Tax year 2026 · Federal strategies

Smart tax strategies for high earners.

Reviewed against IRS Pub 946 and the IRS Cost Segregation Audit Techniques Guide · Cost Seg Smart Research Team · Last reviewed May 2026

The same strategies $1M+ households use, written for the people who run them. Statute cited. Math shown. Ranked against your profile.

Disclosure: Cost Seg Smart operates this site. We sell cost-seg studies and we say so in the cost-seg section below. Treat this as a disclosed multi-strategy guide, not independent research. Full disclosure ↓

Estimate your savings → Browse 8 strategies

8Legal strategies

$200K+Household income tier

2026Rules, current

Sample · $450K household

Projected yr-1 savings

$94,800

Cost Seg + STR Loophole + Solo 401(k) for high earners on a typical high-earner profile.

$51,840

Cost Seg

$31,720

STR Loophole

$11,240

Solo 401(k)

✓

Eligibility

6 of 8 strategies

↑

Effective rate

20.0% → 13.7%

Why this site exists

Written for readers, not buyers.

Every strategy cites the statute. Every example shows the math. You decide what fits.

Every strategy cites its statute

IRC section, Treasury reg, or revenue ruling on every claim. No anecdotes, no influencer takes.

Eligibility, up front

Who qualifies. Who doesn’t. The exact income or ownership fact that flips you. No “call us to find out.”

Math you can check

Every example names its assumptions. Plug in your numbers. Verify the arithmetic yourself.

Eight strategies

The playbook, ranked by leverage.

Eight provisions that move the needle for W-2 earners making $200K to $1M+. Cost segregation and the STR loophole carry the most weight — the W-2 STR cost seg playbook walks through how the two combine for tech and finance W-2 earners.

See which ones apply to you →

Estimate your savings

Your situation. Your ranked playbook.

Pick every chip that applies. Most people check more than one. We rank the eight strategies by real-dollar fit for your mix, flag complexity, and name the gotcha.

2026 brackets Federal only Directional · not advice

Household income$450,000

Filing status

Married

Single

Head of household

Property situation select all that apply

None

Short-term rental

Long-term rental

Selling this year

Work arrangement select all that apply

W-2 only

1099 / consultant

S-Corp owner

W-2 + side biz

Estimated year-1 federal savings

$94,800

3 strategies apply to your profile

See your top strategy →

Featured · IRC §168 · §167

$600K building · reallocation

$162,000 · 27% of basis

5-year: finishes

$84K

5-year: furniture

$36K

15-year: land imp.

$42K

27.5-yr remaining

$438K

Featured strategy · 01

Cost segregation, for high earners.

Cost segregation is an engineering-based study that reclassifies building components into 5-, 7-, and 15-year property classes under IRC §168. Real estate owners use it to pull 100% bonus depreciation forward into year one. A 27.5-year straight-line deduction becomes an immediate write-off on 20–35% of basis. On a $600K short-term rental, expect $120K–$180K in year-one depreciation, worth $38K–$58K of federal tax at the 32% bracket. The STR loophole (Treas. Reg. §1.469-1T(e)(3)(ii)) lets those accelerated deductions offset active W-2 income instead of getting trapped as passive losses. Audit protection requires a qualified engineering study: site inspection, component-by-component cost allocation, and an IRS-defensible report with photographs and MACRS class rationale.

✓Year-one deduction. Reallocates 20–35% of basis into short-life property eligible for accelerated depreciation.
✓Worked example: $200K W-2 + $750K Airbnb → $162K accelerated deduction → $51,840 saved at 32% bracket.
✓Pairs with the STR loophole. Offsets active W-2 income when average guest stay is ≤7 days.
✓Audit-ready. Backed by a qualified engineering study and a contemporaneous participation log.

Provider choice depends on the property. Every legitimate cost-seg firm draws on the same IRS depreciation framework. They differ in documentation depth, engineering involvement, and turnaround. Automated platforms cover most properties under $2M. Full-engineering firms earn their fee on large commercial assets where on-site judgment moves the number. Compare across costsegregationpricing.com, costsegregationreviews.com, and costsegtool.com before you commit.

