/403b? Have HSA-eligible health plan? Make charitable donations?

The 8 Tax Levers for the $1M–$5M Investor

1. Max Retirement Accounts (Including Catch-Up)

In 2026, you can defer $24,500 into a 401(k) — plus $8,000 if you're 50–59 or 64+, or $11,250 if you're 60–63 (the SECURE 2.0 super catch-up). At a 32% marginal rate, maxing the $32,500 total saves $10,400/year in federal tax. If you're self-employed, a solo 401(k) plus cash balance plan can shelter $200,000–$350,000+/year. The HSA adds $8,750/year (family) of triple-tax-advantaged space.¹

See: Solo 401(k) vs Cash Balance Plan | HSA Investment Strategy | Backdoor Roth

2. Asset Location

Where you hold an asset matters as much as what you hold. Bonds and REITs generate ordinary income — at 32–37%, that yield is heavily taxed in a taxable account. In a traditional IRA, it's deferred entirely. A $1M portfolio with $250K in bonds in the wrong account loses roughly $3,000–$5,000/year to unnecessary taxes. Over 20 years at 7% returns, that drag compounds to $150,000+.

The rule of thumb: bonds and high-yield assets in traditional IRA/401k; US equity index funds in taxable (for TLH and step-up); high-growth assets and REITs in Roth. Interactive analyzer at Tax-Efficient Asset Location.

3. Tax-Loss Harvesting

In a down market or volatile year, you can sell holdings at a loss, immediately buy a similar (but not "substantially identical") security to maintain exposure, and book a $3,000/year ordinary income deduction plus unlimited capital gains offset. On a $750K–$2M taxable account, active TLH generates $5,000–$25,000/year in realized losses that offset current or future capital gains — permanently, if gains are ultimately eliminated by the step-up-in-basis at death (IRC §1014).

See: Tax-Loss Harvesting Guide | Direct Indexing: Is It Worth It?

4. Roth Conversion Strategy

Between retirement and age 73 (or 75 for born 1960+), most high earners have a "conversion window" — income drops, and pre-tax balances haven't yet triggered large RMDs. Converting $50,000–$150,000/year from traditional to Roth during this window at 22–24% permanently eliminates future ordinary income that would otherwise arrive at 32–37% when RMDs begin. The savings aren't theoretical: a couple with $1.5M in pre-tax savings at 60 will face RMDs of $55,000+ per year starting at 73, stacked on top of Social Security and investment income.

See: Roth Conversion Sweet Spot Finder | RMD Strategy Guide

5. IRMAA Planning

Medicare Part B and D premiums include income-based surcharges (IRMAA) determined by your income two years prior. A couple whose MAGI crosses $218,000 pays an extra $756/year. Cross $340,000 and it's $4,788/year. At the top tier ($750,000+), $18,480/year. A single Roth conversion or capital-gains-realization event can trigger a tier jump — costing more than the tax on the conversion itself.

Interactive tier calculator: IRMAA Planning Guide

6. Strategic Charitable Giving

Donating appreciated securities to a donor-advised fund avoids capital gains tax entirely while generating a full fair-market-value deduction. A $50,000 position with $30,000 in gains saves $4,500–$7,560 in LTCG+NIIT versus cash giving — on top of the deduction. Bunching two or three years of giving into one year lets you itemize that year (when the deduction exceeds the $32,200 MFJ standard deduction) and take the standard deduction in off years. The QCD at age 70½ is the final upgrade: send up to $111,000/year directly from IRA to charity, keeping RMD income off your MAGI entirely.²

See: Charitable Giving Strategy | Donor-Advised Fund Guide

7. Capital Gains Management

Three levers move your effective LTCG rate: timing (hold past one year), stacking (sell when ordinary income is lower), and harvesting (realize losses to offset gains). In a gap year — early retirement, sabbatical, or partial-year income — MFJ couples with ordinary income under $98,900 pay 0% on long-term capital gains. The 15% bracket extends to $613,700. Beyond that, the 20% rate plus 3.8% NIIT totals 23.8%. Each dollar of ordinary income reduction (via charitable deduction, retirement account contribution, or QCD) also pushes capital gains down the stack.

