5 Tax Strategies for the Affluent Investor Video from Savant Wealth Management

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Hi, good afternoon. Welcome to our Savant live webinar. We’re so glad that you took time out of your afternoon to join us today. We’re going to be talking about five tax strategies for affluent investors. My name is Kelly Gallagher. I’m a CPA in the St. Charles, Illinois location. I am a manager in the tax and consulting group. I have over 20 years of experience in taxes, both businesses and individuals. and I really enjoy helping people lower their tax liabilities using some of these strategies that we’re going to discuss today. I am here with my co-presenter Drake Gindle who is a financial advisor at Savant and I’m going to let Drake introduce himself to you now. Drake. Wonderful. Thank you, Kelly. It’s great to be here with everyone. As Kelly mentioned, my name is Drake Rindle. I’m a financial adviser here in the Rockford, Illinois office. So, I’ve been in the financial services and accounting industry for over 10 years now. I have my CF designation, my CPA designation. So, I really enjoy and love talking taxes. So, I’m really excited to share some tips and tricks as it relates to tax strategies with you all today. Great. Thank great. Thank you, Drake.  We hope that you will have some questions for us as we go along.  if you do, please use the Q&A box at the bottom of your screen to send us those questions and we’ll have time at the end of the webinar to go over some of those with you. So, Drake, you want to take us off with the agenda? Sure thing. Let’s dive in. So, on our agenda today, we’ll be covering five kind of areas as it relates to some tax strategies. First, we’ll cover utilizing estate planning. Next, we’ll move on to being strategic with itemized deductions. After that, we’ll talk about taking advantage of and maximizing your retirement plan contributions, planning for capital gains, and then lastly, we’ll kind of finish today’s presentation out with utilizing kind of the comprehensive and integrated tax planning approach.

So when discussing tax strategies, often times we tend to focus on planning for and minimizing income taxes, but comprehensive tax planning also includes planning for estate taxes as well. So, one important concept to understand when it comes to estate tax is what’s called the estate tax exemption. And at a high level, the estate tax exemption is the amount of an individual’s assets that can be transferred to your beneficiaries or heirs without incurring any federal estate taxes. So essentially, it’s the amount that can be passed tax-free to your heirs. Back on July 4th of 2025, so just last year, an important piece of tax legislation was passed called the One Big Beautiful Bill Act, or as I call it, OB that created a significant change to the federal exemption amount. So, without OB, the federal exemption amount was set to sunset and essentially be cut in half to $7 million per person, as you’ll notice on the chart here. But OBO was passed and it set the exemption amount at $15 million per person starting this year effective January 2026. So, this significant change now eliminates federal estate tax concerns for many American households but not all. So, for married couples for example a significant net worth the benefit of portability still remains in place and intact at the federal level. So, what does portability mean? So essentially portability means that a surviving spouse can add the unused portion of their deceased spouse’s exemption to their own lifetime exemption amount. So, to use kind of a high example, say we have spouse A, spouse B. Spouse A passes away with $10 million in their estate. The surviving spouse can elect portability and port over the $5 million unused exemption amount and use and add on to their own lifetime. essentially bringing up their exemption amount from 15 to 20 million. So again, that’s an important tool or approach to consider, especially for folks who might be concerned for federal estate taxes even with the passing of OB. So, not only does estate tax implications apply at the federal level, but potentially at the state level as well. So, I like this chart. It provides a nice little visual of the different states that impose whether it be an estate tax. So that’s the 11 states that are highlighted in the dark blue or the four states in yellow that impose what’s called an inheritance tax. And then there’s one state, the state of Maryland, that actually imposes both an estate tax and an inheritance tax. So, it’s important to note that each state has its own estate exemption amount as well as estate tax rates, which can vary pretty significantly. So, it’s important to consider your state of residency’s estate tax rules. Whether you’re drafting your estate plan or reviewing your estate plan, even if the federal estate tax isn’t a concern, you want to be mindful again of your state residency’s estate tax rules.

