If you live in California, taxes should be part of your investment strategy.

California has some of the highest marginal tax rates in the country.

For many high-income investors, combined federal and California tax rates can approach 50% on ordinary income, and long-term capital gains can reach 37%!!! (California taxes capital gains as ordinary income)

That means taxes can impact both:

• Your ability to save and invest, and

• How much of your investment returns you actually keep.

If you're a California investor, here are a few strategies that may be worth exploring:

• Tax-loss harvesting your stock investments to help offset realized capital gains.

• Tax-efficient real estate investments that may generate depreciation to offset passive income (depending on your tax situation).

• Strategies that may realize ordinary deductions, where appropriate, to potentially offset items such as W-2 income, RSU vesting, Roth conversions, or other ordinary income (subject to the applicable tax rules).

• U.S. Treasury bills for cash management, since the interest is generally exempt from California state income tax (vs a HY savings account thats taxed at Fed + State)

• A long-term ownership mindset. Frequent trading often creates unnecessary taxes. When appropriate, longer holding periods can improve after-tax outcomes.

Taxes are one of the few investment variables you can actually influence.

And once you optimize for them, you can get back to enjoying the California sunshine. ☀️🏄