TaxtirementFederal rules · 2026
How federal taxes work in retirement, 2026
The federal rules that shape a retirement tax bill: brackets, deductions, Social Security, capital gains, Medicare premiums, required distributions and more, with the 2026 figures Taxtirement uses and the official sources behind each one.
Every figure below is read from the same rules file the app calculates with, so this page can't drift from the app. For how each state taxes retirement income, see the state guides.
Income tax brackets
Federal income tax is charged in layers. Each rate applies only to the slice of taxable income (income after deductions) inside its band, so moving into a higher bracket never raises the tax on the income below it.
| Rate | Single: taxable income | Married filing jointly |
|---|---|---|
| 10% | Up to $12,400 | Up to $24,800 |
| 12% | $12,400 to $50,400 | $24,800 to $100,800 |
| 22% | $50,400 to $105,700 | $100,800 to $211,400 |
| 24% | $105,700 to $201,775 | $211,400 to $403,550 |
| 32% | $201,775 to $256,225 | $403,550 to $512,450 |
| 35% | $256,225 to $640,600 | $512,450 to $768,700 |
| 37% | Over $640,600 | Over $768,700 |
Other filing statuses are in the rules reference. The brackets rise with inflation each year; the IRS publishes the next year's in the fall.
Standard deduction, age 65 and the senior deduction
Most retirees take the standard deduction: $16,100 single, $32,200 married filing jointly in 2026.
From age 65, each person adds an extra $2,050 if unmarried, or $1,650 per spouse who is 65 or older if married.
The senior deduction (from the 2025 law often called the One Big Beautiful Bill Act) adds $6,000 for each person 65 or older, for tax years 2025 through 2028. It's available whether or not you itemize. It shrinks by 6% of income (modified adjusted gross income) above $75,000, or $150,000 on a joint return, so each $6,000 is gone at $175,000 single or $250,000 joint. That makes it one of the places where a Roth conversion or a large withdrawal can cost more than its bracket suggests.
How Social Security becomes taxable
Between none and 85% of Social Security benefits are taxable. The test uses provisional income: your other income, plus tax-exempt interest, plus half of your benefits.
- Below $25,000 single ($32,000 married filing jointly): none of the benefits are taxed.
- From there up to $34,000 single ($44,000 joint): up to 50% of benefits are taxed.
- Above that: up to 85%.
These thresholds are written into the law and have never been adjusted for inflation, so more retirees cross them every year. In the middle range each extra dollar of IRA income can make 50 or 85 cents of benefits taxable too, which is why the effective rate there can be well above the bracket rate.
Capital gains, qualified dividends and the 3.8% tax
Long-term capital gains and qualified dividends are taxed at 0%, 15% or 20%, depending on where they fall once stacked on top of your other taxable income:
| Rate | Single: taxable income | Married filing jointly |
|---|---|---|
| 0% | Up to $49,450 | Up to $98,900 |
| 15% | $49,450 to $545,500 | $98,900 to $613,700 |
| 20% | Over $545,500 | Over $613,700 |
Net investment income tax: an extra 3.8% on investment income (interest, dividends, gains, rents) when modified adjusted gross income is above $200,000 single or $250,000 married filing jointly. It applies to the smaller of your investment income and the amount over the threshold. IRA and 401(k) withdrawals and Roth conversions aren't investment income for this tax, but they raise the income that's compared with the threshold. These thresholds aren't adjusted for inflation either.
Medicare premiums (IRMAA) and the two-year lookback
The standard Part B premium in 2026 is $202.90 a month. With higher income, Medicare adds an income-related monthly adjustment amount (IRMAA) to Part B and to Part D drug coverage, per person:
| Single: income 2024 | Married filing jointly: income 2024 | Part B, per month | Part D add-on, per month |
|---|---|---|---|
| $109,000 or less | $218,000 or less | $202.90 | none |
| Over $109,000 to $137,000 | Over $218,000 to $274,000 | $284.10 | +$14.50 |
| Over $137,000 to $171,000 | Over $274,000 to $342,000 | $405.80 | +$37.50 |
| Over $171,000 to $205,000 | Over $342,000 to $410,000 | $527.50 | +$60.40 |
| Over $205,000, under $500,000 | Over $410,000, under $750,000 | $649.20 | +$83.30 |
| $500,000 or more | $750,000 or more | $689.90 | +$91.00 |
The lookback: Medicare uses your income from two years earlier, so 2026 premiums depend on 2024 income (modified adjusted gross income: AGI plus tax-exempt interest). A Roth conversion or a home sale in one year can raise premiums two years later. The tiers work like cliffs: one dollar over a line raises the premium for the whole year. If income dropped because of retirement or another life-changing event, Social Security can be asked to use a more recent year.