So, when it comes to leaving assets to your heirs, there are kind of two broad approaches, whether it be outright or in trust, both of which have their own advantages and potential disadvantages as kind of highlighted here on this slide. So, there are several considerations when deciding between these approaches and ultimately, it’s about your goals and objectives, the monies that you leave behind. But some other considerations that really come into play can be the financial maturity of the heirs or the beneficiaries and kind of tied to that is the age of the beneficiaries. Some other things to consider as it relates to outright earn trust can relate to the size of the estate as well as the complexity of the assets that come with it. So for example you know outright distribution to beneficiaries that’s simple it’s easy it’s straightforward but it does have its downsides for example it does not offer asset protect asset protection to the heirs in the event of creditor protection or you know essentially the heir receives the inheritance can be retitled into their individual name potentially co-mingled with marital assets which could be exposed to a separation in the event of a divorce of a beneficiary for example. So those are just things to consider when we think through kind of those high broad approaches of well do I give my inheritance outright to the beneficiaries or keep it in some type of trust structure because the trust structure does allow added asset protection but there is a little bit more complexity and you have to be very mindful the income taxes as relates to irrevocable trusts  going that direction.

So, when leaving an inheritance, it’s generally tax-free with taxes really come into coming into play on a forward-looking basis for the beneficiaries. And the taxes that apply to the beneficiary will depend on the type of assets that they are receiving in the inheritance. And there’s kind of two broad categories here that I kind of wanted to talk through in some detail. First is basis adjusted assets. So, this grouping really applies to your non-retirement investment accounts. So, think like a brokerage account that might be titled in your individual name, maybe a joint account that’s titled between you and your spouse or another individual or an investment account that’s titled in trust. Other assets that this that fall under this adjusted category could be land, real estate and even business interests. So, with this basis adjusted essentially it means that there’s a step up in cost basis that happens upon your passing. So, the unrealized gain on paper goes away because the heir’s cost basis in that asset is stepped up to the fair market value of the asset upon the date of your passing. So, there’s certainly a benefit for passing on these types of assets to the next generation because of that step up in cost basis. Hey Drake, if I can jump in for a second. Sure.  I just wanted to mention that with the step up and basis that is something that  when there is a married filing joint  filers that they will want to get an appraisal of the house at the time of one the first spouse who passes away  have an appraisal done because that will impact the capital gains tax that potentially the  surviving spouse will have to pay later on. Very good point. And that can even come into play for business interests where there are multiple business owners within an entity as well as in general real estate when you’re dealing with multiple owners. So very good point, Kelly. Thanks for pointing that out.  so the kind of the second category or bucket are these IRD assets.  so really this comes into play think for your qualified retirement accounts. So, think your IRA, you know, maybe the 401ks, 403bs that you have. So, under the secure act that was eliminated, so under the secure act that was passed you know, several years ago at this point, it essentially eliminated the lifetime stretch opportunity for non-spousal beneficiaries of these types of accounts. Again, think IRA, 401ks. So, for non-spousal beneficiaries who inherit these retirement type of accounts instead of that lifetime stretch now they have to fully deplete the account within 10 years of the owner’s passing. So, with this more limited time frame these type of inherited accounts create significant tax planning for beneficiaries to manage the taxable distributions over that 10-year period of time.

All right. So, another effective tool when we think estate planning is utilizing what’s called the annual gift exclusion strategy. So, essentially what the annual gift exclusion amount is, it’s the dollar amount that you can gift to any living person and it won’t impact your lifetime federal estate amount, that $15 million per person that I mentioned on that prior slide. So, the amount of the annual gift exclusion for this year 2026 is 19,000 per person. And as you can see here on the chart on the left-hand side, this amount has gradually increased with inflation over time. And so, by using the annual gift exclusion strategically, you know, if a concern that you have a taxable estate, you can implement annual gifts on a recurring basis to help reduce your taxable estate overtime. So that’s one thing to keep in mind. But also, I wanted to talk through kind of a high example on the right-hand side of the slide here. So, say we have a married couple, two spouses with one child. So, each spouse has the ability to gift 19,000 again per person. So in total combined that they could gift up to 38,000 to their son in this example or to their child. , and again, it could be an effective tool if we’re concerned about whether it’s federal estate taxes or state estate taxes, implementing again a strategic annual gift exclusion plan to help shift taxable assets out of a potential taxable estate. So, one question that you might ask, well, what if I give more than the annual gift exclusion amount in any given year? So, for example, if you have a child or grandchild and you want to help them with a significant down payment maybe on their first home, you know, that’s an example that that might come up. So, if an individual gives more than their annual gift amount, then a gift tax return, it’s called a form 709, needs to be filed, and it’s attached to your tax return really for informational purposes. So, there’s no taxes that are owed or due, but the gift tax return essentially reports to the IRS that you’ve used up part of your lifetime exemption amount. So again, any amount that you go over that annual gift exclusion amount, you essentially then deduct against your lifetime $15 million cap.