See: Capital Gains Tax Calculator 2026 | Tax-Gain Harvesting at 0%

8. State Income Tax Planning

California, New York, New Jersey, and Minnesota residents with $500K–$1M in income pay $50,000–$130,000/year in state tax they could legally eliminate by changing domicile to a zero-income-tax state. The math is compelling. The execution requires cutting genuine ties: residency change takes 12–24 months, California and New York conduct aggressive audits of departing high earners, and pre-move gain realization (selling concentrated stock before leaving) can be worth $30,000–$100,000 in avoided state tax alone.³

See: State Income Tax Relocation Calculator

Year-Round Tax Calendar

Quarter	Tax Action	Why It Matters
Q1 (Jan–Mar)	Fund IRA/HSA for prior year (deadline: April 15)	Last chance to reduce prior-year taxable income
Q1	Review Roth conversion opportunity for gap-year situations	Early-year conversions give more time for tax-free growth
Q2 (Apr–Jun)	Review IRMAA look-back year income; file for SSA-44 appeal if income event was one-time	IRMAA based on MAGI from 2 years prior; appeals available for qualifying life events
Q2	Review 401k contribution rate; increase if under max	Earlier deferral maximizes tax-free compounding
Q3 (Jul–Sep)	Tax-loss harvest market dips; identify swap candidates	Summer volatility creates harvesting opportunities without waiting for year-end
Q3	Project year-end income; plan Roth conversion amount before December	Need to know bracket headroom before year closes
Q4 (Oct–Dec)	Execute Roth conversions before Dec 31	Conversion is irreversible and must settle in the calendar year
Q4	Make charitable contributions (DAF or direct); bunch if itemizing this year	Deduction applies to tax year in which contribution is made
Q4	Review unrealized losses for final TLH pass; evaluate 0% LTCG harvesting if income supports it	Year's last opportunity for loss realization and 0% gain capture
Q4	Take RMD by Dec 31 (if 73+); fund QCD from IRA before Dec 31 if charitable	RMD missed: 25% excise tax on shortfall. QCD can satisfy RMD and keep income off MAGI

Why coordination matters. Each of these strategies interacts with the others. A Roth conversion raises MAGI, which can trigger an IRMAA tier jump, increase SS taxability, or push capital gains into the 20% bracket. The difference between doing them independently vs. coordinated — across Roth, charitable, TLH, and asset location — is often $10,000–$30,000/year. This is exactly what a fee-only advisor earns their fee on.

In-depth calculators and guides

Asset Location Optimizer — which assets belong in which account type
Tax-Loss Harvesting Calculator — annual benefit estimate + ETF swap strategies
Roth Conversion Sweet Spot Finder — bracket optimization + IRMAA interaction
IRMAA Tier Calculator — 2026 Medicare surcharge exposure by income
Charitable Giving Calculator — appreciated stock vs cash donation comparison
Donor-Advised Fund Guide — OBBBA 2026 deduction changes
Capital Gains Tax Calculator 2026 — LTCG stacking + NIIT calculation
0% LTCG Harvesting Calculator — harvest room, ACA cliff and IRMAA warnings
State Relocation Savings Calculator — CA/NY/NJ vs FL/TX comparison
HSA Triple-Tax Strategy Guide — invest-and-reimburse approach
Backdoor and Mega Backdoor Roth Guide — 2026 limits and pro-rata trap
Solo 401(k) and Cash Balance Plan Calculator

Sources

IRS Notice 2025-67 — 2026 Retirement Plan Contribution Limits. 401(k) employee deferral $24,500; catch-up (50+) $8,000; super catch-up (60–63) $11,250; 415(c) $72,000; IRA $7,500; HSA family $8,750 per Rev. Proc. 2025-19.
IRS Notice 2025-67 — 2026 QCD Limit. Qualified Charitable Distribution limit: $111,000 for 2026. Standard deduction MFJ $32,200 per Rev. Proc. 2025-32.
Tax Foundation — 2026 Federal Tax Brackets. Ordinary income brackets (MFJ): 22% through $211,400; 24% through $403,550; 32% through $512,450; 35% through $768,700; 37% above $768,700 per IRS Rev. Proc. 2025-32.
IRS Rev. Proc. 2025-67 — 2026 LTCG Brackets. LTCG 0% up to $98,900 MFJ/$49,450 Single; 15% up to $613,700 MFJ/$545,500 Single; 20% above. NIIT 3.8% per IRC §1411 on MAGI above $250,000 MFJ/$200,000 Single.
CMS 2026 Medicare Part B Premiums and IRMAA Surcharges. Base Part B premium $202.90/mo; IRMAA T1 threshold $218,000 MFJ; top tier IRMAA adds $576.90/mo per person (per CMS 2026 fact sheet).

Tax values verified against IRS Rev. Proc. 2025-32, IRS Rev. Proc. 2025-67, IRS Notice 2025-67, and CMS 2026 fact sheet. 2026 OBBBA provisions (P.L. 119-21) applied throughout. Content updated June 2026.