Tax planning for retirement means managing your lifetime tax bill, not just this year’s return. In practice it comes down to two things: spreading your savings across taxable, tax-deferred, and Roth accounts, and using the low-income years after your last paycheck for Roth conversions before required minimum distributions (RMDs) start at 73.
The decisions change as you move through three phases: your working years, the gap years after you stop working, and the years when Social Security and RMDs set a floor under your income. This guide takes them in order, with the 2026 figures, so you can jump to the phase you are in.
How does tax planning for retirement work before and after retiring?
It starts while you are still working, because every contribution decides which of three tax buckets grows.
| Bucket | Examples | How it is taxed | What it is for in retirement |
|---|---|---|---|
| Taxable | Brokerage account, savings | Dividends and interest yearly; gains when you sell, at capital gains rates | Spending in the gap years, 0% long-term gains |
| Tax-deferred | Traditional 401(k), traditional IRA, SEP IRA | Withdrawals are ordinary income; RMDs apply | Filling the low brackets each year, Roth conversions |
| Roth | Roth IRA, Roth 401(k) | Qualified withdrawals are tax-free; no RMDs for the owner | Income that does not move any threshold |
Each time you choose between pre-tax and Roth contributions in your retirement plans, you decide how much flexibility you will have later. A household with everything in a traditional 401(k) has one lever in retirement: how much ordinary income to create. Nino’s guides to the 2026 401(k) contribution limits and the backdoor Roth IRA cover the options during these years.
The gap years come next. Between retiring and starting Social Security or RMDs, your income often drops sharply. That is the main planning window, because you choose what income to create and which bracket it lands in.
Once Social Security and RMDs begin, retirement income becomes harder to control. Required withdrawals and benefits arrive whether you need them or not, so the work shifts to managing the thresholds that higher income can cross.
What tax factors should you consider when planning retirement withdrawals?
Start with how each type of withdrawal is taxed. IRA withdrawals from pre-tax accounts are ordinary income. Long-term gains from a taxable account get capital gains rates, and under Rev. Proc. 2025-32 the 0% rate applies in 2026 to taxable income up to $98,900 for joint filers and $49,450 for single filers. That makes withdrawal sequencing a bracket decision: the order you draw from each bucket sets how much of your income is taxed at each rate, and whether a gain lands at 0% or 15%.
A retired couple, both 66, with no wage or benefit income shows how much room there is. For 2026 the standard deduction is $32,200 for joint filers, plus an additional $1,650 for each spouse 65 or older, and the 12% bracket runs to $100,800 of taxable income. Add the $6,000 senior deduction each (below), and about $47,500 of ordinary income is federally tax-free. The couple could convert roughly $148,000 from a traditional IRA and owe about $11,600 of federal tax, under 8% of the amount moved, before state tax.
Then check the thresholds a withdrawal can cross:
- Social Security taxation: more income makes more of your benefit taxable, covered below.
- The net investment income tax: the 3.8% NIIT applies once MAGI passes $200,000 for single filers or $250,000 for joint filers, and the IRS confirms these thresholds are not indexed for inflation. IRA withdrawals and conversions are not investment income, but they raise MAGI, which can expose dividends and gains you already have. Nino’s guide to the net investment income tax covers the mechanics.
- Medicare premiums: for 2026, CMS sets the standard Part B premium at $202.90 a month for MAGI up to $109,000 on an individual return or $218,000 on a joint return, and the first surcharge tier adds $81.20 a month per person. Under 20 CFR 418.1135, Social Security uses the return from two years earlier, so a large withdrawal at 63 raises premiums at 65. Nino’s explainer on MAGI shows how the figure is built.
How can Roth conversions reduce taxes in retirement?
A Roth conversion moves money from a pre-tax account to a Roth account. You pay ordinary income tax on the amount converted that year, and qualified withdrawals later are tax-free.
Converting in the gap years does three things. It moves money out while your bracket is low, as in the couple above. It shrinks the balance that drives your future RMDs, so the floor under your income in your 70s and 80s is lower. And it builds a balance that does not count toward Social Security taxation or Medicare premiums when you spend it.
