As we head toward 2026, one of the biggest changes on the horizon for retirees is the shift in federal income tax brackets. These updated rates might sound technical, but they play a major role in how much of your retirement savings you actually get to keep. In our newest Cardinal Lesson, Tom and I walk through the new brackets and explain how they impact everything from Roth conversions to Medicare IRMAA.
If you’re 65 or older, this isn’t just “tax talk.” This is about planning your income in a way that supports your lifestyle, protects your spouse, and preserves more of what you’ve saved.
Why Tax Brackets Matter in Retirement
During your working years, taxes were mostly out of your control—your W-2 arrived at the end of the year, and that was that. But retirement is different. You get to decide how and when you recognize income. And that means understanding the tax brackets is essential.
Today’s 22% and 24% brackets—especially for married couples—are historically low. That creates a window of opportunity for smart planning, especially if you have a large IRA or 401(k). The decisions you make in your 60s can dramatically affect the taxes you’ll pay in your 70s, 80s, and even 90s.
What’s Changing in 2026
The 2026 brackets are now official and—thankfully—are not as drastic as they might have been without recent legislation. In our video, we compare the 2025 and 2026 brackets side-by-side and explain how the small changes still matter when you’re planning over decades, not just one year at a time.
We also discuss:
- The extra senior deduction and how it phases out once your income crosses certain thresholds
- IRMAA surcharges for Medicare and why avoiding them shouldn’t automatically dictate your whole tax strategy
- The widow’s tax trap, where the surviving spouse is forced into higher single-filer brackets
- RMD projections and how delaying planning can push you into much higher tax rates later
Roth Conversions: Not a One-Size-Fits-All Decision
Roth conversions aren’t right for everyone, but they’re an important tool to consider. Converting now may mean paying taxes earlier—but potentially at much lower rates than you’ll face later.
For couples with large retirement accounts, converting within the 22% or 24% brackets now may save tens or even hundreds of thousands in future taxes. This can also reduce:
- RMD amounts
- Future Medicare IRMAA costs
- Taxes your children may owe when they inherit your IRA
The key is planning with a long-term view—not just trying to optimize a single year.
The Big Picture: Planning for Your 80s and 90s
Good tax planning isn’t just about next April. It’s about making sure you (and possibly your spouse) have the income you need for the rest of your life—without unnecessary tax surprises.
As we say in the video, most people will “make it” financially to age 80. The question is what happens in your mid-80s and 90s. Will you have enough income after one spouse passes? Will RMDs push you into higher brackets? Will IRMAA jump unexpectedly? Will your retirement accounts be taxed heavily when your children inherit them?
These are real issues—and the 2026 tax brackets are a major piece of that puzzle.
Let Us Help You Plan Your Strategy
If you’re 65 or older and feeling unsure about how these new brackets affect your situation, you’re not alone. Every retiree is different—and that’s why one-size-fits-all advice doesn’t work.
Our team at Cardinal Advisors can walk through your income, your savings, and your goals, and help create a plan that minimizes taxes over your lifetime, not just this year.
If you’d like help evaluating Roth conversions, planning RMDs, or creating a year-by-year tax strategy, reach out anytime. These conversations make a huge difference over the long run.
