Retirement Income Tax Calculator (2026)

Retirement taxes are surprisingly complex. Social Security becomes partially taxable once other income crosses a threshold. RMDs and pension income push you into higher brackets. Capital gains stack on top. Medicare IRMAA surcharges kick in at specific income levels. This calculator pulls all of that together — enter every income source, get a complete 2026 federal tax picture: AGI, taxable income, total tax, effective rate, marginal rate, and your IRMAA tier.

How retirement income is taxed: the five income types

Retirees typically draw from five distinct income sources, each taxed differently. Understanding which bucket each dollar comes from — and how the sources interact — is the first step in retirement tax planning.

The Social Security income taxation trap

Social Security benefits appear tax-free — until they're not. The IRS tests your "combined income" (also called provisional income): your adjusted gross income from all other sources plus half your gross SS benefit. If that number crosses a threshold, up to 85% of your SS becomes taxable.¹

Thresholds set in 1984 (50% rule) and 1993 (85% rule). Never adjusted for inflation. A retiree with a $32,000 SS benefit and $40,000 in pension income almost certainly pays tax on 85% of their benefit — even if they think of Social Security as "their own money."

The torpedo effect. In the combined-income zone where SS transitions from 50% to 85% taxable, an extra dollar of ordinary income effectively generates $1.85 of taxable income (the dollar itself plus $0.85 of newly taxable SS). That inflates the effective marginal rate significantly — a retiree in the 22% ordinary bracket can face an effective rate of over 40% on income in the torpedo zone. The calculator above flags this when it applies.

The fix is usually to shift income sources: take Roth distributions instead of traditional IRA withdrawals (Roth doesn't count in combined income), use QCDs to satisfy RMDs without adding to AGI, or delay Social Security to reduce the years of exposure. Learn about QCDs →

IRMAA: the Medicare income surcharge most retirees don't see coming

Medicare Part B and Part D premiums aren't flat — they scale with your income. If your modified AGI from two years prior exceeds threshold levels, you pay IRMAA (Income-Related Monthly Adjustment Amount) surcharges of up to $5,873/year per person above the base $202.90/month Part B premium.²

2026 CMS data. Extra annual cost per person is Part B surcharge + Part D surcharge combined, annualized. A couple in Tier 2 (MFJ MAGI $280K) pays $5,770/yr extra combined. Sources: CMS 2026 IRMAA fact sheet.

IRMAA is a cliff surcharge — $1 over a threshold triggers the full tier surcharge. For a married couple, $1 of extra Roth conversion income above $218,000 MAGI triggers $2,296/year in extra Part B premiums (both spouses). That's an effective 229,600% marginal tax rate on that one dollar. A retirement income specialist optimizes Roth conversions and distributions specifically to stay just below IRMAA thresholds. Full IRMAA calculator →

How capital gains interact with ordinary income

Long-term capital gains and qualified dividends are taxed at preferential rates (0%, 15%, or 20%) — but they "stack" on top of ordinary income for rate purposes. The 0% rate only applies if your total taxable income (ordinary income + capital gains combined) stays below the threshold.³

The 2026 thresholds: $49,450 for single filers, $98,900 for MFJ. A married couple with $60,000 in ordinary taxable income (after the standard deduction) and $50,000 in capital gains has $110,000 in total taxable income — above the $98,900 MFJ threshold. Only the gains that fit below $98,900 (the first $38,900 of their $50,000 in gains) are taxed at 0%. The remaining $11,100 is taxed at 15%.

This interaction means that Roth conversions — which add to ordinary income — can displace gains out of the 0% zone, turning a "free" gain into a 15% taxable event. A specialist models the tradeoff precisely. Capital gains tax guide →

A worked example: what a typical retiree pays

Consider a married couple, both 67, filing jointly in 2026:

• Combined Social Security: $48,000/year (both collecting)
• Small pension: $18,000/year
• IRA/RMD withdrawals: $35,000/year
• Ordinary interest (CDs, bonds): $3,000/year
• Long-term capital gains: $8,000/year

Combined income = ($18,000 + $35,000 + $3,000 + $8,000) + ½ × $48,000 = $64,000 + $24,000 = $88,000 — well above $44,000, so 85% of SS is taxable: $40,800.

AGI = $64,000 + $40,800 = $104,800. Standard deduction for MFJ both over 65: $32,200 + (2 × $1,650) = $35,500. Taxable income = $104,800 − $35,500 = $69,300.

Of $69,300 taxable income, $8,000 is capital gains sitting on top. Ordinary income portion: $61,300. Federal tax: 10% on first $24,800 = $2,480; 12% on $24,800–$61,300 = $4,380. Tax on ordinary income: $6,860. Capital gains: $69,300 is below $98,900, so $8,000 gains are at 0%. Total federal income tax: $6,860 — an effective rate of 6.1% on $112,000 in gross income (including full $48K SS). IRMAA MAGI of ~$104,800 is below $218,000 — no IRMAA surcharge.

Now suppose they take an extra $20,000 IRA withdrawal for a home repair. AGI rises to $124,800; taxable income to $89,300. The $8,000 cap gains are now partially above the $98,900 MFJ threshold? No — $89,300 in total taxable income is still below $98,900. But if MAGI crosses $218,000, they'd owe $1,148 in extra IRMAA per person. The interaction of every dollar of income across these rules is why specialists use software to model it.

Six ways to reduce your retirement tax bill

1. Roth conversions in the pre-RMD window. Between retirement and age 73, income is often lowest. Converting traditional IRA dollars to Roth at 12% or 22% now prevents larger RMDs that would be taxed at the same or higher rates — and eliminates future IRMAA exposure on those funds. Roth conversion calculator →
2. Tax-efficient withdrawal ordering. Draw from taxable accounts first, traditional IRA second, Roth last (generally). This lets Roth assets compound tax-free longest and defers the ordinary income hit. Withdrawal order guide →
3. QCDs instead of IRA withdrawals. Once you're 70½, direct IRA-to-charity transfers (QCDs) up to $111,000/year (2026) are excluded from AGI entirely — unlike taking a distribution and donating it separately. Reduces taxable income, SS taxation, and IRMAA MAGI. QCD guide →
4. 0% capital gains harvesting. In low-income years (especially before RMDs begin at 73), realize enough long-term gains to fill the 0% bracket. Resets your basis at no tax cost. Harvesting guide →
5. IRMAA management. Know your tier boundary and whether a small income adjustment avoids a large surcharge. $1 in Roth vs. traditional IRA can be worth $2,000+ in Medicare premium savings. IRMAA calculator →
6. Social Security timing. Delaying SS to 70 raises benefits ~77% vs. claiming at 62 — and concentrates the SS income into fewer years when you're already drawing RMDs anyway. A later claim also reduces the early-retirement years when SS torpedo risk is highest. SS claiming calculator →

These strategies interact. Maximizing them simultaneously — fitting Roth conversions around IRMAA cliffs, coordinating QCDs with RMDs, timing gains around bracket fill — is the core value a retirement income specialist provides. The difference between an uncoordinated and optimized withdrawal strategy over 25 years is often six figures in lifetime taxes.

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