All right, so moving on here. So, this chart highlights the different type of assets that one can or a short list of the different type of assets that one can gift during their lifetime. And we’ve kind of ordered it from top to bottom from low complexity to high complexity towards the bottom here. So to kind of highlight one, I’m not going to go into, you know, great detail  on each line item here, but for example, you know, maybe gifting cash for IRA or Roth IRA contributions, whether it be to a child or to a grandchild. So, as long as the recipient of that gift qualifies for making, say, a Roth IRA contribution based on their earned income, one approach you could take is gift the dollar amount to help fund that year’s Roth IRA contribution. And when we take a step back and think about this in the grand scheme of things, it could be a great way to kickstart a tax-free bucket for the younger generation, whether it be a young child or a young grandchild, because getting monies into that tax-free Roth bucket just allows for several decades of compounding tax-free growth. So, it could be a really powerful tool for those who are interested in giving during lifetime. So, kind of walking down so other some other assets you can gift securities whether that’s stocks, mutual funds, ETFs know you can gift real estate or you can even include business interest during lifetime. But one thing that I wanted to point out as it relates to gifting these type of asset categories during lifetime is transferring low basis assets might be more tax efficient at death in order for those assets to receive a what’s called that step up in cost basis that I talked about a few slides prior. So again, if you’ve held that asset for a really long time, there’s a lot of pent-up unrealized gain. One option is well rather than gifting that asset during your lifetime, wait to pass it on to your heirs upon death because they would receive the benefit of that step up in cost basis to that fair market value.

So, another topic as it relates to estate planning kind of in general here is well do I gift now during my lifetime or later? And there’s a lot of questions and considerations as it relates to, you know, which approach might make sense. But when you think about it, gifting now during your lifetime, well, you get the personal gratification and the thank you during your lifetime. And you also have the ability to give funds to charity or gift funds to family like kids and grandkids when they need the money the most. Plus, it can be an effective strategy as I kind of alluded to a little bit earlier. Again, if you have concerns of a taxable estate, whether at the federal level or at the state level, again, you’re shifting assets via gifting during your lifetime to help reduce or lower the potential estate tax obligations. Then, of course, the other option is you know, gifting or leaving it all at the end when your estate matures. You know whether that be building in  gifts to charity within your estate plan documents or just leaving the remainder to the heirs upon your passing. So one approach that you can take  that might work well based on your individual circumstances might be taking a hybrid approach you know but al you know a hybrid approach will you know gifting a little bit during your lifetime knowing that there’s going to be chunk left over at the end you know but ultimately and at the end of the day this is a personal choice and it’s really based on your own personal desires and objectives and also one that you have flexibility to review and adjust over time as time goes

Thank you, Drake. Very well done. I’m going to hop in now and talk about how you can be strategic with your itemized deductions and lower your taxable income that way. And this is very important for both federal and state tax especially Illinois like where we start with our federal adjusted gross income. So, if you are subject to a state income tax, you also are thinking about lowering your state taxes as well as federal. Next slide. So how can we do this? How can we lower our taxable income by using itemized deductions when the standard deduction is so high? The tax cut and jobs act made that standard deduction so high. So, it’s very hard for individuals to itemize anymore. So, what we want to do is still take those deductions that you would normally spread out over a few years and frontload those all into one year. That especially works well with charitable contributions. people that are pretty consistent with their charitable giving because you can do three years of con of contributing in year 1 and help get over that standard deduction amount and then in the next year or next couple of years you would go back to using the standard deduction. So right now, for 2026, the standard deduction for singles is $16,100 and $32,200 for married filing joint. The best deductions or the deductions that you should consider for this strategy are the state and local salt tax.  we’re going to get to that in a few minutes. talk about the new cap, mortgage interest, and investment interest, but keep in mind that investment interest is limited to your net investment income. And then charitable giving.

Next slide.

