What Will My Tax Rate Be in Retirement: Brackets, IRMAA, and State

There is no single answer to what your tax rate will be in retirement. Federal income tax runs through seven brackets from 10% to 37%, and the rate you actually pay depends on how much you withdraw each year, which accounts the money comes from, and whether your total income crosses thresholds that tax your Social Security benefits or raise your Medicare premiums. For 2026, a single filer’s first $16,100 is sheltered by the standard deduction alone, and retirees 65 and older qualify for additional deductions that push the tax-free floor higher.¹

Your marginal rate is the rate on your last dollar of income. Your effective rate — total tax divided by total income — is usually lower, and it is the more useful number for planning. A single retiree with $50,000 in taxable income pays 10% on the first $12,400 and 12% on the next $37,600, for roughly $5,752 in federal tax. The 22% bracket never enters the picture.

The 2026 Federal Brackets

After you subtract deductions, whatever remains flows through these rates:¹

10% up to $12,400 single or $24,800 joint
12% on income to $50,400 single or $100,800 joint
22% on income to $105,700 single or $211,400 joint
24% on income to $201,775 single or $403,550 joint
32% on income to $256,225 single or $512,450 joint
35% on income to $640,600 single or $768,700 joint
37% on income above those top thresholds

Long-term capital gains and qualified dividends run on a separate, lower schedule. Single filers pay 0% on long-term gains when total taxable income stays below roughly $49,450 (about $98,900 for joint filers), 15% above that for most taxpayers, and 20% at the highest income levels.

How Your Rate Depends on Where the Money Comes From

The account you draw from determines whether a withdrawal counts as ordinary income, capital gains, or nothing at all.

Withdrawals from a traditional 401(k), traditional IRA, or 403(b) are taxed as ordinary income, exactly like a paycheck.² A $40,000 traditional IRA withdrawal stacks on top of your other income and is taxed at your marginal rate.

Qualified withdrawals from a Roth IRA or Roth 401(k) are free of federal income tax, provided you are at least 59½ and have held the account for five years.³ They also do not count toward the income thresholds that make Social Security benefits taxable or trigger Medicare surcharges.

Pensions funded entirely by pre-tax employer dollars are fully taxable as ordinary income. If you made after-tax contributions, part of each payment is a tax-free return of those contributions, and Form 1099-R shows the taxable portion.

In a regular brokerage account, only the gain on a sale is taxed, and gains on assets held more than a year qualify for the preferential capital gains rates above. Qualified dividends get the same treatment.

Health Savings Account withdrawals for qualified medical expenses are tax-free at any age. After 65, the 20% penalty for non-medical withdrawals disappears, though non-medical amounts are added to ordinary income.⁴

Deductions That Shrink Your Taxable Income

Before the brackets touch a dollar, you subtract your deductions. For 2026, the base standard deduction is $16,100 for single filers and $32,200 for joint filers.¹ Taxpayers 65 or older get an additional standard deduction on top of that; for 2025 it was $2,000 for single filers and $1,600 per qualifying spouse on a joint return, with the 2026 number expected to rise slightly with inflation.

The One, Big, Beautiful Bill Act also created a separate senior deduction for tax years 2025 through 2028. If you are 65 or older, you can claim an extra $6,000, or $12,000 total when both spouses qualify on a joint return. It phases out once modified adjusted gross income exceeds $75,000 single or $150,000 joint, and it is available whether you itemize or not.⁵

Stacked together, a single retiree over 65 who qualifies for the full senior deduction could shelter roughly $24,000 or more before the 10% bracket applies.

The Hidden Bracket: Social Security Taxation

Social Security benefits are not automatically tax-free. The IRS uses “combined income” — your adjusted gross income, plus tax-exempt interest, plus half your benefits — to decide how much of your benefit becomes taxable.⁶

For single filers, combined income below $25,000 leaves benefits untaxed; between $25,000 and $34,000, up to 50% becomes taxable; above $34,000, up to 85% does. For joint filers the tiers are $32,000 and $44,000.⁷ “Up to 85% taxable” means 85% of the benefit amount is added to ordinary income; it is not an 85% tax rate on your benefits. No more than 85% can ever be taxed.

These thresholds have not been adjusted for inflation since the 1980s and 1990s, so more retirees cross them every year.

