How the Wealthy Are Saving Millions in Taxes in 2025

Introduction

High-net-worth individuals and business owners often face a daunting challenge: navigating a labyrinth of tax laws to protect their wealth. Inexperienced CPAs may miss sophisticated strategies, leading to overpaid taxes and eroded fortunes. Are you leveraging every tax-saving opportunity available to your portfolio? At Kewal Krishan & Co, our expert tax advisors help wealthy clients save an average of $50,000 annually, potentially totaling $1 million over a decade. This blog reveals proven tax strategies for 2025, backed by Internal Revenue Code (IRC) provisions, with actionable examples and steps to minimize your tax burden. From QSBS exclusions to charitable trusts, these tactics are tailored for high earners. Unlock your savings potential now with insights linked to Our Tax Planning Services.

Top Tax-Saving Strategies for the Wealthy in 2025

Wealthy taxpayers can leverage advanced strategies under the IRC to reduce taxes. Key approaches include Qualified Small Business Stock (QSBS), charitable trusts, opportunity zones, and tax-loss harvesting, reported on forms like Form 8949, Schedule D (Form 1040), and Form 1041.

1. Qualified Small Business Stock (QSBS) Exclusion

Under IRC § 1202, non-corporate taxpayers can exclude up to 100% of gains (up to $10 million or $15 million for stock acquired post-July 4, 2025, or 10 times basis) from selling QSBS held for five years, issued by a C corporation with assets under $50 million (or $75 million post-July 2025).

2. Charitable Remainder Trusts (CRTs)

A CRT under IRC § 664 allows you to donate appreciated assets, receive a partial deduction, and defer capital gains tax while drawing income. Report on Form 5227.

3. Opportunity Zone Investments

Under IRC § 1400Z-2, reinvesting capital gains into Qualified Opportunity Funds defers taxes until 2030 or later, with potential partial exclusions for 10-year holdings.

4. Tax-Loss Harvesting

Sell securities at a loss to offset capital gains under IRC § 1091, reported on Form 8949 and Schedule D. Losses can offset up to $3,000 of ordinary income annually.

5. Maximizing Deductions

High earners can deduct charitable contributions (up to 60% of AGI under IRC § 170) and business expenses (IRC § 162) on Schedule A or Schedule C.

For details, see IRS Publication 550.

Detailed Example: Maximizing Tax Savings

Consider David, a high-net-worth individual with $5 million in 2025 income, including $2 million in capital gains from selling stock. His strategies include:

• QSBS Exclusion: $1 million of gains from QSBS (acquired 2020, sold 2025) is fully excluded under IRC § 1202, saving ~$238,000 (20% capital gains + 3.8% NIIT).
• CRT: David transfers $1 million in appreciated stock (basis $200,000) to a CRT, receiving a $400,000 charitable deduction (IRC § 170) and deferring $800,000 in gains, saving ~$95,200 in taxes (24% bracket).
• Opportunity Zone: He reinvests $500,000 of other gains into an Opportunity Zone Fund, deferring ~$119,000 in taxes (IRC § 1400Z-2).
• Tax-Loss Harvesting: Sells $300,000 in losing stock to offset $300,000 in non-QSBS gains, saving ~$71,400.
• Charitable Deduction: Donates $100,000 cash, claiming a $100,000 deduction, saving $24,000 (24% bracket).

Total savings: ~$547,600, with deferred taxes on Opportunity Zone gains.

Alternative Scenario

If David skips the CRT and Opportunity Zone, his taxable gains rise to $1.8 million, increasing his tax liability by ~$309,400 (20% + 3.8% NIIT), reducing savings to $238,200.

Step-by-Step Guide for Taxpayer Compliance

To implement these strategies and comply with IRS rules, follow these steps:

1. Assess QSBS Eligibility: Verify the issuing C corporation meets IRC § 1202(d) and (e) criteria. Retain stock certificates and financials.
2. Establish CRT: Work with a tax attorney to set up a CRT, file Form 5227, and claim deductions on Schedule A (IRC § 664, § 170).
3. Invest in Opportunity Zones: Reinvest gains into a Qualified Opportunity Fund within 180 days, report on Form 8997 (IRC § 1400Z-2).
4. Execute Tax-Loss Harvesting: Sell losing securities, track on Form 8949, and offset gains on Schedule D per IRC § 1091.
5. File Returns: Report income, deductions, and credits on Form 1040, Schedule D, or Form 1041 by April 15, 2026, or extend with Form 4868.
6. Retain Records: Keep investment records, trust documents, and receipts for three years per IRC § 6001.

Explore Our Wealth Management Services for tailored strategies.

Common Pitfalls to Avoid

• QSBS Non-Compliance: Ensure the five-year holding and asset cap are met (IRC § 1202).
• CRT Errors: Improper trust setup or distributions can trigger taxes (IRC § 664).
• Opportunity Zone Timing: Missing the 180-day reinvestment window voids deferral (IRC § 1400Z-2).
• Wash Sale Rule: Avoid repurchasing the same security within 30 days of a loss sale (IRC § 1091).

Why Work with a Tax Expert?

Wealth tax strategies are complex, and generic preparers may miss exclusions or credits, costing millions. Kewal Krishan & Co ensures precise execution of QSBS, CRTs, and Opportunity Zone investments, maximizing savings while avoiding IRS scrutiny. Our expertise is detailed in Our Tax Litigation Services.

Conclusion

In 2025, wealthy taxpayers can save millions using QSBS exclusions, CRTs, Opportunity Zones, tax-loss harvesting, and deductions under IRC provisions. Strategic planning and meticulous records are critical to success. Don’t let overlooked strategies diminish your wealth—act now to optimize your tax plan.

Call to Action

Schedule a consultation with Anshul Goyal, CPA EA FCA, a licensed U.S. CPA and Enrolled Agent, admitted to practice before the IRS, specializing in tax litigation and cross-border tax for U.S. businesses and Indians in the U.S. Contact us at Kewal Krishan & Co to maximize your tax savings.

About Our CPA

Anshul Goyal, CPA EA FCA, is a licensed U.S. CPA and Enrolled Agent, representing clients in IRS tax litigation and assisting with cross-border tax compliance for U.S. businesses and Indians in the U.S. His expertise ensures tailored strategies that maximize savings and ensure compliance.

Disclaimer

This blog provides general information for educational purposes only and does not constitute tax, legal, or financial advice. Tax laws change frequently, and individual circumstances vary. Consult a qualified tax professional before making decisions. The author and firm disclaim liability for actions taken based on this content.

FAQs

1. What is the QSBS exclusion?

Up to 100% of gains (up to $10M/$15M) from selling QSBS held five years (IRC § 1202).

2. How does a CRT save taxes?

Defers capital gains and provides a charitable deduction (IRC § 664, § 170).

3. What are Opportunity Zones?

Investments deferring capital gains tax until 2030 with potential exclusions (IRC § 1400Z-2).

4. What is tax-loss harvesting?

Selling securities at a loss to offset gains, up to $3,000 of ordinary income (IRC § 1091).

5. What deductions can high earners claim?

Charitable contributions (up to 60% AGI, IRC § 170) and business expenses (IRC § 162).