So, for tracking your itemized deductions, it’s important to have receipts, especially for your charitable giving.  Most charities will send out a letter or a statement at the end of the year, but for different types of contributions besides cash contributions like gifting appreciated stock, there is a certain tax form that will need to go along with your tax return. Sometimes you’ll need to have an appraisal done for that purpose. So, make sure you know what documentation you need and have that gathered for tax return time. For mortgage interest, your lender will send out a 1098. If they don’t, then you should be able to log into your online account and print that out and or look at your December 31st statement that will show you the year-to-ate interest that you paid. And then for your state and local taxes, you’re going to want to keep canceled checks, bank statements. For those living in Illinois, we have my tax Illinois. That is very helpful. You can without having to create an account.  Just log in some information like your social security number and name and you can look up what you’ve actually paid in estimates for the particular year. I believe it shows two years. So, you select the year that you want to see the estimates that you paid. So that is very helpful. It’s something that we as tax preparers will go ahead and do even if the client has not provided that to us. Next slide.

Okay. So, the state and local income taxes, the salt taxes, used to be at $10,000. That was capped at $10,000 after TCJA. But now with the One Big Beautiful Bill Act that was increased to $40,000 for single and married filing joint filers with modified AGI of $500,000 or less. It is phased out. So, if you exceed the $500,000 you or if you’re between $500 $600,000 it’s phased out but at the point that you are over $600,000 you don’t lose out completely. It reverts back to the $10,000. So, you still will always have that $10,000 each year between now and 2029. They are going to adjust the income threshold and the cap by 1% and then after or beginning in 2030 it reverts back to the $10,000 cap unless something is passed that will make the 40,000 permanent. Next slide.

Okay, moving on. We’re going to talk about the new floor for charitable contributions. So, for 2026, you are going to be limited to 0.5% of your adjusted gross income before you can start to deduct your charitable donations. That 0.5 reduction is carried forward to the following year only if your contributions exceed the pre-existing AGI limits. So, there are certain buckets that charitable contributions fall into. The most common cash contributions to public charities, that’s 60% and gifts of appreciated stock to a public charity, that’s a 30% bucket. So, looking at our example, a taxpayer has AGI of $100,000 and they donate $50,000 of appreciated stock. Now that is that 30% bucket that we just talked about. So, step one is to reduce your contributions by that half a% floor. So, $100,000*.5% is $500. $50,000US $500 is $49,500.

That’s your deduction before the AGI limit. So now we have to consider that that appreciated stock was a 30% bucket and 100,000 times that 30% gives $30,000 as your maximum deductible contribution for that year. Now you made $50,000. So, what happens to the other 20,000? That is going to carry over to the following year where again it will be grouped with other contributions and determining how much you can take in that year.

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Other itemized deductions that One Big Beautiful Bill Act impacted is mortgage interest that was made permanent the extent that the limit of deductible mortgage interest up to $750,000 in home acquisition debt. So again, that was made permanent. And what is home acquisition debt? That is money used to buy, build, or substantially improve your primary or a second home. Also included is mortgage insurance premiums on that same type of acquisition indebtedness. Also important to note that for home equity lines of credit, home equity loans that must be secured by the house, the primary or secondary home. If you were to take out a line of credit or home equity loan and pay off credit card or that for college tuition, that would not count as qualified mortgage interest for itemized deductions. Casualty losses, that is an area that has changed over the years. It used to be bound on schedule A itemized deductions, but now we hardly ever see it because it has been limited to only federally declared disaster zones or state declared disaster.  That was something new that has come up that it’s for state declared disasters as well. So, if you have a basement that floods, that’s not going to, count as a casualty loss if it was here in Illinois. But let’s say in Florida, your basement floods after a hurricane that was a federally declared disaster, then that will count. miscellaneous itemized deductions that prior to TCJA was something that people tracked, but TCJA eliminated those. Still the case except the One Big Beautiful Bill Act now made educator expenses as an itemized deduction. You may know this, but $300 of educator expenses is an above-the-line deduction right now. That hasn’t changed. That remains. So, most educators spend a lot more than $300 in their classrooms. So now they are able to take the remaining portion of what they spent and claim that as an itemized deduction. So that’s a good thing for our educators. Next slide.

Okay. Tax smart gifting options.  Drake has already touched on this subject, but I’m going to go over a few additional ones as we are talking about bunching donations.  So again, you can do three years of giving in one year to get you over that I over the standard deduction amount.  a donor advised fund is definitely a useful tool. You again, you’re going to put a large amount of money into year 1 and then those deductions can come out in future years to the charity of your choice. QCDS or qualified charitable distributions that is out of your IRA account if you are age 70 and a half or older. And the limit for 2026 is $111,000. It’s a great thing to do because it reduces your taxable income and you’re giving it to charity. Please note though that you do not get a charitable contribution on your schedule A for that. It’s just the benefit is reducing your taxable income. There’s also charitable trusts charitable remainder trusts that you can set up that your beneficiary gets a certain amount of income stream up to 20 years and then anything after that goes to a charity that you designate. And as Drake has already talked to us about the importance of estate planning and your charitable gifting that way. Next slide.

