2026 Tax Bracket Changes-What It Means for Your Retirement
Investopedia’s piece explains how the newly released 2026 federal income tax brackets will shape retirees’ decisions on withdrawals, Roth conversions, and overall tax planning. With the 2026 brackets now set, the article emphasizes that knowing exactly where your income lands on that table is no longer just a filing-season detail—it’s a planning tool.
My comments focus on how retirees can use those brackets to sequence withdrawals more intelligently. As I note in the article, “The truth is, most retirement income—Social Security, pensions, and RMDs from IRAs and 401(k)s—remains taxable, and the order and timing of withdrawals can have a huge effect on your tax bill.” In other words, if you blindly pull from traditional IRAs and 401(k)s without watching your bracket, you can easily push yourself into a higher rate and give more back to the IRS than necessary.
The story explains that distributions from traditional accounts are taxed at ordinary income rates, while tapping taxable brokerage assets may generate long-term capital gains taxed at lower rates. For retirees who are near the top of a bracket, shifting some withdrawals to those taxable accounts (or to cash) can keep them below the next threshold. I underscore that required minimum distributions are “a common bracket-buster—forcing you to take taxable income from your IRAs or 401(k)s even if you don’t need it, often bumping people into higher brackets.” That’s why planning ahead—especially in the years before RMDs begin—is so important.
The article then ties this directly to Roth strategy: using lower-income years to convert some traditional funds to Roth can reduce future RMDs and lower the lifetime tax burden for both retirees and their heirs. Done right, this uses the brackets to your advantage instead of letting them ambush you.
Bottom line: 2026’s brackets aren’t just numbers on a chart; they’re a roadmap. As I stress in the piece, understanding where your income sits—and how each withdrawal choice moves you up or down the ladder—is one of the most powerful levers retirees have to control their tax bill over the rest of their lives.