Required minimum distributions
Traditional IRAs and 401(k)s must start paying out at an age set by your birth year:
| Born | Required distributions start at age |
|---|---|
| 1950 or earlier | 72 |
| 1951 to 1959 | 73 |
| 1960 or later | 75 |
Each year's minimum is the account balance on December 31 of the prior year divided by a factor from the IRS Uniform Lifetime Table. The factor shrinks with age, so the share that must come out grows:
| Age that year | Divisor | Share of the balance |
|---|---|---|
| 73 | 26.5 | 3.8% |
| 75 | 24.6 | 4.1% |
| 80 | 20.2 | 5% |
| 85 | 16 | 6.2% |
| 90 | 12.2 | 8.2% |
| 95 | 8.9 | 11.2% |
A different table applies when a spouse more than 10 years younger is the sole beneficiary. Roth IRAs have no required distributions while the owner is alive.
Qualified charitable distributions (QCDs)
From age 70½, an IRA owner can send up to $111,000 a year (2026) directly from the IRA to charity. The gift isn't counted as income, so it doesn't raise adjusted gross income, the taxable part of Social Security or Medicare premiums, and once required distributions have started it counts toward them.
Withdrawals before age 59½
Taxable withdrawals from IRAs and workplace plans before age 59½ generally owe an extra 10% tax on top of income tax. There are exceptions; the one most retirees meet is leaving a job in or after the year you turn 55, which frees that employer's plan (not IRAs) from the extra tax.
Health insurance before Medicare: the premium tax credit
Retiring before 65 often means buying a Marketplace plan. The premium tax credit limits what you pay for the benchmark plan to a share of household income, set by income as a percentage of the federal poverty line:
- Up to 133% of the poverty line: 2.1% of income.
- Rising in steps to 9.96% of income between 300% and 400%.
The cliff: for 2026, households with income above 400% of the poverty line get no credit at all. Coverage in 2026 uses the 2025 poverty guidelines ($15,650 for one person, $21,150 for two in the 48 contiguous states), so the cliff is at $62,600 for one person and $84,600 for a couple. Below 100% of the poverty line there's generally no credit either. Roth conversions and withdrawals count toward this income.
If you itemize: state and local taxes, charity and the top-bracket limit
State and local taxes (SALT): the deduction for state income (or sales) tax and property tax is capped at $40,400 in 2026 ($20,200 married filing separately). The cap shrinks by 30% of modified adjusted gross income above $505,000, but never below $10,000.
Charity: from 2026, people who don't itemize can deduct cash gifts to charity up to $1,000 ($2,000 married filing jointly). For people who itemize, only gifts above 0.5% of adjusted gross income count. The usual limits still apply: cash gifts to public charities up to 60% of AGI, gifts of long-held stock and other appreciated property up to 30%, and anything over the limit carries forward for up to 5 years.
The top-bracket limit (section 68): for income in the 37% bracket (above $640,600 single, $768,700 joint), itemized deductions are reduced by 2/37 of the smaller of the deductions or the income above that line. In effect each itemized dollar saves at most about 35% instead of 37%.
References
Every figure on this page comes from these official sources. The app's calculations are also checked against them; see How we check our numbers.
Laws
- Public Law 119-21 (the One Big Beautiful Bill Act), as enacted (congress.gov)Used for: the senior deduction, the SALT cap, the new charity rules and the § 68 limit
- 26 U.S.C. § 1: Tax imposed (rates and the capital gains bands) (uscode.house.gov)Used for: how the brackets and the 0%, 15% and 20% capital gains rates work
- 26 U.S.C. § 63: Taxable income defined (standard deduction) (uscode.house.gov)Used for: the standard deduction and the extra amount from age 65
- 26 U.S.C. § 86: Social Security and tier 1 railroad retirement benefits (uscode.house.gov)Used for: how much Social Security is taxable (the fixed $25,000 and $32,000 thresholds)
- 26 U.S.C. § 151: Personal exemptions (including the deduction for seniors) (uscode.house.gov)Used for: the $6,000 senior deduction, who qualifies and its phase-out
- 26 U.S.C. § 164: Taxes (the state and local tax deduction) (uscode.house.gov)Used for: the SALT cap, its phase-down and its floor
- 26 U.S.C. § 170: Charitable contributions (uscode.house.gov)Used for: the deduction for non-itemizers, the 0.5% floor, the AGI limits and carryovers
- 26 U.S.C. § 68: Overall limitation on itemized deductions (uscode.house.gov)Used for: the 2/37 reduction of itemized deductions in the top bracket