So, things that you can do to be more tax efficient.  QCDs that I just mentioned. It’s a big gifting opportunity as long as you are at that RMD age. It cannot come from a 401k. It is only from an IRA. Up to $111,000 per year for 2026. And you can give all of your RMD or just a portion of it. Again, you it’s excluded from income, but you do not get that itemized deduction for charity. Next slide.  really quick question slash comment Kelly for you.  so that new QCD limit that 111,000 for this year 2026 I believe that is per person if I’m correct. So, you are correct. So, for example, if there if you know a couple filing a joint tax return that’s extremely charitably inclined, that 111,000 applies to each of your IAS where you can give a combined up to 222,000 from your IRA accounts to the charities, the charities of your choice. And I always like to kind of take a step back here and think about this because when we think about IAS, these are pre-tax buckets. So, when you are making contributions to the accounts over time, you’re getting the tax deduction upfront, the monies then have grown tax deferred. And for any monies that you send off from your IRA via this QCD approach to the end charity, it’s tax-free. So, you’ve completely cut out Uncle Sam all along the way by utilizing this qualified charitable distribution strategy. Again, if you have those charitable inclinations and those charitable goals. And another important thing to note is  especially for folks who are required minimum distribution age and they have to take monies out of their IRA by sending monies off to charity you get a few benefits you know from the IRA that helps satisfy that required minimum distribution you don’t include those dollars in income and it helps directly  decrease your AGI. So, thinking back to one of Kelly’s slides with the salt tax that was expanded from 10 to 40,000, there’s that income phase out range between 500 and 600,000 and AGI. Well, if you’re within that range, Cherby and Clyde and need to take monies out of your IRA, you could utilize this QCD approach to help reduce your AGI to then maximize what you might be able to claim for those salt taxes, for example. Sorry, Kelly. That was a kind of a long- winded little side note there. That was great. Great advice. Thank you, Drake. Okay.  yeah, next slide. Here we are. So, the One Big Beautiful Bill Act has brought back a limitation on itemized deductions for high earners. We saw this previously with the PE’s limitation that was prior to Tax Cuts And Jobs Act, but now we’re seeing it again. So those in the 37% tax bracket starting in 2026 are going to see their itemized deduction benefit capped at 35%. So, the last bullet point, itemized deductions of a h 100,000, you’re only going to receive the benefit of $35,000, not the $37,000. So, this brings up an important tax planning opportunity. This would be a great year to use that bunching strategy for your itemized deductions to try and lower your tax bracket from that 37% to get you into the 35% tax bracket so that you aren’t going to lose out on the benefit of those itemized deductions.

Next slide.

Okay, we’re moving on to maximizing retirement plan contributions and how this can be a good tool to reduce your taxable income. Next slide.

So, by maximizing your retirement plan, you are lowering your taxable income. For those who are self-employed, you have the options to use IRA, a solo 401k, or simple plan. Next slide. The annual contribution limits for 2026 for employees who participate in a 401k plan is $24,500, which is up from $23,500 in 2025. The catch-up contribution for those ages 50 and over increased to $8,000 up from $7,500 in 2025. There is something called a super catchup which is part of the One Big Beautiful Bill Act and that is for individuals aged 60 to 63. You are able to put away $11,250 as a catch-up contribution if your 401k plan allows for this. It must allow for it. If it does not, then you can’t make a catch-up contribution. So, for IAS, they have gone up to $7,500 in 2026, up from $7,000 in 2025. And then the catchup contribution for those age 50 and over is $1,100 up from $1,000 in 2025 for high-income earners.  and that is those with AGI of $150,000 or more. Those catchup contributions have to be made into a Roth account starting in 2026. And if the plan does not or if the IRA does not allow that, then you would not be able to do your catchup contribution.

Next slide.

