The tax rate for retirees is the same set of federal brackets that applies to everyone else, running from 10% to 37% in 2026.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 There is no separate retiree schedule and no automatic discount for being retired. What changes is where your income comes from. Social Security, traditional 401(k) or IRA withdrawals, Roth withdrawals, pensions, and investment gains each get taxed under different rules, and your effective rate is the blended result.
The 2026 Federal Brackets
Federal income tax is progressive. Only the dollars that fall inside a given bracket are taxed at that bracket’s rate. For 2026, single filers face seven brackets:1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
- 10% on income up to $12,400
- 12% on $12,401 to $50,400
- 22% on $50,401 to $105,700
- 24% on $105,701 to $201,775
- 32% on $201,776 to $256,225
- 35% on $256,226 to $640,600
- 37% on income above $640,600
For married couples filing jointly, each threshold is roughly double: the 10% bracket covers up to $24,800, the 12% bracket ends at $100,800, and the 37% bracket starts above $768,700.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
A single retiree with $60,000 in taxable income shows how the layers stack. The first $12,400 is taxed at 10% for $1,240. The next $38,000 falls in the 12% bracket for $4,560. The last $9,600 lands in the 22% bracket for $2,112. Total federal tax: $7,912, an effective rate of about 13.2%. Most retirees with modest incomes stay entirely inside the bottom two or three brackets.
How Social Security Gets Taxed
Social Security benefits can be fully tax-free, partly taxable, or up to 85% taxable, depending on a figure the IRS calls provisional income. That is your adjusted gross income plus any tax-exempt interest plus half of your Social Security benefits.2Internal Revenue Service. Social Security Income The result gets compared against fixed dollar thresholds written into federal law.3Office of the Law Revision Counsel. 26 USC 86
For single filers, provisional income under $25,000 keeps benefits fully tax-free. Between $25,000 and $34,000, up to 50% of benefits become taxable. Above $34,000, up to 85% are taxable. For joint filers, those breakpoints are $32,000 and $44,000.4Internal Revenue Service. Publication 915, Social Security and Equivalent Railroad Retirement Benefits
These thresholds have not been adjusted for inflation since Congress set them in 1983, so a much larger share of retirees now owe tax on their benefits than the original law contemplated.5Social Security Administration. Income Taxes on Social Security Benefits “Up to 85% taxable” is often misread. It does not mean an 85% tax rate on your benefits. It means 85% of your benefit amount gets added to the rest of your income and taxed at your ordinary rate. At least 15% of Social Security is always shielded at the federal level.
Traditional Retirement Account Withdrawals
Money pulled from a traditional 401(k), 403(b), or IRA is taxed as ordinary income. Every dollar you withdraw is added to your taxable income for the year and taxed at your marginal rate, the same way a paycheck would be.6Internal Revenue Service. IRC 403(b) Tax-Sheltered Annuity Plans That is the trade for the deduction you took when you contributed.
A large one-year withdrawal can do two things at once: push part of your income into a higher bracket and pull more of your Social Security benefit into the taxable column by lifting your provisional income. Spreading distributions across several years often keeps more dollars in the 10% and 12% brackets.
Roth 401(k) and Roth IRA
Qualified withdrawals from Roth accounts are entirely free of federal income tax. Contributions went in with after-tax dollars, so the government does not tax the money again on the way out. Converting a traditional balance to a Roth is a different story: the converted amount counts as ordinary income in the year of the conversion, and earnings on the converted funds must sit for five years before they can be pulled out tax-free.
Pensions and Annuities
Pension payments and annuity distributions from an employer’s qualified plan are taxed as ordinary income. Annuities you bought with your own after-tax money are split: each payment carries a taxable portion (the earnings) and a tax-free portion (the return of your original investment), calculated using IRS life expectancy tables.7Internal Revenue Service. Topic No. 411, Pensions – The General Rule and the Simplified Method
Long-Term Capital Gains and Qualified Dividends
Investment income in a taxable brokerage account plays by a separate, more favorable rate schedule. Long-term capital gains on assets held more than a year, along with qualified dividends, are taxed at 0%, 15%, or 20%. For 2026, single filers hit each rate at these taxable-income levels:8Tax Foundation. 2026 Tax Brackets and Federal Income Tax Rates
- 0% up to $49,450
- 15% from $49,451 to $545,500
- 20% above $545,500
For joint filers, the 0% rate reaches up to $98,900 in taxable income, and the 20% rate begins above $613,700. The 0% band is a real planning opportunity. A retired couple with little other income could realize close to $99,000 in long-term gains and owe no federal tax on them. Even retirees with some ordinary income can time sales to fit inside the 0% window in lower-income years.
