Every dollar you pull from your IRA or 401(k) in 2026 gets taxed at your federal income tax rate. Here are the tax brackets you need to know before making withdrawal decisions this year.
| Tax Rate | Single Filer | Married Filing Jointly |
| 10% | $0 – $12,400 | $0 – $24,800 |
| 12% | $12,401 – $50,400 | $24,801 – $100,800 |
| 22% | $50,401 – $105,700 | $100,801 – $211,400 |
| 24% | $105,701 – $211,400 | $211,401 – $403,550 |
| 32% | $211,401 – $256,225 | $403,551 – $512,450 |
| 35% | $256,226 – $640,600 | $512,451 – $768,700 |
| 37% | Over $640,600 | Over $768,700 |
Source: IRS Revenue Procedure 2025-32
How do these brackets affect your retirement withdrawals? Every traditional IRA distribution, 401(k) withdrawal, and pension payment stacks on top of your other income. Once that combined total crosses a bracket threshold, each additional dollar gets taxed at the higher rate. For a married couple filing jointly, the jump from 12% to 22% happens at $100,800 in taxable income – and that 10-percentage-point increase is the single biggest leap in the entire bracket structure.
I’ve seen retirees lose thousands of dollars to avoidable bracket jumps simply because they didn’t plan the timing and size of their withdrawals. The good news is that 2026 brings higher bracket thresholds, a larger standard deduction, and a new senior-specific deduction that can shield more of your retirement income from federal taxation.
Your 2026 Standard Deduction – The First Layer of Protection
Before a single dollar of your retirement income gets taxed, the standard deduction removes a significant chunk from the equation. For 2026, those amounts increased under the One Big Beautiful Bill Act (OBBBA).
| Filing Status | Base Standard Deduction | Additional for Age 65+ | Total Standard Deduction (Age 65+) |
| Single | $16,100 | $2,050 | $18,150 |
| Married Filing Jointly (one spouse 65+) | $32,200 | $1,650 | $33,850 |
| Married Filing Jointly (both 65+) | $32,200 | $3,300 | $35,500 |
That means a married couple where both spouses are 65 or older can receive up to $35,500 in retirement income before owing a penny in federal income tax – just from the standard deduction alone.
The New OBBBA Senior Deduction – An Extra $6,000 Shield
For tax years 2025 through 2028, the OBBBA created a separate deduction for taxpayers age 65 and older. This is worth up to $6,000 per qualifying individual ($12,000 for married couples filing jointly where both spouses qualify). Unlike the additional standard deduction, this senior deduction is available to both itemizers and standard deduction filers.
There’s an income-based phaseout to be aware of.
- Single filers – Phaseout begins at $75,000 MAGI, fully eliminated at $175,000
- Married filing jointly – Phaseout begins at $150,000 MAGI, fully eliminated at $250,000
- Rate of reduction – 6% of every dollar over the threshold (every $1,000 over reduces the deduction by $60)
For a married couple both over 65 with MAGI under $150,000, the total deduction stack looks like this. Standard deduction ($32,200) plus additional senior standard deduction ($3,300) plus OBBBA senior deduction ($12,000) equals $47,500 in total deductions. That’s a significant amount of retirement income completely shielded from federal income tax.
Bracket Management – How Much Can You Withdraw Without Jumping to 22%?
This is where retirement tax planning gets practical. The 12% to 22% bracket boundary is the most important threshold for most retirees, because it represents the largest single-rate jump in the federal system. Staying below it – or strategically filling it – can save you thousands over a retirement spanning two or three decades.
Here’s how the math works for different filing situations in 2026, assuming the taxpayer is 65 or older with no other income sources besides retirement withdrawals.
| Scenario | Total Deductions | 12% Bracket Ceiling (Taxable Income) | Max Withdrawal to Stay in 12% Bracket |
| Single filer, age 65+, MAGI under $75K | $24,150 ($18,150 + $6,000) | $50,400 | $74,550 |
| Married filing jointly, both 65+, MAGI under $150K | $47,500 ($35,500 + $12,000) | $100,800 | $148,300 |
| Single filer, age 65+, no OBBBA (MAGI over $175K) | $18,150 | $50,400 | $68,550 |
| Married filing jointly, both 65+, no OBBBA (MAGI over $250K) | $35,500 | $100,800 | $136,300 |
A married couple both over 65 with income under $150,000 could withdraw up to $148,300 from traditional retirement accounts and stay entirely within the 12% federal bracket. That’s a planning target worth building your withdrawal strategy around.
One important note – Social Security benefits, pension payments, and any part-time earned income all count toward these thresholds. If you receive $30,000 in Social Security (with $25,500 of it taxable) and $20,000 from a pension, you would subtract those amounts from the maximum withdrawal figure to determine how much additional IRA or 401(k) income fits within the 12% bracket.
Roth Conversion Sweet Spots by Bracket
The same bracket math that governs withdrawals applies to Roth conversions – and 2026 may present a strong window for strategic conversions. When you convert traditional IRA money to a Roth IRA, you pay federal income tax on the converted amount at your current rate. The benefit is that future growth and withdrawals from the Roth account are tax-free.
The sweet spot is converting just enough to fill your current bracket without spilling into the next one.
| Current Bracket | Convert Up To (Taxable Income Ceiling) | Single 65+ Conversion Room (After $24,150 Deductions) | MFJ Both 65+ Conversion Room (After $47,500 Deductions) |
| Fill the 10% bracket | $12,400 / $24,800 | $36,550 | $72,300 |
| Fill the 12% bracket | $50,400 / $100,800 | $74,550 | $148,300 |
| Fill the 22% bracket | $105,700 / $211,400 | $129,850 | $258,900 |
| Fill the 24% bracket | $211,400 / $403,550 | $235,550 | $451,050 |
Conversion room assumes retirement account withdrawals/conversions are the only income source. Subtract Social Security, pension, and other income from these figures to find your actual available conversion space.