So, there are some limitations about making Roth contributions. You have to be within the income range. So, it begins to phase out over 153,000 to 168,000 for single filers and between 242,000 and 252,000 for married filing joint filers. Something that you could consider doing is making a backdoor Roth. So, what we accomplish with that, you make a non-deductible traditional IRA contribution because your income is over the limits, too high for you to just make a Roth contribution. So, we’re going to do a non-deductible traditional and then convert that right away to a WTH. There’s also a mega backdoor Roth, and this is only if your 401k plan allows for this, but you would make your normal $24,500 pre-tax contribution and then another $47,500 if you were to max out at that $72,000 point.  And after-tax contributions and then right away move that over into either a Roth 401k or a Roth IRA. Again, the plan has to allow for that in order to be able to do it. You should consider a Roth conversion in your lower income years. So, for most people, this is going to be at retirement up until the time, you’re required to take RMDs because your earnings, your wages have gone away at that point. So definitely you want to do it in your lower income years. Next slide.

These are some ways that you can increase your savings in your retirement plan. Ways to put more money into retirement. You can look at your prior year tax return and if you had a refund, then you can put more into your 401k. If you get a pay increase over the next year, then you can put a portion of that into your 401k and not all of it if you don’t want to. In the example, the last bullet point there, if you got a 3% pay increase, you could put 1% into your 401k and keep the remaining 2% and it’s win-win. Your pay goes up and so does your retirement savings. Most importantly, you should be taking advantage of your company’s employer match if that is an option. That is free money to you. So, to the extent that you are able to, you want to definitely take advantage of the employer match. Next slide.

Okay. Roth conversions we hit on a little bit before.  what they accomplish, you are voluntarily transferring assets from your pre-tax traditional IRA to a tax-free Roth IRA. The beauty of the Roth is that the earnings grow tax-free in the account and when you take the money out as long as you’ve met certain conditions, it’s tax-free. So, it’s a very powerful tool. There are no income limitations for Roth conversions as opposed to Roth contributions. So, why make a Roth conversion? Again, that future tax-free growth. There’s no taxes on future distributions within requirements.  there’s no RMDs. It’s a great investment account for legacy planning and it reduces future taxes because there’s smaller RMDs. You do have to watch out for what’s called a prosaic calculation when doing the Roth conversion. If you have any pre-tax retirement accounts, that will impact how much of that Roth conversion is going to be taxable. So, to the extent that you have pre-tax contributions, it could make some of that Roth conversion taxable. So just keep that in mind. Next slide.

