Distributions from retirement accounts
How retirement withdrawals are taxed in 2026
Distributions from traditional 401(k), 403(b), IRA and pension plans are taxed as ordinary income. The full amount is added to your other income for the year and runs through the 2026 federal brackets. If you withdraw before age 59 and a half, the IRS adds a 10% early withdrawal penalty unless an exception applies (disability, Rule of 55, 72(t) payments, etc.).
| Withdrawal | Fed tax (no other income) | +10% penalty if <59.5 | Net received |
|---|---|---|---|
| $25,000 | ~$892 | $2,500 | ~$21,608 |
| $50,000 | ~$4,088 | $5,000 | ~$40,912 |
| $100,000 | ~$13,380 | $10,000 | ~$76,620 |
Single filer, no other income, standard deduction $16,100, 2026 federal brackets. Penalty shown separately.
Questions
Pension withdrawal tax FAQ
How are 401(k) and IRA withdrawals taxed?
Traditional 401(k) and IRA withdrawals are taxed as ordinary income at your federal marginal tax rate. The full distribution amount is added to your other income for the year and taxed according to the 2026 IRS brackets. Roth 401(k) and Roth IRA qualified withdrawals are tax-free.
What is the early withdrawal penalty?
If you withdraw from a traditional 401(k) or IRA before age 59 and a half, the IRS imposes a 10% early withdrawal penalty on top of regular income tax. Exceptions include disability, certain medical expenses, first-time home purchase (IRA only, up to $10,000) and substantially equal periodic payments (Rule 72(t)).
Are Roth 401(k) and Roth IRA withdrawals tax-free?
Qualified Roth distributions are completely tax-free and penalty-free. To qualify, the account must have been open for at least five years and you must be at least 59 and a half, disabled, or the beneficiary of a deceased account holder. Non-qualified Roth withdrawals may be subject to tax and penalties on the earnings portion.
How much tax will I pay on a $50,000 401(k) withdrawal?
If you have no other income and file single, a $50,000 traditional 401(k) withdrawal in 2026 would owe about $4,088 in federal income tax (after the $16,100 standard deduction). If you are under 59.5, an additional $5,000 early withdrawal penalty applies, totaling roughly $9,088 in combined tax and penalties.
Do I have to pay state tax on retirement withdrawals?
Most states tax traditional 401(k) and IRA withdrawals as ordinary income. However, some states exempt all or part of retirement income. States with no income tax (Texas, Florida, Nevada, etc.) do not tax retirement withdrawals. Check your state's specific rules for retirement income exclusions.
What is the Rule of 55 for 401(k) withdrawals?
If you leave your job during or after the calendar year you turn 55, you can withdraw from that employer's 401(k) without the 10% early withdrawal penalty. This does not apply to IRAs, only to the 401(k) of the employer you separated from. Regular income tax still applies to the withdrawal.
- Sources: IRC Sec. 72(t) (10% early withdrawal penalty, exceptions) · IRS Rev. Proc. 2025-32 (2026 brackets) · Rule of 55 (IRC Sec. 72(t)(2)(A)(v)).
- 🔄 Last updated July 2026 · Tax year 2026
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