Taxes on Retirement Income: What You Need To Know in 2026
Written by
Rudri Bhatt Patel, CFHC™
Edited by
Joe Evans, CFHC™
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Retirement isn’t just about how much you’ve saved; it’s about how much you actually keep.
Taxes on retirement income can catch retirees off guard. Between 401(k) withdrawals, Social Security benefits, required minimum distributions (RMDs) and Medicare premium adjustments, your tax situation may look very different from your working years. The good news? With the right strategy, you can control how and when you pay taxes.
Below is a breakdown of how retirement income is taxed — plus updated 2026 federal tax brackets to help you plan.
Taxes on Retirement Income: At a Glance
| Income Source | How It’s Taxed |
|---|---|
| Traditional 401(k) / IRA | Taxed as ordinary income |
| Roth IRA / Roth 401(k) | Qualified withdrawals are tax-free |
| Taxable brokerage | Capital gains and dividends taxed |
| Pension | Taxed as ordinary income |
| Social Security | Up to 85% may be taxable |
| RMDs | Taxed as ordinary income |
2026 Federal Income Tax Brackets (For Retirement Planning)
If you’re withdrawing from traditional retirement accounts, you’ll pay taxes based on your marginal tax bracket. Here are the projected 2026 brackets for single and married filers:
2026 Tax Brackets — Single Filers
| Tax Rate | Taxable Income |
|---|---|
| 10% | $0 to $12,150 |
| 12% | $12,151 to $49,150 |
| 22% | $49,151 to $104,900 |
| 24% | $104,901 to $199,500 |
| 32% | $199,501 to $253,500 |
| 35% | $253,501 to $635,000 |
| 37% | Over $635,000 |
2026 Tax Brackets — Married Filing Jointly
| Tax Rate | Taxable Income |
|---|---|
| 10% | $0 to $24,300 |
| 12% | $24,301 to $98,300 |
| 22% | $98,301 to $209,800 |
| 24% | $209,801 to $399,000 |
| 32% | $399,001 to $507,000 |
| 35% | $507,001 to $760,000 |
| 37% | Over $760,000 |
Remember: Only the income within each bracket is taxed at that rate.
Required Minimum Distributions (RMDs) in 2026
RMD rules changed under SECURE 2.0.
- Born 1951 to 1959 = RMDs begin at age 73
- Born 1960 or later = RMDs begin at age 75
RMDs are taxed as ordinary income and can:
- Push you into a higher tax bracket
- Increase taxable Social Security
- Trigger Medicare IRMAA surcharges
Failure to take an RMD results in a 25% penalty (reduced to 10% if corrected quickly).
How Retirement Withdrawals Affect Social Security in 2026
Your Social Security may be taxable based on “provisional income.”
Single Filers
- Under $25,000 = 0% taxable
- $25,000 to $34,000 = Up to 50% taxable
- Over $34,000 = Up to 85% taxable
Married Filing Jointly
- Under $32,000 = 0% taxable
- $32,000 to $44,000 = Up to 50% taxable
- Over $44,000 = Up to 85% taxable
These thresholds aren’t indexed for inflation, which means more retirees get pulled into taxation over time.
Medicare IRMAA Surcharges for 2026
Medicare Part B and Part D premiums increase when income exceeds certain thresholds. IRMAA is based on your income from the two years prior.
Large IRA withdrawals or Roth conversions today can raise premiums two years later.
Withdrawal Strategy: How To Minimize Taxes on Retirement Income
There’s no universal formula, but here are three common strategies:
1. Taxable First
Withdraw from brokerage accounts first.
Why it works:
- Capital gains may be taxed at lower rates
- Allows IRAs to continue growing
Risk:
- Larger RMDs later
2. Tax-Deferred First
Withdraw from traditional IRAs early in lower-income years.
Why it works:
- Fills lower tax brackets intentionally
- Reduces future RMD burden
Risk:
- Could increase Social Security taxation
3. Proportional Withdrawals
Take balanced withdrawals from multiple account types.
Why it works:
- Keeps income stable
- Reduces bracket spikes
Most retirees benefit from a blended approach.
Roth Conversions in 2026
A Roth conversion moves money from a traditional IRA to a Roth. You pay taxes now, but future withdrawals are tax-free. Conversions make sense if:
- You’re currently in a lower bracket
- You want to shrink future RMDs
- You’re trying to avoid IRMAA tiers
But timing matters. Large conversions can bump you into higher brackets in the conversion year.
Common Retirement Tax Mistakes
- Waiting too long to plan
- Ignoring RMD projections
- Draining one account too quickly
- Triggering Medicare surcharges unintentionally
Retirement tax planning works best when it’s done before income spikes.
Final Take to GO
Taxes on retirement income aren’t something you deal with once; they’re something you manage every year. The key is understanding:
- Which accounts are taxable
- How 2026 tax brackets apply
- When RMDs begin
- How withdrawals affect Social Security and Medicare
Small planning decisions today can make a meaningful difference over decades of retirement. If your situation includes multiple income sources or large IRA balances, working with a tax advisor or fiduciary planner may help you avoid costly surprises.
FAQ
Retirement income often comes from several sources, which can make taxes more complicated than during your working years. Here are answers to common questions about taxes on retirement income.- Do retirees pay taxes on all retirement income?
- No. Traditional 401(k) and IRA withdrawals are taxable, but qualified Roth withdrawals are tax-free. Social Security may or may not be taxable depending on your total income.
- What is the best order to withdraw retirement accounts?
- It depends on your tax bracket and RMD timing. Many retirees withdraw from taxable accounts first, tax-deferred accounts second and Roth accounts last, but a blended strategy often works best.
- How do RMDs affect taxes in retirement?
- RMDs increase taxable income and can push you into higher tax brackets, increase Social Security taxation and trigger Medicare premium surcharges.
- Can Roth conversions reduce retirement taxes?
- Yes. Converting during lower-income years can reduce future RMDs and lower lifetime taxes, but timing is important to avoid bracket spikes.
- How do withdrawals affect Social Security and Medicare costs?
- Higher income can cause up to 85% of Social Security benefits to become taxable and may increase Medicare premiums through IRMAA adjustments.
Data is accurate as of Feb. 17, 2026, and is subject to change.
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