Okay, wonderful. Thank you, Kelly.  So, I’m going to move on to planning for capital gains here. So capital gain tax rates are preferential tax rates compared to the ordinary income tax brackets. So said differently, your capital gain tax rate is either zero, 15, or 20%. Which is typically lower than where you fall within the ordinary tax brackets, which range from 10% to 37%. So, for example, if you’re in the 10 or 12% ordinary income tax bracket, your capital gain tax rate is zero. If you’re in the 22 or 24% bracket, your capital gain tax rate is 15%. So on and so forth. So that’s why I like to kind of explain capital gain taxes as preferential because they’re preferential relative to ordinary income taxes. And so your ordinary or so, excuse me, your capital gain tax bracket is determined by what your taxable income is. So, I kind of wanted to talk through how do we get to our taxable income. So, you really start at your top line. So, think your gross total income and then you take away your standard deduction or your itemized deduction whichever is greater and then there’s also other deduction that can come into play that gets you to your taxable income. And again, that taxable income figure is what’s going to determine what bracket you fall in for capital gain taxes. So, one thing that really stands out is we certainly want to take advantage of the 0% capital gain tax rate. You can’t beat a 0% tax rate. So, in years with lower taxable income, you know, one thing to be mindful of is deploying what’s called capital gain harvesting. Again, once low taxable income’s lower and you think you’re going to fall in that 0% favorable capital gain tax rate, it might make sense to realize some gains and pay zero taxes along the way. Another kind of component as it relates to coordinating capital gains is you can do it and integrate it with your charitable planning. Kind of as Kelly alluded to, you know, utilizing an approach such as a bunching charitable strategy to really accelerate the deduction into one tax year, which then can allow for lower taxable income, which might land you in a favorable zero, maybe even a 15% capital gain tax bracket. So again, there’s a lot of different moving pieces. You really need to have a good understanding on what taxable income is and how you get there. , and also kind of projecting out, you know, what’s your tax bracket now versus where it might be in the future as it relates to planning for capital gains over the future and going forward. So capital gain taxes applies when you turn an unrealized gain, so an unrealized gain, think of a gain on paper to a realized gain. So, there’s a triggering event that causes capital gain taxes and it’s typically when you sell the investment or you sell the asset and with the capital gain defined as the difference between your sales price what you sold it for versus what you bought it for your cost basis. So, for example, kind of high level, you know, say you bought an investment for $100 and it grew to $120 and you sold it. You only pay capital gain taxes on the gain or the $20 in that example. And so, capital gains are associated with stocks or investments that are held within a brokerage account. So, think a non-IRA, non-retirement type of account. That’s where capital gain tax rates apply. Capital gain taxes can also apply to the business owners out there who are thinking about eventually selling their business at a future point in time. Individuals that hold real estate property, capital gains, can be a part of that type of transaction. And then we also see capital gain tax rates apply to what’s called capital gain distributions that are really generated from mutual funds primarily held within brokerage accounts. So, by actively monitoring investments in a taxable investment account, one could take advantage of what’s called, you know, a concept called tax lost harvesting. So, for example purposes, as you’ll see here on the slide, so if you sell an investment for 80,000 that you bought initially for 100,000, you capture a realized loss of 20,000 in that case. So, this 20,000-capital loss can be used to offset other capital gains in that given tax year. If you don’t have any other capital gains to offset, the IRS actually allows you to use up to 3,000 of that capital loss to offset in other ordinary income tax sources with any unused capital loss. So, kind of the 17,000 in this example can be carried forward to future tax years until it’s eventually used up at some point in the future. So, you can kind of see the power of this tax lost harvesting. And by systematically harvesting and accumulating capital losses can not only reduce capital gain taxes in the current year, but you can also plan for maybe significant capital gains, you know, such as selling a business or selling a piece of real estate in the future by actively monitoring and engaging in this tax loss harvesting concept. So, when we think about tools in our tool belt here at Savannah as it relates to planning for capital gains, you know, one is asset location. So, this is an on purpose by design strategy where we intentionally locate certain investment funds or asset categories within a taxable bucket within a portfolio to help maximize the favorable preferential capital gain tax rates and then by actively monitoring when tax loss harvesting opportunities arise. just based on movements of the market, based on movements of the underlying investments in those accounts. So, some other solutions that I’ve kind of included on the slide here, Savant custom indexing and tape which stands for tax advantage portfolio extensions. We don’t have enough time today, but essentially, they’re investment strategies that expand the opportunity set for tax loss harvesting that again can be used to manage current capital gains, but maybe more importantly future capital gains. One thing, one item not on this slide is, that I kind of just thought of on the fly here, again, for the business owners out there, considering an installment sale if you go to sell your business at a future point in time. Essentially what an installment sale is, it’s strategically deferring the capital gains over the set period within the installment to spread out the capital gains over multiple tax years, which might be able to help you plan for and manage what capital gain tax bracket and therefore what capital gain tax rate applies in a large liquidity event such as selling a business or  selling a piece of real estate. Okay, so moving on to our last section here.  again, kind of bringing this all together, utilizing tax planning. So here at Savant, we incorporate really a comprehensive wealth management and an in-house tax and consulting solution under one roof that provides for the proactive tax planning that can create opportunities to both manage and minimize taxes over one’s lifetime. And the most effective plan is a plan for taxes beyond just this current year. It’s a proactive tax plan approach that evaluates and really projects your long-term income sources and therefore your long-term tax brackets to take advantage of years where income might be lower. , so in years where income’s lower, as we’ve kind of discussed, you know, Roth conversions can make sense. , capital gain harvesting at the 0% tax rate can make sense, etc.

At Savant, we aim to use all available tools in our tool belt to co control and minimize taxes as best we can. And there’s a pretty long long list to that tool and what we have at our disposal.  but just to talk through high level a few of these, you know, first and foremost, incorporating low-cost and tax efficient investment funds within a portfolio goes a long way. I discussed that asset location and implementing that depending on the account types that we manage within a portfolio and the importance of integrating charitable planning and your long-term charitable goals within the tax plan to help manage taxes over time and also for the retirees or soon to be retirees. It’s planning for a tax efficient distribution and cash flow plan essentially replacing the paycheck if you will. And ultimately, the less you pay in taxes, the more you keep in your pocket, which is certainly an objective of a proactive long-term tax plan.

