10 Critical Tax Tips for Executives in 2025

1. Prepare for the Expiration of the Tax Cuts and Jobs Act (TCJA) 

The Tax Cuts and Jobs Act of 2017 included several provisions that significantly benefit high-income earners, many of which are set to expire at the end of 2025 unless Congress acts: 

Key Expiring Provisions: 

• Individual tax rate reductions (top rate could return from 37% to 39.6%) 
• Higher standard deduction amounts 
• Expanded child tax credit 
• Increased estate and gift tax exemptions 
• State and local tax (SALT) deduction limitation may be modified 

Strategic Implications: 

• Consider accelerating income into 2025 if tax rates are expected to increase 
• Evaluate Roth conversion opportunities while rates remain lower 
• Review estate planning strategies before exemption amounts potentially decrease 
• Plan for potential changes to SALT deduction limitations 

2. Leverage Deferred Compensation Plans: Your Most Powerful Tool 

One of the top tax strategies for executives is to defer compensation whenever possible. Elective deferred compensation plans allow you to set aside a portion of your salary or bonus to be paid out in the future, delaying taxes until withdrawal. 

2025 Considerations: 

• With potential tax rate increases looming, carefully evaluate whether to defer income beyond 2025 
• Consider timing distributions from existing deferred compensation plans before potential rate increases 
• Evaluate supplemental executive retirement plans (SERPs) as additional deferral vehicles 

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3. Maximize Retirement Account Contributions 

2025 Contribution Limits: 

• 401(k): $23,500 (plus $7,500 catch-up for age 50+) 
• IRA: $7,000 (plus $1,000 catch-up for age 50+) 
• SEP-IRA: Lesser of 25% of compensation or $70,000 

Strategic Moves: 

• Maximize pre-tax contributions to reduce current taxable income 
• Consider Roth conversions while tax rates remain relatively low 
• Utilize mega backdoor Roth strategies if your 401(k) plan allows after-tax contributions 

4. Navigate Stock Option Complexities 

Executives with stock options should develop strategic exercise and sale plans to minimize tax liability, especially considering potential rate changes: 

Key Strategies: 

• Time ISO exercises to optimize AMT impact 
• Consider exercising NQSOs in 2025 if ordinary income rates are expected to rise 
• Plan for long-term capital gains treatment (currently 20% for high earners) 
• Evaluate 83(b) elections for restricted stock awards 

5. Alternative Minimum Tax (AMT) Awareness 

The AMT often affects executives due to high incomes and stock option exercises. Key AMT considerations for 2025: 

• AMT exemption for 2025: $85,700 for married filing jointly 
• ISO exercises remain a primary AMT trigger 
• Consider timing of deductions and income to manage AMT exposure 

6. Business Expense Deductions 

Take advantage of allowable business expense deductions while maintaining meticulous records: 

Key Areas: 

• Travel and entertainment (50% deductible for business meals) 
• Professional development and education 
• Home office expenses (if applicable) 
• Professional dues and subscriptions 

7. Charitable Giving Strategies 

Maximize charitable deductions while potentially avoiding capital gains. 

Advanced Strategies: 

• Donate appreciated securities instead of cash 
• Consider charitable remainder trusts or donor-advised funds 
• Bundle charitable contributions to maximize itemized deductions 
• Evaluate qualified charitable distributions from IRAs (age 70½+) 

8. Estate Planning Urgency 

With estate tax exemptions potentially decreasing after 2025: 

• Consider large gifts before potential exemption reductions 
• Review and update estate planning documents 
• Evaluate sophisticated strategies like grantor retained annuity trusts (GRATs) 

9. State Tax Considerations 

Don't overlook state tax implications: 

• SALT deduction remains capped at $10,000 through 2025 
• Consider state residency planning for high-tax states 
• Evaluate timing of state income recognition 

10. Lean on Your Tax and Financial Planning Professionals 

At the executive level, professional guidance becomes essential—especially when navigating potential tax law changes. CPAs and financial planners versed in executive tax strategies – like our team here at WHZ – can identify planning opportunities that are specific to leadership roles. 

The specialized tax situations faced by executives and business leaders require equally specialized planning and preparation. Following these strategies will help optimize your tax situation both before and after potential TCJA changes. As income and wealth escalate, a trusted advisory team becomes indispensable. 

At WHZ, our team of advisors pool our collective knowledge and work together to build an investment strategy and overall strategic financial plan that's tailored just for you and your goals, through our Plan Well, Invest Well, Live Well™ strategic process. We're there to keep it up to date every step of the way as your life and the markets change. 

If you'd like a financial partner to guide you through these steps and more, contact us for a complimentary discovery session and see how we can help you to achieve "Absolute Confidence. Unwavering Partnership. For Life."

Authored by Associate Vice President, Wealth Advisor Jonathan Mathews. AI may have been utilized for some research and initial drafting of this piece. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084, 860.928.2341. http://www.whzwealth.com  

These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your financial advisor. WHZ Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice.