85%
Max % of SS That's Taxable
13
States With No Retirement Income Tax
37%
Top Federal Rate on RMDs
$105K
2026 QCD Limit (Tax-Free Charity)
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Retirement income comes from many sources, and each is taxed under its own rules. Understanding the full picture — federal brackets, state taxes, SS thresholds, IRMAA tiers, and the QCD strategy — is the foundation of keeping more of what you've saved.

How Common Retirement Income Sources Are Taxed Federally

Income Source Federal Tax Treatment Notes
Traditional IRA / 401(k) RMDs Fully Taxable Ordinary income rates. No capital gains treatment.
Social Security Benefits 0% – 85% Taxable Depends on combined income. 0–50–85% thresholds.
Pension / Defined Benefit Fully Taxable Ordinary income. State tax treatment varies widely.
Roth IRA Distributions Tax-Free If account is at least 5 years old and owner is 59½+.
Qualified Dividends 0%, 15%, or 20% Long-term capital gains rates — lower than ordinary income.
Interest Income Fully Taxable Ordinary income. Counts toward SS combined income.
Capital Gains (Long-term) 0%, 15%, or 20% Many retirees qualify for the 0% rate on LTCG.
Municipal Bond Interest Federal Tax-Free Still counts toward SS combined income and IRMAA MAGI.
QCD (IRA → Charity) Excluded from AGI Up to $105,000/year. Must go directly to charity. Age 70½+.

Municipal bond interest is federally tax-free but not invisible to the IRS. It still counts toward your "combined income" for Social Security taxation purposes and toward your MAGI for IRMAA. Many retirees are surprised to find that tax-free income raises their Medicare premiums.

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Retirement Tax Guides

Credit for the Elderly or Disabled

A genuine dollar-for-dollar tax credit for low-income retirees 65+ or disabled — narrow limits mean most don't qualify, but it's worth checking.

Check eligibility

How to Appeal an IRMAA Surcharge

A qualifying life-changing event can get your Medicare premium recalculated using current income instead of a two-year-old figure.

Read appeal guide

Estimated Quarterly Taxes in Retirement

No employer means no automatic withholding. Here's the IRS safe harbor rule that determines if you need to pay quarterly.

Check if you owe quarterly

Retiree Tax Filing Guide

New forms, an easy-to-miss extra standard deduction for 65+, and income that gets taxed differently than you expect.

Read filing guide

Capital Gains Tax Strategies for Retirees

Many retirees qualify for the 0% long-term capital gains bracket without realizing it. Here's how to use it safely.

Read strategy guide

Should You Move States in Retirement for Taxes?

A no-income-tax state isn't automatically cheaper once property tax, sales tax, and cost of living are factored in.

Read relocation guide

Retirement Tax Estimator

Model your complete 2026 federal and state tax picture — SS income, RMDs, pensions, dividends, and capital gains — in one place.

Estimate my taxes

Is Your Social Security Taxable?

Up to 85% of SS benefits can be taxed. Learn how "combined income" is calculated, where your income falls, and how to reduce taxable SS.

Check SS taxability

State Retirement Tax Comparison

13 states have no income tax. Many others exempt Social Security, pensions, or retirement account withdrawals. Find out where your state stands.

Compare state taxes

RMD Tax Impact & Strategies

RMDs are taxed as ordinary income and can trigger IRMAA, push SS into taxable territory, and hit the NIIT threshold. QCDs and Roth conversions can help.

Read RMD tax guide

The gap between your top bracket rate and effective tax rate is usually large. Most retirees with income between $50,000 and $100,000 pay an effective federal rate of 12–16%, not the 22% marginal rate on the top dollar. Understanding both figures helps you make smarter decisions about Roth conversions, QCDs, and income timing.

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Retirement Tax Strategies — Plain English, Every Tuesday

Tax brackets, IRMAA thresholds, QCD rules, and state law changes — we track what matters and translate it into action steps you can actually use.

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