- 26 U.S.C. § 1411: Net investment income tax (uscode.house.gov)Used for: the 3.8% tax and its fixed income thresholds
- 26 U.S.C. § 401(a)(9): Required minimum distributions (uscode.house.gov)Used for: the age required distributions start (72, 73 or 75 by birth year)
- 26 U.S.C. § 408(d)(8): Qualified charitable distributions from IRAs (uscode.house.gov)Used for: who can make a QCD (age 70½) and how it's left out of income
- 26 U.S.C. § 72(t): 10% additional tax on early distributions (uscode.house.gov)Used for: the 10% early-withdrawal tax, age 59½ and the age-55 plan exception
- 26 U.S.C. § 36B: Premium tax credit (uscode.house.gov)Used for: the Marketplace premium credit and the 400% of poverty limit
- 42 U.S.C. § 1395r: Medicare Part B premiums, including the income-related amounts (uscode.house.gov)Used for: how higher incomes raise the Part B premium (IRMAA)
- 42 U.S.C. § 1395w-113: Medicare Part D premiums, including the income-related amounts (uscode.house.gov)Used for: the Part D income-related add-on
Regulations and official guidance
- IRS Revenue Procedure 2025-32: 2026 inflation adjustments (irs.gov)Used for: the 2026 brackets, standard deduction, age-65 amounts and capital gains bands
- IRS Revenue Procedure 2025-25: 2026 premium tax credit percentages (irs.gov)Used for: the share of income expected toward a benchmark Marketplace plan in 2026
- IRS Notice 2025-67: 2026 retirement plan limits (irs.gov)Used for: the 2026 QCD limit and the 401(k) contribution limits
- Check your eligibility for the new enhanced deduction for seniors (irs.gov)Used for: how the IRS explains the senior deduction and its income limits
- 26 CFR 1.401(a)(9)-9: Life expectancy and distribution period tables (ecfr.gov)Used for: the Uniform Lifetime Table used to figure required distributions
- 26 CFR 1.401(a)(9)-2: Distributions starting during the owner's lifetime (required beginning age) (ecfr.gov)Used for: the age required distributions start for each birth year
- Required Minimum Distributions: proposed regulations (89 FR 58644) (federalregister.gov)Used for: age 73 for people born in 1959, where the law names both 73 and 75Proposed rules. The final rules leave the 1959 birth year open; Taxtirement follows this proposal (age 73).
- 20 CFR 418.1135: Which year's income sets the Medicare income-related amount (ecfr.gov)Used for: the two-year lookback (2026 premiums use 2024 income)
- Questions and Answers on the Net Investment Income Tax (irs.gov)Used for: what counts as investment income for the 3.8% tax
Forms, instructions and publications
- IRS Publication 915 (2025): Social Security and Equivalent Railroad Retirement Benefits (irs.gov)Used for: the worksheet for the taxable part of Social Security
- IRS Publication 590-B (2025): Distributions from Individual Retirement Arrangements (irs.gov)Used for: required distributions, the life expectancy tables and QCDs
- IRS Publication 554 (2025): Tax Guide for Seniors (irs.gov)Used for: the age-65 standard deduction and the rules most retirees meet
- IRS Publication 526 (2025): Charitable Contributions (irs.gov)Used for: the AGI limits on charitable gifts and carryovers
- Instructions for Form 5329 (2025): Additional Taxes on Qualified Plans and IRAs (irs.gov)Used for: the 10% early-withdrawal tax and its exceptions
- Instructions for Form 8962 (2025): Premium Tax Credit (irs.gov)Used for: how the premium credit is figured and the 400% of poverty limit
- Instructions for Form 8960 (2025): Net Investment Income Tax (irs.gov)Used for: how the 3.8% tax is figured line by line
- Form 1040 Instructions (2025), including the Tax Table (irs.gov)Used for: checking the app's tax against every row of the IRS Tax Table
Agency data
- 2026 Medicare Parts A & B Premiums and Deductibles; 2026 Part D income-related amounts (cms.gov)Used for: the 2026 Part B premium and the IRMAA tiers for Parts B and D
- Cost-of-Living Increase and Other Determinations for 2026 (federalregister.gov)Used for: the 2.8% cost-of-living increase and the 2026 earnings test limits
- Annual Update of the HHS Poverty Guidelines (2025) (federalregister.gov)Used for: the poverty line used for 2026 Marketplace premium credits
See your own years. Taxtirement applies these rules, and your state's, to your household for every year of retirement, and shows the calculation behind each number. Coming November 2026 for iPhone, iPad and Mac.
This page summarizes the 2026 federal rules as Taxtirement applies them, for education and planning. It isn't tax advice and doesn't cover every situation. Rules change; check the IRS's current instructions, or a tax professional, before acting. Spotted something wrong? Tell us.