Retirement taxes
How retirement income is taxed in 2026
Retirement income generally escapes FICA taxes (no Social Security or Medicare withholding), which saves you 7.65% compared to working income. But most sources are still subject to federal income tax through the same progressive bracket system that applies to wages.
The Social Security provisional income test
Social Security benefits are taxed based on "provisional income": your AGI (without SS) plus tax-exempt interest plus half of your SS benefits. For single filers, if provisional income is below $25,000, none of your SS is taxable. Between $25,000 and $34,000, up to 50% is taxable. Above $34,000, up to 85% is taxable. These thresholds have not been adjusted since 1993.
Pension and 401(k)/IRA withdrawals
Traditional 401(k) and IRA distributions are taxed as ordinary income at your marginal rate. Pension income is also typically fully taxable. These amounts are added to your AGI and flow through the standard deduction and bracket table just like wages — but without the 7.65% FICA layer.
Questions
Retirement income tax FAQ
Is retirement income taxed?
Most retirement income is taxable. Traditional 401(k) and IRA withdrawals are taxed as ordinary income. Pension income is usually fully taxable. Social Security benefits may be 0%, 50% or 85% taxable depending on your provisional income. Roth withdrawals are tax-free if qualified.
How much of Social Security is taxable?
It depends on your provisional income (AGI + non-taxable interest + half of SS benefits). For single filers: below $25,000 none is taxable, $25,000 to $34,000 up to 50% is taxable, above $34,000 up to 85% is taxable. These thresholds have not changed since 1993 and are not indexed for inflation.
Do retirees pay FICA taxes?
Not on pension, 401(k) or Social Security income. FICA (Social Security 6.2% and Medicare 1.45%) applies only to earned wages and self-employment income. This is a significant tax advantage of retirement income — you avoid the 7.65% FICA bite entirely on distributions.
Are Roth withdrawals taxed in retirement?
No, if qualified. Roth IRA and Roth 401(k) withdrawals are tax-free and do not count as provisional income, which means they also do not trigger taxation of your Social Security benefits. This makes Roth accounts especially powerful for managing retirement tax brackets.
What tax bracket will I be in when I retire?
It depends on your total taxable retirement income. Many retirees drop one or two brackets compared to their working years. For 2026, a single retiree with $50,000 in taxable income pays a top marginal rate of 22%. The standard deduction further reduces the taxable amount.
Should I withdraw from pre-tax or Roth accounts first?
A common strategy is to withdraw from pre-tax accounts up to the top of a lower bracket, then use Roth for anything above to avoid jumping brackets. This also keeps provisional income low to minimize Social Security taxation. A tax-efficient withdrawal order can save thousands per year.
- Sources: IRC Section 86 (SS taxation thresholds $25K/$34K single, $32K/$44K MFJ) · IRS Rev. Proc. 2025-32 (2026 brackets) · IRS Topic 423.
- 🔄 Last updated July 2026 · Tax year 2026
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