2026 Retirement Income Tax Calculator
Estimate your federal tax on Social Security, pension, IRA withdrawals, and dividends
Last reviewed:
Data sources: IRS Rev. Proc. 2025-40 (2026 inflation adjustments), One Big Beautiful Bill Act (OBBBA, signed July 4 2025), IRS Publication 915 (Social Security taxation)
What This Calculator Estimates
This calculator estimates your 2026 federal income tax on the income sources most common in retirement: Social Security benefits, pension income, IRA and 401(k) withdrawals, interest income, and dividends. It applies the 2026 tax brackets, the updated standard deduction, the new OBBBA senior deduction, and the Social Security taxability formula — giving you a realistic estimate before you sit down with a tax professional.
The results include your total federal tax owed, effective tax rate, marginal rate, and a breakdown showing exactly how much of your Social Security is taxable and why.
How 2026 Retirement Income Is Taxed
Ordinary Income: IRA Withdrawals, Pension, Interest
Traditional IRA and 401(k) withdrawals, pension income, interest income, and wages are taxed as ordinary income — the same as if you were still working. They’re added together, reduced by your deductions, and taxed at the progressive bracket rates:
| Rate | Single | Married Filing Jointly |
|---|---|---|
| 10% | ≤ $12,400 | ≤ $24,800 |
| 12% | $12,401–$50,400 | $24,801–$100,800 |
| 22% | $50,401–$105,700 | $100,801–$211,400 |
| 24% | $105,701–$201,775 | $211,401–$403,550 |
| 32% | $201,776–$256,225 | $403,551–$512,450 |
| 35% | $256,226–$640,600 | $512,451–$768,700 |
| 37% | > $640,600 | > $768,700 |
These brackets reflect the One Big Beautiful Bill Act (OBBBA), which made permanent the Tax Cuts and Jobs Act rates that were scheduled to expire in 2026, with additional inflation adjustments for the 10% and 12% brackets.
Social Security: Up to 85% May Be Taxable
Social Security is not fully taxable — the IRS uses a formula based on your provisional income to determine how much is included in taxable income:
Provisional income = AGI (excluding SS) + tax-exempt interest + 50% of SS benefit
| Provisional Income (Single) | Taxable Portion of SS |
|---|---|
| Under $25,000 | 0% |
| $25,000–$34,000 | Up to 50% |
| Over $34,000 | Up to 85% |
For married filing jointly, the thresholds are $32,000 and $44,000. The maximum taxable is always 85% — a common misconception is that SS becomes “fully taxable,” but it never exceeds 85%.
Qualified Dividends: Preferential Rates
Qualified dividends (from U.S. stocks held long enough) are taxed at long-term capital gains rates, not ordinary income rates. In 2026, for most retirees with moderate income, qualified dividends are taxed at 15% — well below the 22% or 24% bracket many retirees fall into for ordinary income.
The 0% rate applies when total taxable income stays under $49,450 (single) or $98,900 (MFJ). For retirees with primarily SS and moderate investment income, a portion of qualified dividends may fall in the 0% bracket.
The 2026 Deductions for Retirees
Standard Deduction + Over-65 Bump
| Filing Status | Base | Over-65 Extra | Total (both spouses 65+) |
|---|---|---|---|
| Single (65+) | $16,100 | +$2,050 | $18,150 |
| MFJ (one 65+) | $32,200 | +$1,650 | $33,850 |
| MFJ (both 65+) | $32,200 | +$3,300 | $35,500 |
The New OBBBA Senior Deduction
The OBBBA created a new $6,000 deduction per taxpayer age 65 or older for tax year 2026. This deduction is unusual because it stacks on top of both the standard deduction AND itemized deductions — available regardless of which you choose.
The deduction phases out at 6% of AGI above $75,000 (single) or $150,000 (MFJ):
- Single, AGI $90,000: $6,000 − 6% × $15,000 = $5,100
- Single, AGI $175,000: fully phased out ($0)
- MFJ both 65+, AGI $160,000: $12,000 − 6% × $10,000 = $11,400
A married couple, both over 65, with AGI under $150,000 can deduct up to $12,000 in senior deductions on top of their $35,500 standard deduction — a total of $47,500 in deductions before hitting a dollar of taxable income.
A Worked Example
Default scenario: married couple, both over 65, filing jointly.
