347. W-2 Tax Strategies in 2025: What's Actually Working
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Oct 1, 2025
Dive into the complexities of W-2 taxation and discover why it's challenging to offset high-income earnings. Explore Section 469 passive activity rules and how achieving real estate professional status can benefit you. Learn about the $626,000 Excess Business Loss limit and how to generate non-passive losses from active businesses and oil & gas investments. Uncover strategies to stack charitable deductions with business losses and avoid dubious tax schemes for a smarter financial future.
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insights INSIGHT
W-2 Income Is Hard To Offset
W-2 income is taxed at ordinary rates including federal, state, and FICA which makes it highly taxed.
You generally cannot offset W-2 income with employee expenses like a business owner can.
insights INSIGHT
Passive Loss Rules Limit Rental Deductions
Section 469 makes rental real estate losses passive by default, so they only offset passive income.
Depreciation creates non-cash losses that can reduce taxable income without hurting cash flow.
volunteer_activism ADVICE
Plan Around The $626K EBL Cap
Remember the Excess Business Loss (EBL) cap: in 2025 married couples can only use $626,000 of business losses against other income.
Any excess loss carries forward as a net operating loss to future years.
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In this episode of the Tax Smart REI Podcast, hosts Thomas Castelli and Ryan Carriere, CPA, dive into one of the most-requested topics from high-income investors and professionals, W-2 tax strategies.
Tune in to learn:
- Why W-2 income is so highly taxed and the biggest obstacles to offsetting it
- How Section 469 passive activity rules work and proven ways to navigate them with real estate professional status (REPS) or short-term rentals
- How the $626,000 Excess Business Loss (EBL) limit applies to high earners and how to strategically plan around it
- Ways to generate non-passive losses through active businesses and oil & gas investments
- How to stack charitable deductions (like donor-advised funds, CRTs, and CLTs) on top of business losses for maximum impact
- Traditional but powerful tactics, including 401(k)s, HSAs, SALT deductions, and capital loss harvesting
- Which “too-good-to-be-true” tax schemes to avoid and how to spot them before they get you audited
This comprehensive breakdown gives you a complete view of W-2 taxation.
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