Taxes in Retirement
Many retirees are surprised to learn they still owe significant taxes. How much depends on which accounts you withdraw from, how much you take and how you plan ahead.
Last updated: Aug 2026
Quick answer
Retirement income is often taxable, especially withdrawals from traditional IRAs and 401(k)s. RMDs, Social Security taxation and Medicare IRMAA surcharges can raise your total tax burden. Tax-efficient withdrawal order, bracket management and Roth conversions can lower lifetime taxes and improve portfolio longevity.
How different accounts are taxed
| Account type | Contributions | Growth | Withdrawals |
|---|---|---|---|
| Traditional 401(k) / IRA | Pre-tax | Tax-deferred | Taxed as ordinary income |
| Roth 401(k) / IRA | After-tax | Tax-free | Tax-free (if qualified) |
| Brokerage | After-tax | Taxable each year | Capital gains rates |
| Social Security | - | - | Up to 85% taxable |
Why taxes can be higher than expected
Required Minimum Distributions (RMDs)
As of February 2026, RMDs generally start at age 73 (or 75 for those born after 1960). You must withdraw a minimum amount from traditional accounts each year, whether you need the money or not. These forced withdrawals are fully taxable and can push you into higher brackets.
Social Security taxation
If your "combined income" (adjusted gross income + nontaxable interest + half of SS benefits) exceeds $25,000 (single) or $32,000 (married filing jointly), up to 85% of your Social Security is taxed as ordinary income.
IRMAA surcharges
Higher income in retirement can trigger Medicare Part B and Part D surcharges (IRMAA), effectively adding another "tax" on top of your income. Large RMDs or Roth conversions can trigger this.
State taxes vary widely
Some states tax retirement income, some don't. Some exempt Social Security, some don't. Where you live in retirement can change your tax bill by thousands per year.
Key strategies to reduce taxes
Roth conversions before RMDs
Convert traditional IRA money to Roth during low-income years (e.g., between retirement and Social Security). Pay tax now at a lower rate to avoid forced withdrawals later. Learn about Roth conversions →
Strategic withdrawal order
Drawing from the right account at the right time can save significant taxes. The conventional wisdom of "taxable first, then tax-deferred, then Roth" isn't always optimal. Learn about withdrawal order →
Bracket management
Each year, "fill up" lower tax brackets by taking slightly more from traditional accounts or doing Roth conversions. This spreads income across years and avoids spikes that push you into high brackets.
Next step: test tax-aware scenarios
Use the retirement number calculator for a baseline, then compare withdrawal and tax scenarios to spot avoidable lifetime tax costs.
Tax planning tools
RetireNumber models federal tax brackets, RMD schedules, IRMAA thresholds and state taxes across all 50 states. See your projected tax burden year by year and find Roth conversion windows before RMDs begin.
Explore tax planningThis is a high-level overview. Tax situations are personal and complex. RetireNumber models current tax law for planning purposes but is not a substitute for a tax professional.