Strategic Tax Planning for High-Net-Worth Individuals in 2026: How to Keep More of What You’ve Built
By Alexander Grant, CFP®, CPA – Wealth Management Editor
November 20, 2025
With the top federal income tax bracket at 37 %, a 3.8 % Net Investment Income Tax, 20 % long-term capital gains for high earners, and potential sunsets of the 2017 TCJA looming after December 31, 2025, high-net-worth individuals (typically $5 million+ investable assets) face the highest effective federal rates in a generation. Add state taxes—California 13.3 %, New York City 14.776 % combined—and the marginal rate on ordinary income can exceed 57 % in some jurisdictions.
Yet 2025 and early 2026 represent one of the last predictable windows for aggressive, legal tax reduction before possible legislative changes under a new Congress. Here are the strategies ultra-high-net-worth families and executives are deploying right now.
1. Front-Load Charitable Giving with Donor-Advised Funds (DAFs)
The single most powerful move in 2025–2026 remains contributing appreciated securities to a DAF before any capital-gains rate increase.
- Eliminate 20 % federal + 3.8 % NIIT + state capital gains tax (up to 13.3 % in CA).
- Receive an immediate fair-market-value deduction at ordinary income rates (up to 37 % federal + state).
- No required distribution timeline—grant over decades while investments grow tax-free.
Example: A California resident with $10 million of Apple stock (cost basis $800 k) contributes shares to a DAF in 2025 → avoids ~$2.8 million in combined capital gains tax and gets a ~$5.3 million California/federal deduction if itemizing.
2. Roth Conversion Ladders Before TCJA Sunsets
The 2017 tax cuts doubled the estate/gift tax exemption to ~$13.61 million per person ($27.22 million married) and lowered income tax brackets. Both are scheduled to sunset after 2025 unless extended.
Strategy: Execute multi-year Roth conversion ladders in 2025–2026 while brackets are still low and the 5-year holding clock starts now.
2026 projected bracket compression (single filer):
- Current $609 k → top 37 % bracket becomes ~$300 k taxable income.
- A $1 million conversion in 2026 could push someone from 35 % to 39.6 % proposed rate.
Doing $500 k–$1 million annual conversions in 2025–2026 locks in today’s lower rates and removes all future growth from taxable estates.
3. Max Out Grantor Retained Annuity Trusts (GRATs) at Today’s 5.3 % Section 7520 Rate
The November 2025 7520 rate sits at 5.3 %—still elevated but trending down. Low rates = bigger remainder interests passing gift-tax-free.
High-net-worth families are rolling 2-year and 5-year Walton GRATs with concentrated stock (NVIDIA, Tesla, private shares) to transfer future appreciation at minimal gift tax cost. Even a modest outperformance over 5.3 % passes wealth tax-free.
4. Spousal Lifetime Access Trusts (SLATs) & Intentionally Defective Grantor Trusts (IDGTs)
With exemption sunset looming, many are gifting $13–27 million into SLATs before year-end 2025. The trust is outside the estate, yet the spouse retains indirect access.
For business owners: Sell appreciating company shares to an IDGT in exchange for a low-interest note (AFR ~4.8 % Nov 2025). All future growth escapes estate tax; interest payments are not income-tax events because it’s grantor.
5. Opportunity Zone Rollovers – Last Call?
The 10 % basis step-up for investments held 5+ years expired in 2021, but deferral until 12/31/2026 and permanent exclusion of post-investment gain remain. Many are swapping low-basis real estate or stock gains into final-round OZ funds closing in Q4 2025–Q1 2026.
6. Private Placement Life Insurance (PPLI) for Tax-Free Growth & Borrowing
Ultra-affluent families are using PPLI to wrap private equity, hedge funds, and even bitcoin/ETH inside a tax-indifferent insurance wrapper.
- No annual capital gains or dividend tax.
- Policy loans at 4–5 % allow tax-free access.
- Death benefit income-tax-free and (if structured correctly) estate-tax-free via ILIT.
Typical buyer: $25 million+ net worth, already maxed traditional planning.
7. Qualified Small Business Stock (QSBS) Stacking
Section 1202 still allows 100 % exclusion of up to $10 million gain (or 10× basis) on qualified C-corp stock held 5+ years.
Founders and early angels are creating multiple QSBS stacks by rolling profits into new QSBS-eligible startups before 2026 uncertainty.
8. Delaware Incomplete Gift Non-Grantor Trusts (DINGs) for State Tax Arbitrage
Residents of high-tax states (NY, CA, NJ) are establishing incomplete-gift trusts in Delaware or Nevada. The trust is ignored for federal gift/estate but treated as a separate taxpayer in the domicile state—potentially eliminating state income tax on intangible assets (stocks, bonds, crypto).
2025–2026 Action Checklist (Before December 31)
- Fund DAFs with low-basis appreciated securities
- Complete 2025 Roth conversions (pay tax with outside cash)
- Seed or roll GRATs at current 7520 rate
- Gift up to $13.61M per spouse into SLATs/IDGTs
- Evaluate OZ final deadlines
- Lock in PPLI policies before any insurance reform chatter
The window for many of these strategies narrows dramatically after 2025. While no one has a crystal ball on legislative changes, acting while current law is known—and rates are historically favorable—remains the core principle of sophisticated wealth planning.
High-net-worth individuals who treat tax planning as a multi-year, proactive discipline rather than an annual April exercise routinely save 8–15 % of their net worth over a lifetime. In 2025–2026, that percentage could be even higher for those who move decisively before the rules potentially shift.