A married couple can report roughly $133,000 of income in the 2026 tax year and still stay inside the 12% tax bracket. For a single filer, the figure is $66,500.
Both come from adding the standard deduction ($32,200 for married filing jointly or $16,100 for single filers) to the top of the 12% bracket ($100,800 or $50,400), before any other deductions or credits.
Filers 65 or older have more room: the standard deduction rises by $1,650 per spouse ($2,050 for a single filer), and a separate senior deduction of up to $6,000 per person runs through 2028. It shrinks once modified adjusted gross income passes $75,000 ($150,000 for couples), and conversion income counts toward that limit.
Room left under those lines is gone for good on Dec. 31. A Roth conversion, which moves money from a traditional IRA into a Roth IRA, is one way to use it.
The 22% bracket runs to $211,400 of taxable income for couples and $105,700 for singles, or about $243,600 and $121,800 before the standard deduction, so the choice is not all or nothing.
Say a couple has $90,000 of income before the deduction. The gap to $133,000 is $43,000, and converting that amount would be taxed at 12%, or $5,160 in federal tax.
Each additional $10,000 converted above the line would be taxed at 22%, costing $1,000 more than at 12%.
The conversion also shrinks the traditional balance that future required withdrawals are based on. Those withdrawals generally begin at 73, and a smaller account means a smaller mandatory amount to take out and pay tax on each year.
Why Dec. 31 matters
The IRS taxes a conversion in the year it happens and applies the tax to any untaxed amounts in the traditional IRA. Since 2018, a conversion also cannot be undone. A conversion made in 2026 that turns out to be too large stays too large.
Side effects that catch retirees
Conversion income can ripple into other bills. According to the IRS, Social Security benefits become taxable once modified adjusted gross income plus half of benefits passes a base amount for the filer’s status, so a conversion can pull more of a check into the tax base.
Medicare is stricter. Part B premiums step up at income thresholds, and in 2026 crossing the first one by $1 adds $81.20 a month per person, about $974 a year, with bigger jumps at higher thresholds. Medicare looks back two years at tax returns, so a 2026 conversion can show up in 2028 premiums.
Retirees 70½ or older who give to charity have one way to keep IRA money out of that income.
Where the tax money comes from matters too. Paying the bill from the IRA itself shrinks the amount that lands in the Roth, while cash from outside the account leaves the full conversion available.
Sizing it without guessing
Projecting income, Social Security taxation, and Medicare thresholds at once is the hard part, and you can’t reverse a miscalculation. If you have $100,000 or more in investments and want a second set of eyes, you can use SmartAsset, which matches you with up to three fiduciary advisors legally required to put their clients’ interests first.
The questionnaire takes about 10 minutes and includes roughly 37 questions; it asks for a phone number near the end, and you decide whether and when to respond. SmartAsset provides matching, not advice, and Money Talks News may be compensated when readers use the link.
Add a Comment