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Every Saturday, we open the mailbag, pour some strong coffee, and tackle the tax questions keeping America awake at 2 a.m. Here are this week’s questions:
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As a W-2 employee, what are the most effective ways to lower taxable income?
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The whole American tax system seems designed by someone who enjoys watching mice navigate a particularly cruel maze for a tiny piece of cheese.
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For W-2 workers, the cheese is simply not owing extra in April.
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Since the 2017 tax changes wiped out most itemized deductions (RIP home office write-off), your best options now are the tried-and-true ones:
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1. Max out pre-tax retirement accounts.
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Stuff that 401(k) or 403(b) to the brim. For 2025, that’s up to $23,500. Every dollar you contribute reduces your taxable income today (and your future self will thank you).
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2. Use a Health Savings Account (HSA) if you qualify.
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It’s the tax trifecta: money goes in tax-free, grows tax-free, and comes out tax-free for medical expenses. It’s basically a legal cheat code.
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If someone receives a large bonus from their employer (say $100,000 or more), what strategies can help minimize the taxes owed on that income?
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Now, about that $100K bonus…
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Congrats! That’s what we call a “good problem.” Unfortunately, it comes with a bad tax bill. Employers usually withhold 22%, but once that bonus stacks on your regular income, you’ll likely owe more at filing time.
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Here’s how to soften the blow:
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1. Defer it (if possible).
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Some employers offer non-qualified deferred compensation (NQDC) plans. You can choose to delay receiving part or all of your bonus until a future year (like retirement) when your income (and tax rate) may be lower.
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2. Offset it immediately.
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Max out your 401(k) right away using part of that bonus.
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Bunch your charitable giving. For example, donate several years’ worth into a Donor-Advised Fund this year. That big deduction can help shield a good chunk of the bonus from taxes.
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As a W-2 worker, your toolkit is smaller, but still powerful if you play it right. If you’ve got a burning question you need answered by the team, hit ‘reply’ to this email and send us your thoughts. We may feature it (anonymously) in a future Saturday edition.
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Helping you outsmart the IRS one paycheck at a time,
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— Your Friends at TaxStache
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PRESENTED BY MASTERWORKS
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Where to Invest $100,000 According to Experts
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Investors face a dilemma. Headlines everywhere say tariffs and AI hype are distorting public markets.
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Now, the S&P is trading at over 30x earnings—a level historically linked to crashes.
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And the Fed is lowering rates, potentially adding fuel to the fire.
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Bloomberg asked where experts would personally invest $100,000 for their September edition. One surprising answer? Art.
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It’s what billionaires like Bezos, Gates, and the Rockefellers have used to diversify for decades.
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Why?
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Contemporary art prices have appreciated 11.2% annually on average
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…And with one of the lowest correlations to stocks of any major asset class (Masterworks data, 1995-2024).
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Ultra-high net worth collectors (>$50M) allocated 25% of their portfolios to art on average. (UBS, 2024)
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