Dear Uplevel,
We just received our taxes for last year from our CPA and wow… Between a big federal tax bill, state taxes, and all the various local taxes, it’s feeling like a bigger and bigger chunk of our income goes toward taxes every year.
While we know we are fortunate to earn good incomes—we certainly don’t feel “rich.” It’s starting to feel like we’re working just to pay taxes. Short of moving or greatly reducing our income, what can we do?
Sincerely,
Feeling the Tax Squeeze
Our Take
Dear Feeling the Tax Squeeze,
We’ll start by saying you’re not alone. As Oregon residents ourselves, we (and many of our clients) feel this acutely. Between state income tax and Multnomah County taxes, the burden here is among the highest in the country—so no, you’re not imagining things.
Unfortunately, there’s no silver (legal) bullet when it comes to taxes. But there are ways to be more strategic and efficient.
Here are a few of the most impactful areas we focus on with clients:
1. Make Sure You’re Not Overpaying
Before we look for ways to reduce taxes, we review what’s already been filed. Why? Because it’s not uncommon to see:
- Backdoor Roths reported incorrectly
- Charitable contributions missing
- Social security income taxed beyond the cap because of a job change
- Contributions not captured because they happened after year-end
None of these are aggressive strategies—they’re execution details. But when they’re wrong, you quietly overpay.
2. Make the Most of Tax-Advantaged Accounts
For high-income W-2 earners, the list isn’t long—but it is important:
- 401(k): not just contributing, but deciding pre-tax vs Roth intentionally
- HSA: one of the few truly triple tax-advantaged accounts
- Backdoor / Mega Backdoor Roth (if available)
These aren’t flashy—but meaningful tax efficiency comes from doing these well and consistently, not finding something new.
3. Be Strategic With Deductions
For many high earners, deductions against income don’t have to be limited to just the standard deduction. Other options to reduce taxable income to consider include:
- Charitable giving, especially when “bunched” into a single year or funded through a donor-advised fund (DAF)
- Qualified Charitable Distributions (QCDs) for those over 70½
- Thoughtful timing of deductions when possible
4. Understand Where Your Income Lands
There are certain income ranges where credits, deductions, or planning opportunities phase in or out. While you can’t always control income, coordinating bonuses, equity compensation, or other large events can sometimes create planning opportunities.
5. Don’t Let The Tax Tail Wag the Dog
We’ve had several clients consider moving—either to another county or out of state—to reduce taxes. In some cases, that can help. But more often, higher housing costs, less favorable interest rates than their current rate, and the disruption to your life offset much of the benefit.
If you truly want to live somewhere else for lifestyle reasons, that’s a great reason to explore it. But we rarely recommend a move solely for tax savings.
6. Be Cautious With Tax-Saving Strategies Like Rental Real Estate
We’re often asked whether buying rental property is a good way to reduce taxes. While there can be tax benefits, they’re often more limited than expected—especially for high-income households where passive loss rules apply.
Real estate can be a great investment if it fits your overall plan, but we don’t typically recommend it purely as a tax strategy.
The Bottom Line
Meaningful tax planning isn’t about finding one big loophole—it’s about coordinating across your entire financial picture and being intentional year after year.
There isn’t a single strategy that meaningfully changes your tax situation. But there is a meaningful difference between reacting each year and having a coordinated, forward-looking plan.
That’s where we see the biggest impact—not just in taxes paid, but in clarity and confidence around your entire financial picture.
If this is something you’ve been thinking about, we’re always happy to take a closer look together.
Onward and Uplevel,
Anika & Amanda
Uplevel Wealth is a fee-only, fiduciary wealth management firm serving clients in Portland, OR, and virtually throughout the U.S.