Okay, I’ll take this one, Drake. To get the best results for tax planning, especially if you’re a business owner, you want to make sure that you have your expenses gathered and organized. If you use QuickBooks or Zero Accounting, make sure that you have reconciled your cash and credit card accounts up through the most current months. So, we have the most accurate picture of where the business is at. And then we can look at things like capital expenditures. Should you purchase a vehicle or farm equipment before the end of the year and place it in service before the end of the year so that we can take advantage of accelerated depreciation methods such as section 179 expense. And we now have 100% bonus depreciation back. That was another part of the One Big Beautiful Bill Act. So, we are back at 100% bonus. However, for Illinois, they have still decoupled from federal. So that will be an ad back to the Illinois tax return. Each state varies. So, if you have questions on that, just let us know and we can help you with it. Also, you want to check your other deductions, especially if you’re self-employed. If you’re a schedule C, do you have a home office deduction? Business mileage that just came out for 2026, it’s 72.5 cents per mile. If you do have business mileage, you should be either using an app that tracks that or just a mileage log where you write down the dates where you went, the business purpose and the mileage. Also half of your self-employment taxes are deductible if you are self-employed. Next slide.

All right, this slide is actually showing us the provisions of the One Big Beautiful Bill Act and what the phase out ranges are at. So, we’ve already talked about some of these like the salt deduction that’s between $500 and $600,000.  The itemized floor limit or the itemized deduction floor limit. But two things that we have not talked about before that I want to touch on here.  Although it’s not an itemized deduction, it’s an additional deduction is the enhanced senior deduction and that is $6,000 per person. However, there is the phase out range married filing joint that is between $150 and $250,000. And there’s also the new auto loan interest deduction. And that is for new cars only, not for used. And the final assembly of those cars has to happen in the United States. There is a website that if you go to IRS.gov  and search this deduction, it will bring up that that link and you can look to see if your car had final assembly in the United States. But you can get up to a $10,000 deduction for the interest expense on that. that phases out for married filing joint filer between $200 and $249,000.

Next slide. All right, we have finished our webinar.  but we are going to go over some questions now. We have about five minutes to go over some questions. If by chance your question has not been answered, someone will reach out to you and make sure that you get your answer.

Drake, do you want to take a question? Yeah, let me get that pulled up here. Get to the chat group here. Okay. All right. Kind of scrolling through because we do have a few minutes here. All right, here’s a good one that relates to capital gains. So, if I purchased a home in 2023 and plan to sell it in 2026 this year, do I have to pay capital gain taxes? Okay, so this is a so this is a great question. So, assuming that this home that you were referencing to, assuming that is your primary residence, you would likely qualify for what’s called the primary residence capital gain exclusion under the IRS code. But there’s a few criteria that you need to meet in order to qualify for this excl g gain exclusion. It’s called the ownership and use test. So, as long as you you’ve owned the home for at least two out of the last 5 years and you lived in the home as your primary residence in at least two out of the last 5 years, then you qualify for this. Again, the primary residence capital gain exclusion. But one thing I’d like to note really quick, because this can vary depending on geographic location and how long you’ve owned the home for, there is a limit depending on filing status on how much can be excluded from capital gains for a primary residence. For example, to tie some numbers to that. So, for individuals that file a single filer tax return, they can exclude up to the first 250,000 in capital gain on selling their residence and then it’s double that for   for individual or for spouses who file a joint return. They can exclude up to half a million in capital gain when selling their primary residence. But again, making sure you qualify based on that ownership and use test.

Kelly, any questions that pop out to you? Yeah, I see one here asking if you can contribute to both a 401k and IRA. So the answer  to that the short answer is yes but it also it depends on the situation  because there are the limitations for  for income and  your filing status but you could contribute to your 401k  to at least get that employer match because again that’s free money to you and then after that  contribute to an IRA and if you meet  all the requirements for that and are not limited and then if you still  were able to put money into savings then you could go back to your 401k and put additional money in.

Great response. No, that’s a good one. Well, I think we’re coming up on the end of the hour here. So I think that’s all the time we have for questions today, but again, we appreciate everyone carving out an hour here early in the new year to talk taxes with Kelly and I, if your if your specific question wasn’t answered, we’ll make sure that someone reaches out. Again, thank you for participating and we hope everyone has a good rest of the day, a good rest of the week, and, again, a good start to 2026. Yes, I just want to say too, thank you for, being my co-presenter, Drake. You did a great job. And thank you everybody for joining us. Also, there is a 15-minute consultation. So please reach out to us and schedule that complimentary call. Drake and I would love to chat with you more. Have a great day. Thank you everyone. If you enjoyed this webinar, visit savantwealth.com/guides and download our complimentary guide books, checklists, and other useful financial resources.