Size each conversion deliberately. The usual approach is to convert up to the top of a chosen bracket and stop, then check the Medicare thresholds and the senior deduction phase-out before you send the form. That discipline matters because the IRS states that, effective January 1, 2018, a conversion from a traditional IRA, SEP, or SIMPLE to a Roth IRA cannot be recharacterized. An oversized conversion stays converted. Nino’s Roth conversion calculator sizes one to a bracket, and the guide on whether Roth conversions count as income walks through what else the conversion touches.
How can retirees reduce taxes on Social Security benefits?
How much of your benefit is taxed depends on half your benefits plus all your other income, including tax-exempt interest. Under IRS Publication 915, up to 50% of benefits become taxable once that figure passes $25,000 for single filers or $32,000 for joint filers, and up to 85% once it passes $34,000 or $44,000.
The levers all keep that figure lower:
- Roth withdrawals do not count toward it, which is what makes a Roth balance useful once benefits start.
- Qualified charitable distributions from an IRA stay out of income, so they do not push more of your benefit into tax.
- Large withdrawals or conversions done before you claim never enter the years your benefits are being taxed.
A temporary deduction helps too. For 2025 through 2028, the IRS allows an additional $6,000 deduction for each person who is 65 or older by the end of the year, $12,000 for a couple where both qualify, available whether or not you itemize. It phases out above $75,000 of MAGI for single filers and $150,000 for joint filers, which is one more reason to size a conversion before you make it.
How do required minimum distributions affect your tax bill?
RMDs from traditional IRAs and workplace plans start at age 73, or 75 for people born in 1960 or later under the final RMD regulations. They are ordinary income, and with a large pre-tax balance they can push you into a higher bracket and a higher Medicare premium tier every year for the rest of your life. Roth IRAs and designated Roth accounts have no RMDs while the owner is alive. Nino’s RMD calculator shows the amount for your age and balance.
Timing the first one matters. The IRS gives you until April 1 of the year after you reach your starting age, but the second RMD is still due that December 31, so delaying stacks two taxable withdrawals into one year.
Qualified charitable distributions soften the impact if you give to charity anyway. From age 70½, IRS Notice 2025-67 allows up to $111,000 in 2026 to go directly from an IRA to a qualifying charity. The gift counts toward your RMD and never appears in your income, so it keeps Social Security taxation, NIIT, and Medicare premiums where they were.
What mistakes can increase taxes in retirement?
Most of the costly mistakes are about timing and size:
- Not paying tax as you go on IRA withdrawals. The default withholding on a nonperiodic IRA distribution is 10% unless you pick another rate on Form W-4R, which is rarely enough. The safe harbor under IRC section 6654 is paying 90% of this year’s tax, or 100% of last year’s, 110% if your prior-year AGI was over $150,000.
- Converting too much in one year. Crossing a Medicare premium tier or the senior deduction phase-out by a few thousand dollars costs more than the tax on those dollars, and the conversion cannot be undone.
- Missing an RMD. The excise tax is 25% of the amount not taken, reduced to 10% if you correct it within two years.
- Ignoring state tax. States differ on whether they tax pensions, IRA withdrawals, and Social Security, so a plan built on federal brackets alone can be off by thousands.
- Forgetting the two-year lookback. The income on your return at 63 sets your Medicare premium at 65, after the window to adjust it has closed.
If you are weighing whether to handle this yourself, Nino’s guide to a retirement planner vs. a financial advisor covers what each one does.
Plan your retirement taxes with Nino
Retirement tax planning works best across several years at once. Nino pairs AI-powered planning software with a dedicated CFP and CPA who project your taxes year by year, size Roth conversions to your bracket, and sequence withdrawals around the Social Security and Medicare thresholds, with federal and state tax filing included on Advisor plans. You pay a flat annual fee, so the cost does not rise with your balances, and Nino does not hold, manage, or trade your investments or charge a percentage of assets.
Book a free consultation to see your retirement tax picture year by year. Every Advisor plan includes a 30-day money-back guarantee; see plans and pricing.