Earning $100K-$200K in 2025 puts you in the top 5-20% of U.S. earners, but taxes can trip up even the savviest six-figure professionals. This guide highlights five common tax traps to avoid, helping $100K-$200K earners save money and build wealth. At SixFigureEdge, we’re here to help you navigate your financial edge.
Why Avoiding Tax Traps Matters at $100K-$200K
Incomes between $100K and $200K in 2025 outpace 80-95% of full-time U.S. workers, per U.S. Census Bureau data adjusted for 2-3% annual inflation. With the median individual income at ~$52,000 and the top 25% at ~$95,000, your six-figure earnings put you ahead—but without smart planning, federal (18-32%) and state (0-13%) taxes can drain $20,000-$60,000 annually. Here’s what’s at stake:
- National Context: Your six-figure income gives you an edge, but tax mistakes can cost thousands yearly.
- Six-Figure Edge: Avoiding pitfalls now protects your cash—SixFigureEdge shows you how.
Tax Traps for $100K-$200K Earners
Here’s what to watch out for, scalable across your income range—smart moves for 2025.
1. Missing Out on Retirement Contributions
Trap: Not maxing 401(k) ($23,000 in 2025) or IRA ($7,000)—leaving taxable income higher.
Cost: At $120K, skipping $30,000 in contributions costs $7,200-$8,400 in federal taxes (18-24%) and $3,900 in high-tax states (e.g., California, 13%).
Fix: Contribute the max to cut taxes and grow wealth tax-free.
2. Overlooking State Tax Differences
Trap: Assuming all states tax equally—high-tax states (e.g., California, 9.3%-13.3%) hit $150K harder than no-tax states (e.g., Texas).
Cost: At $150K, California’s $14,250 state tax vs. Texas’s zero costs $14,250 annually—plus higher property/sales taxes in Texas.
Fix: Research your state’s tax burden and adjust deductions or relocate strategically.
3. Ignoring Itemized Deductions
Trap: Taking the standard deduction ($14,600 for singles in 2025) when itemizing (e.g., home office, charity) saves more.
Cost: At $140K, missing $5,000 in deductions costs $1,600 federally and $650 in California—$2,250+ yearly.
Fix: Track expenses like medical costs or donations to itemize effectively.
4. Misusing Tax Credits
Trap: Not claiming credits like the Saver’s Credit (up to $1,000) or Energy Credit—missing dollar-for-dollar savings.
Cost: At $110K, skipping a $1,000 credit loses $1,000, plus state benefits in some areas.
Fix: Review eligibility annually for credits tied to savings or home upgrades.
5. Failing to Defer Income
Trap: Taking all income in one year can push you into a higher tax bracket—e.g., if you earn $190K in 2025, your income above $191,950 is taxed at 32%. By deferring some earnings to 2026, you could stay within the 24% bracket and reduce your tax burden.
Cost: At $130K, deferring $10,000 to 2026 saves $2,400 federally and $1,300 in California—$3,700+ annually.
Fix: Delay bonuses or freelance income to balance tax years.
How SixFigureEdge Keeps You Ahead
At SixFigureEdge, we dig into the data so $100K-$200K earners like you can avoid tax pitfalls and maximize wealth. Whether you’re at $100K or $200K, our strategies protect your income. Want to avoid tax traps and keep more of your six-figure income? TurboTax can help you find deductions, defer income, and optimize your tax strategy. Stick with SixFigureEdge for more ways to protect and grow your wealth.