Income:
- Social Security: $28,000
- Pension: $24,000
- IRA withdrawals: $20,000
- Interest: $2,000
- Ordinary dividends: $3,000 (of which $2,500 are qualified)
Step 1 — SS taxability: Provisional income = $49,000 (non-SS) + $14,000 (50% × SS) = $63,000. Above $44,000 MFJ threshold → taxable SS = min(85% × $28,000, 0.85 × ($63,000 − $44,000) + $6,000) = min($23,800, $22,150) = $22,150.
Step 2 — AGI: $49,000 + $22,150 = $71,150
Step 3 — Deductions: Standard: $32,200 + $3,300 (two 65+ bumps) = $35,500. Senior deduction: AGI $71,150 < $150,000 threshold → full $12,000. Total deductions: $47,500
Step 4 — Taxable income: $71,150 − $47,500 = $23,650
Step 5 — Tax: $23,650 in taxable income. The $2,500 qualified dividends “stack on top” of $21,150 ordinary income. All falls in the 10–12% bracket → very low effective rate, around 2–3% of AGI.
This illustrates why the OBBBA senior deduction is so valuable for moderate-income retirees: it can eliminate a significant portion of taxable income entirely.
Key Assumptions and Limitations
This calculator estimates federal income tax only. State income tax, which varies significantly by state (some exempt SS entirely; others have no income tax at all), is not included. The 3.8% Net Investment Income Tax (NIIT) on investment income above $200,000/$250,000 is not included. Alternative Minimum Tax (AMT) is not calculated. No tax credits are applied. The Social Security provisional income formula excludes tax-exempt interest (municipal bond interest), which may slightly understate taxability for investors holding muni bonds. IRA and 401(k) withdrawals are assumed to be fully taxable (pre-tax accounts); Roth withdrawals are tax-free and should not be entered. Results are estimates for planning purposes — consult a CPA or enrolled agent for your actual tax return.
Frequently Asked Questions
What percentage of my Social Security is taxable in 2026?
It depends on your provisional income: your AGI (excluding Social Security) plus 50% of your Social Security benefit. For single filers, if provisional income is under $25,000, none of your SS is taxable. Between $25,000–$34,000, up to 50% is taxable. Above $34,000, up to 85% is taxable. For married filing jointly, the thresholds are $32,000 and $44,000. The maximum taxable portion is always 85% — Social Security is never 100% taxable.
What is the new $6,000 senior deduction for 2026?
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, created a new $6,000 deduction per qualifying taxpayer age 65 or older. Unlike the over-65 standard deduction bump, this deduction is available whether you itemize or take the standard deduction. It phases out at 6% of AGI above $75,000 for single filers and $150,000 for married couples, fully disappearing around $175,000 (single) and $250,000 (joint) for a single qualifying taxpayer.
How are qualified dividends taxed in retirement?
Qualified dividends are taxed at long-term capital gains rates — 0%, 15%, or 20% — rather than ordinary income rates. In 2026, the 0% rate applies if your total taxable income is under $49,450 (single) or $98,900 (married filing jointly). For most retirees with moderate income, qualified dividends are taxed at 15%. The LTCG rate applies to the portion of qualified dividends that 'stack on top of' your ordinary income in the brackets.
What is the 2026 standard deduction for someone over 65?
For 2026, the base standard deduction is $16,100 for single filers and $32,200 for married filing jointly. Taxpayers 65 or older get an additional $2,050 (single) or $1,650 per qualifying spouse (MFJ) on top of the base. A married couple both over 65 has a standard deduction of $32,200 + $3,300 = $35,500. Additionally, the new OBBBA senior deduction of up to $6,000 per qualifying taxpayer applies on top of this.
Does this calculator include state income taxes?
No — this calculator estimates federal income tax only. State income tax treatment of retirement income varies significantly: some states exempt Social Security entirely, some exempt pension income, and a few (Florida, Texas, Nevada, etc.) have no income tax at all. Your total tax burden depends heavily on your state. Consult your state's revenue department or a local tax professional for state tax estimates.
What does this calculator not include?
This calculator does not account for: state income taxes, the 3.8% Net Investment Income Tax (NIIT) on investment income above $200,000 (single) or $250,000 (MFJ), Alternative Minimum Tax (AMT), self-employment tax, tax credits (child tax credit, foreign tax credit, etc.), or tax-exempt interest income in the Social Security provisional income calculation. It also assumes you take either the full standard deduction or a simple itemized total — it does not walk through individual itemized deductions.