Required Minimum Distributions Can Push Your Rate Up

Tax-deferred accounts do not let you defer forever. Required Minimum Distributions begin at age 73 if you were born between 1951 and 1959, and at age 75 if you were born in 1960 or later. The amount is your prior-year December 31 balance divided by a life-expectancy factor from the Uniform Lifetime Table.⁸

RMDs count as ordinary income, so a large required withdrawal can push you into a higher bracket, drag more of your Social Security into the taxable range, and raise your Medicare premiums. Missing the required amount triggers a 25% excise tax on the shortfall, reduced to 10% if you correct it within the IRS’s correction window.⁹ Roth IRAs have no RMDs during the original owner’s lifetime.

Two Surcharges That Sit Above the Brackets

The 3.8% Net Investment Income Tax

Once modified adjusted gross income passes $200,000 single or $250,000 joint, a 3.8% surtax applies to net investment income — interest, dividends, capital gains, rental income, royalties, non-qualified annuity income.¹⁰ Social Security, pensions, and IRA or 401(k) distributions are not investment income for this tax, but they do raise your MAGI and can push you over the threshold, exposing your investment income to the surtax.¹¹

Medicare IRMAA

Higher retirement income also raises Medicare premiums. Medicare looks at your tax return from two years earlier to decide whether you owe an Income-Related Monthly Adjustment Amount on Part B and Part D. The 2026 standard Part B premium is $202.90, but the surcharge tiers add substantially more:¹²

Individual income at or below $109,000: no surcharge, $202.90 per month
$109,001 to $137,000: $284.10 per month
$137,001 to $171,000: $405.80 per month
$171,001 to $205,000: $527.50 per month
$205,001 to $499,999: $649.20 per month
$500,000 or more: $689.90 per month

Joint filers hit the same surcharges at roughly double the income thresholds, starting at $218,000. Part D adds separate surcharges from $14.50 to $91.00 per month at the same income tiers.¹² Because the lookback is two years, a one-time spike — a large Roth conversion or a home sale — raises your premiums for a year, two years later. A qualifying life-changing event (retirement, divorce, the death of a spouse) lets you file Form SSA-44 to have Social Security use more recent income instead.¹³

What You Can Do to Keep the Rate Down

The strategies that lower a retirement tax bill mostly work by controlling the timing and character of your income, so you stay under the thresholds that stack extra taxes on top of the brackets.

Roth conversions move money from a traditional IRA to a Roth, triggering ordinary income tax now in exchange for tax-free growth, tax-free qualified withdrawals, and no lifetime RMDs later.¹⁴ Many retirees convert in the years after earned income ends but before Social Security and RMDs begin, filling a lower bracket each year.

Qualified Charitable Distributions let anyone 70½ or older send up to $111,000 per year directly from an IRA to a qualifying charity. The transfer counts toward your RMD but never appears in gross income, so it does not raise Social Security taxation or IRMAA.¹⁵

A Qualified Longevity Annuity Contract lets you use up to $210,000 of retirement account money for an annuity that starts paying no later than age 85. The amount inside the QLAC is excluded from the balance used to calculate RMDs, lowering required withdrawals in your 70s and early 80s.¹⁵

Mixing withdrawals across taxable, tax-deferred, and Roth accounts each year is the underlying lever. Covering some spending from Roth withdrawals or capital-gain brokerage sales can keep a traditional IRA withdrawal from crossing a Social Security taxation threshold, an IRMAA tier, or the net investment income tax trigger.

State Taxes Are the Other Half

Federal is only part of your rate. Some states levy no personal income tax; others tax 401(k) withdrawals and pensions at the same rates as wages. A handful of states tax Social Security benefits, though most exempt them partially or entirely. State pension exclusions range from a few thousand dollars to a full exemption, often tied to your age or the type of pension. The difference between two states on the same retirement income can run into thousands of dollars a year, so check your state Department of Revenue’s current rules before making large withdrawals or relocating.

1
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
2
Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans
3
Internal Revenue Service. Roth IRAs
4
Office of the Law Revision Counsel. 26 USC 223 – Health Savings Accounts
5
Internal Revenue Service. One, Big, Beautiful Bill Act – Tax Deductions for Working Americans and Seniors
6
Office of the Law Revision Counsel. 26 USC 86 – Social Security and Tier 1 Railroad Retirement Benefits
7
Social Security Administration. Must I Pay Taxes on Social Security Benefits?
8
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
9
Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans
10
Internal Revenue Service. Topic No. 559 – Net Investment Income Tax
11
Internal Revenue Service. Net Investment Income Tax
12
Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles
13
Social Security Administration. Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event
14
Internal Revenue Service. Retirement Plans FAQs Regarding IRAs
15
Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living