How Professionals Over 50 Can Reduce Taxes in Arkansas

By Roxanne Martens, MS, CFP®

For successful professionals navigating their 50s, the financial landscape often presents a dual reality: peak earning years coupled with retirement looming on the horizon. This overlap of peak earnings and upcoming retirement creates a valuable window for proactive tax planning to reduce taxes in Arkansas.

For professionals at this stage (particularly those in sectors driving the Arkansas economy like Walmart, Tyson, or the state’s robust healthcare systems), failing to implement sophisticated tax-mitigation strategies now means potentially relinquishing a significant portion of their hard-earned wealth to unnecessary taxes later. 

The time for thoughtful, strategic tax efficiency isn’t in your rearview mirror—it’s right now.

Max Out Your Retirement Contributions

The most fundamental step to reduce taxes in Arkansas is to fully leverage tax-advantaged retirement savings vehicles:

401(k) and 457(b) Plans

If your employer offers these plans, prioritize maximizing your contributions (up to $23,500 for 2025). Those aged 50 and over can utilize “catch-up” contributions ($7,500), allowing you to save even more. A new “super” catch-up contribution cap is in effect for anyone between the ages of 60 and 63. This increased amount is $11,250 for 2025. Carefully consider whether a Roth 401(k) (after-tax contributions with tax-free withdrawals in retirement) or a traditional 401(k) (pre-tax contributions reducing current income) aligns better with your anticipated future tax bracket.

Traditional and Roth IRAs

Even outside of employer-sponsored plans, individual retirement accounts (IRAs) can offer valuable tax benefits. In 2025, the standard contribution limit is $7,000, with an additional $1,000 catch-up for those aged 50 and over. 

Health Savings Accounts (HSAs)

If you have a high-deductible health plan, an HSA offers a powerful triple-tax advantage: contributions are pre-tax (reducing your taxable income), earnings grow tax-free, and withdrawals for qualified medical expenses are also tax-free. The limits for 2025 are $4,300 for individuals and $8,550 for families.  

Use Roth Conversions Strategically

Converting assets from traditional IRAs or pre-tax retirement accounts to a Roth IRA can be a potent tax-saving strategy, potentially during your higher-earning 50s.

Consider converting a portion of your traditional IRA assets to a Roth IRA while you are still working. While the converted amount is taxed as ordinary income in the year of conversion, all future qualified withdrawals from the Roth account are tax-free. This strategy is especially beneficial if you anticipate being in a higher tax bracket in retirement or if you desire tax-free income for estate planning purposes. Carefully coordinate your Roth conversions with a financial professional to avoid inadvertently bumping yourself into a higher tax bracket for the year.

Consider Deferred Compensation Plans

For top-level employees at major Arkansas corporations, deferred compensation plans can provide significant tax perks.

These plans allow you to delay receiving a portion of your current income until a future date, typically retirement. This reduces your taxable income in the current high-earning year. The deferred amount grows tax-deferred until it is paid out in retirement, potentially when you’re in a lower tax bracket. It’s important to thoroughly understand the payout schedules and any associated risks with deferred compensation plans, as they are typically unsecured promises.

Use Tax-Efficient Investment Strategies

The way you manage your investments in taxable accounts can also significantly impact your overall tax burden. Here are a few strategies we utilize within the taxable investment accounts we manage at CGN Advisors:

• Utilize tax-loss harvesting, a strategy of selling losing investments to offset capital gains taxes on profitable investments. 
• Consider investing in municipal bonds, which are often exempt from federal income tax and sometimes state income tax.   
• Practice careful capital gains management by holding investments for longer than a year to qualify for lower long-term capital gains tax rates and strategically timing the sale of appreciated assets to avoid jumping into higher tax brackets.
• Mitigate unnecessary turnover in your investment portfolio, as frequent trading can generate short-term capital gains, which are taxed at higher ordinary income tax rates.  

Give Back Strategically

Charitable giving can be a powerful tool for reducing your tax liability when structured properly. 

Donating appreciated stock directly to a qualified charity allows you to avoid paying capital gains taxes on the appreciation while also receiving a deduction for the fair market value of the stock. High-income earners should consider establishing a donor-advised fund (DAF) to make significant charitable contributions over time. You receive an immediate tax deduction when you contribute to the DAF, and the funds can be distributed to charities of your choice in future years. Carefully document all charitable donations to claim the full allowable deduction.

Reach Out for Help to Reduce Taxes in Arkansas

Your 50s are a pivotal period for proactive tax planning, and this is not the stage to DIY or wing it. Strategies like backdoor Roth conversions and navigating the intricacies of deferred compensation plans require the assistance of an experienced professional financial advisor. 

As a fiduciary and fee-only financial advisory firm, our team at CGN Advisors offers objective advice tailored to the specific needs of top-level Arkansas professionals.

If you’re ready to learn more about how we can help you reduce your tax burden, schedule a meeting today by calling (479) 335-1034. We look forward to connecting with you!

About Roxanne

Roxanne Martens is a CERTIFIED FINANCIAL PLANNER® professional and serves as a Lead Financial Advisor on the team at CGN Advisors, a Fee-Only, financial advisory firm based in Manhattan, Kansas. Roxanne works out of CGN’s Arkansas location, serving clients in the Rogers, Bentonville, Springdale, and Fayetteville areas. An advisor since 2020, she works with corporate executives, young professionals, and those approaching retirement by helping them utilize their growing income efficiently and facilitating strategic cash flows once their regular earned income ends. She enjoys using her skill set to educate and guide clients through life as they make financial decisions and set goals. Roxanne says, “Comprehensive financial planning and investment management takes a lot of trust from the client, and I don’t take that lightly. I genuinely want each of my clients to succeed.” Her favorite aspect of her role is connecting with clients on a personal level, providing clarity and peace, and being able to witness them realize their dreams.

Roxanne obtained her master’s degree in personal financial planning from Kansas State University and holds the CFP® designation. Prior to becoming a financial advisor, she taught in the Personal Financial Planning program at Kansas State University for seven years. As a mom with young children, most of her free time is spent with her husband, John, and two sons, Johnny and Judd. They enjoy living life outdoors—bike rides and spending time at the lake or pool. To learn more about Roxanne, connect with her on LinkedIn.

Investment advisory services are offered through CGN Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. 

Investing involves substantial risk and has the potential for partial or complete loss of funds invested. Investments mentioned may not be suitable for all investors. Before investing in any investment product, potential investors should consult their financial or tax advisor, accountant, or attorney with regard to their specific situation. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.

The opinions expressed herein are those of certain CGN Advisors, LLC personnel and are subject to change without notice. The opinions referenced are as of the date of publication and are subject to revision due to changes in the market or economic conditions and may not necessarily come to pass. Any opinions, projections, or forward-looking statements expressed herein are solely those of the author, may differ from the views or opinions expressed by other areas of the firm, and are only for general informational purposes as of the date indicated.