Economists reveal 8 places high-earners shelter cash from the IRS, adding to a $36T global stash. Are you missing any?

Vawn Himmelsbach

6 min read

When we think of tax havens for the rich, we generally think of Swiss bank accounts or offshore subsidiaries. But minimizing taxes legally isn’t just for the ultra-wealthy — and there are often legitimate reasons for doing so.

It’s not just multinational corporations looking to shelter cash. Individuals are stashing anywhere from $8.7 trillion to $36 trillion, according to estimates from economists. (1) Because of confidentiality practices, it’s hard to calculate an exact number of how much wealth is stashed in tax havens.

What we do know is that a lot of people are doing it, and it’s more accessible than you might think.

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Municipal bonds: Most municipal bonds are exempt from federal income taxes. Additionally, they are often exempt from state and local taxes, although this can depend on the specific bond and where it was issued.

Municipal bonds don’t just offer tax advantages. They are also safe, help fund government projects, like schools, roads and community facilities, and you don’t need to be ultra-wealthy to invest in them. J.P. Morgan notes that “implied yields for municipal bonds are over 7%, after factoring in the U.S. taxpayer advantage.” (2)

Retirement funds: Putting your money into a 401(k) or individual retirement fund (IRA) can serve as a tax shelter by reducing your taxable income at the end of the year and deferring tax payments to when you’re retired — and ideally in a lower tax bracket. For 2026, you can contribute up to $24,500 to your 401(k) and $7,500 to IRAs, or more if you qualify for catch-up contributions. (3)

Whole life insurance: There are pros and cons to whole life insurance, and it’s best to consult with your insurance broker to see if it’s right for you. One of the advantages is multiple tax benefits. You pay for your policy with after-tax dollars, so its cash value grows tax-deferred, and you can generally withdraw up to your basis (the amount you paid in premiums) tax-free.

You can also take out policy loans, which aren’t reported to the IRS, and the death benefit paid to your beneficiaries is typically tax-free, provided the policy remains in force. (4)

Charitable donations: For cash contributions, you can deduct up to 60% of your adjusted gross income to qualified charities recognized by the IRS, including registered 501(c)(3) organizations.

You could also donate through a donor-advised fund (DAF), which allows you to make a charitable contribution and receive an immediate tax deduction. (5)

Qualified business income deductions: If you earn income from a sole proprietorship, partnership or S corporation, you can deduct up to 20% of your qualified business income (QBI) as well as 20% of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income.

Also known as 199A deductions, qualified business income deductions could also apply to some trusts and estates. (6)

Offshore accounts: For high-net-worth individuals, offshore bank accounts or brokerage accounts in countries with little or no tax liability can be an enticing option.

While Switzerland is often a top choice because of its commitment to banking secrecy, there are several other tax havens such as Singapore, Belize and the Cayman Islands.

But finding the right offshore account for your needs isn’t just about choosing a low-tax country. U.S. taxpayers must still report and pay taxes on worldwide income, and meet all disclosure requirements under FATCA and FBAR. It’s also important to consider factors such as banking accessibility, regulatory stability and legal compliance. (7) (8)

Qualified Opportunity Zones: A QOZ is an “economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment,” according to the IRS. (9)

You can reinvest capital gains into a qualified opportunity fund (QOF) within 180 days to defer federal taxes on those gains until December 31, 2026, or until you dispose of the investment — whichever comes first. And if you hold that investment for 10 years or longer, you don’t pay federal income taxes on any gains generated from the QOF. Because regulations can be complex and may change in the future, it’s best to consult a tax professional to chart a path forward.

Shell companies: A shell company only exists on paper; it has no physical office or staff. That’s why shell companies have historically been popular among criminals for money laundering and other illicit activities.

However, they can also be used for legitimate purposes, such as holding assets, facilitating mergers, protecting intellectual property or establishing a business presence in a foreign market.

Read More: This is the quiet portfolio shift many wealthy investors are making in 2026. Should you consider it too?

While the average person probably isn’t going to set up a shell company, contributing to retirement accounts is an easy way to start reducing your tax bill. Giving to charity is also a win-win — you get a tax break while helping charitable organizations that rely on donations to survive.

Other strategies, such as buying whole life insurance, investing in QOZs or parking money in offshore accounts, could be more complicated.

For example, an American with more than $10,000 in offshore bank accounts or brokerage accounts is required to fill out a Report of Foreign Bank and Financial Accounts (FBAR) on Financial Crimes Enforcement Network (FinCEN) Form 114.

And the penalties for mistakes (or deliberate fraud) can range from interest charges to audits and even criminal charges. (10)

That’s why it’s typically recommended to seek out advice from a qualified professional. A financial advisor could help reduce the tax burden on your retirement savings, while an insurance broker could structure a whole life policy to optimize your tax advantages.

A tax advisor can also provide guidance in these areas — from rules for charitable giving to 199A deductions to QOZ investments. That way, you can stay compliant while fully leveraging the tax benefits of your approach.

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We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

International Monetary Fund (IMF) (1); J.P. Morgan (2); IRS (3); (4); (5); (6); (7); (8); (9); (10).

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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