Short-term gains (assets held a year or less) get no preferential treatment and are taxed as ordinary income. A separate 3.8% net investment income tax applies to gains, dividends, interest, and rental income once modified adjusted gross income clears $200,000 single or $250,000 joint. Those NIIT thresholds, like the Social Security ones, are not indexed for inflation.
Deductions That Lower the Rate You Actually Pay
The bracket that applies to your last dollar of income is not the rate you pay overall, because deductions come off the top first. For 2026, the standard deduction is $16,100 for single filers and $32,200 for joint filers.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Taxpayers age 65 or older get an additional standard deduction on top of that base amount, and each spouse on a joint return qualifies separately if both are 65 or older.9Office of the Law Revision Counsel. 26 USC 63
For tax years 2025 through 2028, an enhanced senior deduction of $6,000 per eligible person ($12,000 for a joint return where both spouses qualify) is also available to taxpayers 65 or older. It stacks on top of the age-65 add-on, applies whether you take the standard deduction or itemize, and phases out for single filers with modified adjusted gross income above $75,000 and joint filers above $150,000.10Internal Revenue Service. 2026 Filing Season Updates and Resources for Seniors For a retiree with modest income, the combined deductions can strip a substantial chunk out of the taxable base before any bracket applies.
Required Minimum Distributions
The IRS eventually forces money out of traditional retirement accounts so it can collect the tax that was deferred. Required minimum distributions start the year you turn 73 if you were born between 1951 and 1959, and the year you turn 75 if you were born in 1960 or later. The first RMD can be delayed until April 1 of the following year, but doing that means taking two distributions in the same calendar year, which can push you into a higher bracket. Every RMD after the first is due by December 31.
Missing an RMD triggers a 25% excise tax on the amount you should have withdrawn. If you fix the shortfall inside the correction window, generally before the IRS assesses the penalty or within two years, the excise drops to 10%.11Office of the Law Revision Counsel. 26 USC 4974 Roth IRAs carry no RMD during the original owner’s lifetime.
If you keep working past your RMD age and do not own 5% or more of the company, you can defer distributions from your current employer’s 401(k) until you actually retire. That exception does not extend to IRAs or to plans from former employers.
Retirees 70½ or older can also route up to $111,000 per person in 2026 directly from an IRA to a qualifying charity as a qualified charitable distribution.12Internal Revenue Service. Notice 25-67, 2026 Amounts Relating to Retirement Plans and IRAs The amount counts toward the RMD but is excluded from taxable income, which is often more valuable than taking the distribution and claiming a charitable deduction. The transfer has to go straight from the IRA custodian to the charity.
IRMAA: The Hidden Rate on High-Income Years
Medicare surcharges are not technically a tax, but they behave like one and catch retirees off guard. If your income exceeds set levels, Medicare charges income-related monthly adjustment amounts (IRMAA) on top of the standard Part B and Part D premiums. IRMAA is based on your modified adjusted gross income from two years earlier, so 2026 premiums track your 2024 return.
For 2026, the standard Part B premium is $202.90 a month. Single filers with MAGI at or below $109,000 (joint filers at or below $218,000) pay that amount. Above the threshold, surcharges rise in five tiers. At the top tier, individuals with MAGI above $500,000, or couples above $750,000, pay an extra $487 a month for Part B and $91 a month for Part D, per person, an added cost above $6,900 a year each.
The practical result is that one-time income spikes carry a delayed premium bill. A Roth conversion, a business sale, or a lump-sum pension payout in 2024 shows up as higher Medicare premiums in 2026. If your income falls due to retirement, divorce, the death of a spouse, or another qualifying event, Form SSA-44 asks the Social Security Administration to use your more recent income instead of the two-year-old figure.
State Taxes Sit on Top
The federal picture is only part of the total rate. State rules vary sharply. Nine states impose no income tax at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Most states that do tax income exempt Social Security benefits entirely, and several also carve out pension income, military retirement pay, or IRA and 401(k) distributions up to specific limits. The remaining states generally treat retirement distributions as taxable income much the way the IRS does. Because the rules change often and turn on the specific type of income involved, the state treatment of each income source you receive is worth checking before you plan a withdrawal.