If you’re working hard to grow your wealth, it’s just as important to protect it—and taxes can take a significant bite out of your investment earnings. As we approach 2025, now is the time to consider smart tax strategies that can help you retain more of what you earn and invest with purpose.

Whether you're planning for retirement, managing equity compensation, or simply looking to make your investment income more tax-efficient, these 10 strategies can make a big difference.

Here are ten actionable ways to reduce taxes on your investment earnings in 2025:

1. Optimize Your Investment Income

Not all investment income is taxed the same. Interest income from traditional savings accounts and short-term capital gains are taxed at ordinary income rates, which can be as high as 37%. On the other hand, qualified dividends and long-term capital gains are often taxed at lower rates—0%, 15%, or 20%, depending on your income.

Strategy: Shift your focus toward investments that offer tax-efficient income. For example, fixed-income investments like Compound Real Estate Bonds (CREB) offer a predictable 8.5% APY and are designed with tax-efficiency in mind, especially when held in tax-advantaged accounts.

2. Max Out Retirement Plans at Work

If you have access to a 401(k), 403(b), or other employer-sponsored retirement plan, maximizing your contributions can reduce your taxable income and defer taxes on investment earnings until retirement.

Contribution Limits for 2025 (projected):

• $23,000 for 401(k) plans
  
  
• $30,500 if you’re 50 or older (includes a $7,500 catch-up)
  
  

Tip: Don’t leave employer matching contributions on the table—it’s free money and a long-term tax advantage.

3. Make a Tax-Deductible IRA Contribution

Depending on your income and whether you or your spouse are covered by a workplace plan, you may be eligible to deduct traditional IRA contributions.

For 2025, the contribution limit is expected to be $7,000 (or $8,000 if age 50+).

Even if you can’t deduct your IRA contributions, a Roth IRA may be a better alternative for tax-free growth and tax-free withdrawals in retirement.

4. Retirement Income Planning

How and when you withdraw retirement funds matters. Distributions from traditional IRAs and 401(k)s are fully taxable, but if you plan your income levels in retirement carefully, you can avoid pushing yourself into higher tax brackets.

Tax-efficient income planning may involve:

• Drawing from taxable accounts first
  
  
• Delaying Social Security to reduce tax on benefits
  
  
• Using Roth conversions to spread income across lower tax years
  
  

5. Stock Option and Equity Compensation Planning

If you receive equity compensation like stock options or RSUs, taxes can get complicated. The timing of your exercise or sale impacts how much tax you pay.

• Incentive stock options (ISOs) have favorable tax treatment if held long enough.
  
  
• Non-qualified stock options (NSOs) are taxed as income upon exercise.
  
  

Work with a tax advisor to map out a strategy that aligns with your income goals and avoids surprise tax bills.

6. Give Stocks to Charity With a Donor-Advised Fund (DAF)

When you contribute to a donor-advised fund (DAF) through an irrevocable charitable donation, you receive an immediate federal income tax deduction equal to the fair market value of the donated asset. Why choose to donate stocks instead of cash? By gifting appreciated assets—like stocks, mutual funds, or ETFs—you can avoid realizing capital gains taxes that would apply if you sold the investments yourself. This means more of your money goes to the causes you care about, rather than to taxes.

This strategy is especially useful in high-income years, such as after the sale of a business or the exercise of stock options following an IPO.

To take advantage of this tax benefit, you’ll need to itemize your deductions. If you typically take the standard deduction, consider “bunching” multiple years’ worth of charitable donations into a single year to maximize the tax impact. You can generally deduct up to 30% of your adjusted gross income (AGI) for donations of appreciated securities, with any excess carried forward for up to five years. Keep in mind: only long-term appreciated assets (held for more than a year) are eligible for this favorable treatment—including cash.

7. Harvest Losses to Offset Gains

Tax-loss harvesting is a powerful strategy for investors with taxable brokerage accounts. If some of your investments have declined, selling them at a loss can help offset capital gains elsewhere in your portfolio.

Even if you don’t have gains to offset, you can deduct up to $3,000 in capital losses against ordinary income and carry forward the rest.

Remember the wash-sale rule—you can’t buy the same (or substantially identical) security within 30 days before or after the sale if you want the loss to count.

8. Plan Distributions From an Inherited IRA

If you inherit an IRA from someone other than your spouse, you’re now required to withdraw the full balance within 10 years, thanks to the SECURE Act. However, how you space out those distributions affects your tax bracket and liability.

Spreading distributions evenly over 10 years, or in low-income years, can reduce the total tax burden—especially if you coordinate it with other income sources.

9. Reduce Taxes on Business Income With Retirement Plans

If you’re self-employed or a small business owner, consider opening a Solo 401(k) or SEP IRA to reduce taxable business income. These plans allow for high contribution limits—potentially up to $66,000 or more in combined employee and employer contributions (based on 2024 numbers).

CREB Tip: If you’re a freelancer or gig worker, investing some of your income into a tax-advantaged retirement plan while also earning fixed income through CREB can balance both security and tax efficiency.

10. Donate Your RMD to Charity

If you’re age 70½ or older, you can make a Qualified Charitable Distribution (QCD) of up to $100,000 directly from your IRA to a qualified charity. This satisfies your Required Minimum Distribution (RMD) and isn’t counted as taxable income.

QCDs are especially useful for retirees who don’t need their RMDs and want to reduce their tax bill while giving back.

Final Thoughts: Pair Tax Strategies With Smart Investment Choices

Taxes may be unavoidable, but with the right strategy, they’re certainly manageable. Combining these tax-saving tactics with stable, fixed-income investments—like those offered by Compound Real Estate Bonds (CREB)—can improve your after-tax returns and help you reach your financial goals faster.

CREB offers an 8.5% APY, no fees, real asset backing, and anytime withdrawals, making it a powerful option to build wealth with confidence.

Remember to consult a tax professional or financial advisor to tailor these strategies to your specific situation and take full advantage of the tax code in 2025.

Ready to start earning smart, tax-efficient returns?
Explore how Compound Real Estate Bonds can complement your tax strategy today.