Run the Cost Seg Smart calculator → Order a study at Cost Seg Smart → Estimate your savings

Featured strategy · 02

The short-term rental loophole, in full.

The STR loophole is a carve-out in Treas. Reg. §1.469-1T(e)(3)(ii): when the average guest stay at a rental is 7 days or fewer, the activity is not a rental under IRC §469. Losses from the property — including the paper losses cost segregation produces — offset active W-2 income, not just passive income. You still need material participation. Most high earners hit it via the 100-hour-and-more-than-anyone-else test. A W-2 surgeon with one short-term rental can pull $150K–$200K in year-one deductions against ordinary income and save $48K–$74K in federal tax. Documentation does the work: booking records proving the 7-day average, a contemporaneous hour log, and no full-service property manager.

✓Treas. Reg. §1.469-1T(e)(3)(ii). Average guest stay ≤7 days means the activity is not a rental under §469.
✓Material participation test. Most high earners pass on the 100-hour-and-more-than-anyone-else test.
✓Stacked with cost seg. A surgeon making $400K W-2 pulls $187K in year-one deductions and keeps $74,800 in federal tax.
✓Documentation does the work. Booking records, hour log, no full-service property manager.

See the W-2 offset playbook → Read the STR cost seg guide → See all 8 strategies

IRC §469 carve-out

Surgeon · $400K W-2 · worked example

$74,800 year-1 federal savings

Purchase basis

$825K

Short-life reallocation

$187K

Participation hrs

208 hr

Avg. guest stay4.8 days

FAQ

Questions from careful readers.

If your question isn’t here, the answer is almost always: it depends on your facts. Talk to a CPA who knows real estate.

Are these strategies legal? +

Yes. Every strategy here cites the IRC, a Treasury regulation, or an IRS-published revenue ruling. No shelters. No offshore structures. No aggressive characterizations. Execution still matters. Documentation, timing, and eligibility all have to line up. A CPA who knows real estate and high-income planning is not optional.

Do I need to own real estate to benefit? +

No. The Backdoor Roth, Solo 401(k), S-Corp optimization, and Augusta Rule require zero real estate. Cost segregation and the STR loophole are the two highest-leverage moves for W-2 earners. Both require you to own a depreciable property, ideally a short-term rental.

How is this site different from a blog? +

Every claim ties to statute. Every example names its assumptions. We publish the arithmetic so you can check it. The point is to teach you the rules, not sell you something.

Why is cost segregation featured? +

For W-2 earners who own a short-term rental, it’s the single biggest lever in the tax code. A $600K building unlocks $140K–$180K in year-one deductions, worth $45K–$65K at the 32% bracket. We operate Cost Seg Smart, so we can quote and run studies directly. Full disclosure below.

What does the calculator actually do? +

It applies 2026 federal brackets to your household income, filters the eight strategies by eligibility, and estimates year-one federal tax reduction at your marginal rate. This is directional planning, not a tax return. It does not handle AMT, NIIT, state tax, QBI phase-outs, or recapture. Use it to narrow the list, then bring the numbers to a CPA.

When should I talk to a CPA vs. just read? +

Read first. You’ll have a sharper conversation with a CPA if you already know which strategies might apply and what they’re worth. Most CPAs won’t bring up the STR loophole or cost segregation unless you ask. When they do, you want to know whether their numbers hold up.

Which cost-seg provider should I use? +

We don’t crown a single provider here. The right choice depends on property type, basis, and turnaround. Every legitimate provider works off the same IRS depreciation framework. Firms differ in documentation depth, engineering involvement, and turnaround. costsegregationreviews.com ranks the field. costsegregationpricing.com tracks the pricing spread. Some readers run a quick estimate at costsegtool.com before evaluating providers. Disclosure: we operate Cost Seg Smart, one of the providers in this category. See the section above and the disclosure block below.