Retirement savings aren’t just about how much you accumulate, but how much you actually keep. Taxes on retirement income can be a major shock to those unprepared. Between 401(k) withdrawals, Social Security, and required minimum distributions (RMDs), your tax burden can shift dramatically.
This guide breaks down how retirement income is taxed in 2026, equipping you with the knowledge to plan effectively. The goal? To control when and how you pay taxes, not be surprised by them.
Understanding the 2026 Tax Landscape
The tax brackets determine how much of your income is taxed at each rate. Here’s what to expect in 2026 for single and joint filers:
2026 Federal Income Tax Brackets
| Single Filers | Tax Rate | Married Filing Jointly | Tax Rate |
|---|---|---|---|
| $0 to $11,600 | 10% | $0 to $23,200 | 10% |
| $11,601 to $47,150 | 12% | $23,201 to $94,300 | 12% |
| $47,151 to $100,525 | 22% | $94,301 to $199,050 | 22% |
| $100,526 to $191,950 | 24% | $199,051 to $383,900 | 24% |
| $191,951 to $243,725 | 32% | $383,901 to $487,450 | 32% |
| $243,726 to $609,350 | 35% | $487,451 to $731,200 | 35% |
| Over $609,350 | 37% | Over $731,200 | 37% |
Only the income within each bracket is taxed at that rate.
RMDs and Their Impact
Required Minimum Distributions (RMDs) are withdrawals you must take from tax-advantaged accounts starting at a certain age. SECURE 2.0 changed the rules:
- Born 1951–1959: RMDs begin at age 73.
- Born 1960 or later: RMDs begin at age 75.
RMDs are taxed as ordinary income, potentially pushing you into a higher bracket, increasing Social Security taxes, or triggering Medicare surcharges. Failing to take an RMD results in a penalty (25%, reduced to 10% if corrected quickly).
Social Security Taxation
Social Security benefits may be taxable based on your “provisional income.” Here’s a simplified look:
Taxable Thresholds (Single/Joint)
| Income Level | Taxation |
|---|---|
| Under $25,000 / $32,000 | 0% |
| $25,000 – $34,000 / $32,000 – $44,000 | Up to 50% |
| Over $34,000 / $44,000 | Up to 85% |
These thresholds aren’t indexed for inflation, so more retirees get taxed over time.
Medicare IRMAA Surcharges
Medicare Part B and Part D premiums rise with income. The calculation is based on your income from two years prior. Large withdrawals or Roth conversions can unexpectedly increase premiums later.
Minimizing Retirement Taxes: Three Strategies
- Taxable First: Withdraw from brokerage accounts before tax-advantaged ones. Capital gains may be taxed at lower rates.
- Tax-Deferred First: Withdraw from traditional IRAs in lower-income years. This fills lower brackets and reduces future RMDs.
- Proportional Withdrawals: Balance withdrawals across account types to keep income stable and avoid bracket spikes.
Most retirees benefit from a blended approach.
Roth Conversions: Timing Matters
A Roth conversion moves money from a traditional IRA to a Roth IRA, paying taxes now for tax-free withdrawals later. This makes sense if you’re in a lower bracket or want to reduce future RMDs. However, large conversions can push you into higher brackets now.
Common Mistakes to Avoid
- Waiting too long to plan.
- Ignoring RMD projections.
- Draining one account too quickly.
- Triggering Medicare surcharges unintentionally.
Final Take: Retirement taxes aren’t a one-time event; they require ongoing management. Understanding your accounts, tax brackets, and RMD rules is crucial. If your finances are complex, a tax advisor or fiduciary planner can help avoid costly surprises.
