Taxes All Retirees Need to Know About

We all know we need to pay income tax on what we earn from working. But taxation doesn’t go away after you clock out for the final time. In retirement, you could face taxes you never had to worry about in the past.

These include potential taxation on your Social Security benefits, Medicare premiums, 401(k) withdrawals, and more.

It’s important to know what these taxes are and how they work in order to make the most out of your hard-earned savings. So let’s take a deeper look.

Retirement Account Withdraws

Once you stop earning a regular paycheck, you may have to rely heavily on your retirement account savings.

Depending on the type of retirement account, you may need to pay ordinary income taxes on your withdrawals. In 2026, rates range from zero percent to 37 percent, depending on your income and filing status.

This applies to tax-deferred retirement accounts like the following.

But in retirement, you may have more control over your income. You can work with a financial adviser to strategically withdraw funds from these accounts to meet your needs and remain within desired tax brackets.

Moreover, it’s important to note that qualified withdrawals from Roth IRAs, Roth 401(k)s, and similar accounts are tax-free.

RMDs

Required minimum distributions (RMDs) are specific annual amounts of money you must withdraw from accounts like traditional 401(k)s and IRAs once you reach the age of 73.

The RMD is based on factors like your account balance and life expectancy as determined by the IRS.

You also pay ordinary income taxes on RMDs. If they are large enough, RMDs can trigger other tax burdens like taxation on Social Security benefits and Medicare premiums (more on this later).

And failure to take your applicable RMD can trigger tax penalties.

But there are ways to minimize the impact of RMDs. Once you reach age 59.5, you can make withdrawals from pre-tax retirement accounts penalty-free. By doing so strategically, you can reduce the account balance and size of future RMDs as a result.

And once you reach age 70.5, you can make qualified charitable distributions (QCDs) to an IRS-approved charity.

A QCD is a distribution taken directly from your traditional IRA and transferred to a qualified charity. The QCD amount won’t be treated as taxable income and it can satisfy your RMD.

In 2026, you can make a QCD of up to $111,000.

Taxes on Social Security Benefits

Millions of Americans depend on Social Security checks as a key source of income in retirement.

But Uncle Sam may take a cut. In fact, about 40 percent of all people who receive Social Security benefits must pay taxes on their benefits, according to the Social Security Administration (SSA).

Whether you do largely depends on your filing status and “combined income.”

Combined income = adjusted gross income + nontaxable interest + 50 percent of your Social Security benefits.

If you’re filing single and your combined income is under $25,000, none of your benefits will be taxed. If it ranges from $25,000 to $34,000, up to 50 percent of your benefits will be taxed. And if it’s more than $34,000, up to 85 percent of it will be taxed.

If you’re married and filing jointly with your spouse and your combined incomes are less than $32,000, none of your benefits would be taxed. If that’s between $32,000 and $44,000, up to 50 percent will be taxed. And if it’s more than $44,000, up to 85 percent would be taxed.

IRMAA

If you’re a high earner, your Medicare premiums may be more expensive than that of the average person.

That’s because of the Income-Related Monthly Adjustment Amount (IRMAA). The IRMAA is a surcharge on Medicare Part B and Medicare Part D premiums.

And it can get a little complicated because of the look-back period.

The government determines whether IRMAA applies to you based on your modified adjusted gross income (MAGI) from two years prior.

Single filers may get hit with IRMAA in 2026 if their 2024 MAGI exceeded $109,000.

And married couples filing jointly may face IRMAA if MAGI was greater than $218,000.

For Medicare Part B premiums, the 2026 surcharge can range from $284.10 to $689.90.

The total Medicare Part D premiums for those affected by IRMAA can vary depending on your plan. The 2026 IRMAA Medicare Part D premiums can range from an extra $14.50 to $91.

However, there are several ways you can minimize your taxable income now to potentially avoid IRMAA in the future. Strategies include maxing out accounts like traditional IRAs and 401(k)s, as well as taking advantage of QCDs.

The Bottom Line

Taxation doesn’t end when you stop working. In retirement, you may face new taxes, including ones you may not have even heard of. So it’s important to understand how these taxes work and how they affect you. Even more important is to factor these taxes into your overall retirement planning strategy.

The Epoch Times copyright © 2026. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.