For many retirees, the years between retirement and age 73 (when required minimum distributions begin) represent the best Roth conversion window. Income is often lower during this gap, meaning you can convert larger amounts while staying in a favorable bracket. By the time RMDs kick in, you’ve reduced the balance subject to required distributions and built up a tax-free Roth pool.
Be aware that Roth conversions increase your adjusted gross income for the year, which can trigger Medicare IRMAA surcharges (based on income from two years prior), affect the OBBBA senior deduction phaseout, and increase the taxable portion of your Social Security benefits. Run projections across all three impacts before executing a conversion strategy.
The Texas Advantage – Side-by-Side Comparison
Federal brackets apply the same way regardless of where you live. But state taxes can dramatically change how much of your retirement income you actually keep. Texas retirees have a structural advantage that’s worth quantifying.
Here’s what a married couple (both 65+) withdrawing $100,000 from traditional retirement accounts would pay in total income taxes across three states, assuming the $100,000 is their only income and they qualify for the full OBBBA senior deduction.
| Tax Component | Texas | California | New York |
| Federal taxable income | $52,500 | $52,500 | $52,500 |
| Federal tax owed | $5,804 | $5,804 | $5,804 |
| State income tax on retirement withdrawals | $0 | ~$1,800 | ~$3,900 |
| Total tax burden | $5,804 | ~$7,604 | ~$9,704 |
| Annual savings vs. Texas | – | ~$1,800 more | ~$3,900 more |
State tax estimates are approximate based on 2025-2026 rates. California taxes all retirement account withdrawals and pensions at state income tax rates up to 13.3%. New York taxes retirement income with partial exemptions for government pensions. Neither state taxes Social Security benefits. Individual circumstances vary – consult a tax professional for exact calculations.
Over a 20-year retirement, a Texas resident in this scenario could keep roughly $36,000 to $78,000 more than someone with identical income in California or New York – just from the state tax difference. For oil and gas professionals who spent their careers in Houston, Dallas, or the Permian Basin, staying in Texas during retirement preserves this advantage across every retirement account distribution, pension payment, and investment withdrawal.
Frequently Asked Questions About 2026 Tax Brackets and Retirement
What is the standard deduction for someone over 65 in 2026?
A single filer age 65 or older receives a base standard deduction of $16,100 plus an additional $2,050, totaling $18,150. A married couple filing jointly where both spouses are 65+ receives $32,200 plus $3,300 ($1,650 each), totaling $35,500. The OBBBA senior deduction may provide an additional $6,000 per qualifying individual ($12,000 for couples) for those with income below the phaseout thresholds, per IRS guidance on 2026 tax adjustments.
How much can I withdraw from my IRA without moving into the 22% bracket?
For a single filer age 65+ with no other income and full OBBBA senior deduction eligibility, approximately $74,550. For a married couple filing jointly (both 65+) with full OBBBA eligibility, approximately $148,300. These figures decrease dollar-for-dollar with any Social Security, pension, or other taxable income you receive.
Does Texas tax retirement withdrawals?
No. Texas has no state income tax, so IRA distributions, 401(k) withdrawals, pension payments, Social Security benefits, and investment income are all free from state-level taxation. You still owe federal income tax on traditional pre-tax retirement account distributions.
When is the best time to do a Roth conversion in retirement?
The most favorable window for Roth conversions is generally between retirement and age 73 (when required minimum distributions begin), when your taxable income may be lower. The goal is to convert enough to fill your current bracket without pushing into the next one. However, conversions increase AGI, which can affect Medicare premiums and Social Security taxation – so multi-year projections are recommended.
Is the $6,000 senior deduction permanent?
No. The OBBBA senior deduction is temporary, applying to tax years 2025 through 2028. It phases out starting at $75,000 MAGI for single filers and $150,000 for married filing jointly, and is fully eliminated at $175,000 and $250,000 respectively. Congress could extend the provision, but as of now it expires after the 2028 tax year.
How do 2026 tax brackets differ from 2025?
The OBBBA provided a 4% inflation adjustment for the 10% and 12% brackets and a 2.3% increase for higher brackets. The standard deduction increased by $350 for single filers and $700 for joint filers. The bracket structure and number of rates (seven) remain unchanged. These wider brackets mean slightly more income can be taxed at each rate before crossing into the next tier.
Planning Your 2026 Retirement Tax Strategy
Tax bracket management is not a one-time exercise – it’s an annual decision that compounds over your entire retirement. The difference between paying 12% and 22% on $50,000 in withdrawals is $5,000 per year. Multiply that across 20 years of retirement and you’re looking at $100,000 in tax savings from bracket management alone.
If you’re approaching retirement or already managing withdrawals, our advisors at Saxon Financial Group work with Texas retirees on exactly these calculations – coordinating IRA distributions, pension timing, Roth conversions, and Social Security strategies to keep your tax bill as low as legally possible. Learn more about our retirement planning approach, or schedule a conversation with our team to review your bracket positioning before year-end.
This article is provided for educational purposes and does not constitute tax, legal, or investment advice. Tax situations vary by individual. Consult your tax professional or financial advisor for guidance specific to your circumstances. Saxon Financial Group is an SEC-registered investment advisor.
