January 8th 2026
By Ari Parker
Lower your retirement tax bill with proven strategies. Learn about tax-efficient withdrawals, deductions, Roth conversions, and senior tax breaks to keep more of your money.
By Jordan McElwain
Retirement should be a time to relax and enjoy the rewards of your work. The last thing you want to do is worry about taxes eating away at your income!
We have good news. With the proper planning, you can significantly reduce your taxes in retirement, keeping more of your money in your pocket.
In this guide, you’ll learn how retirement income is taxed, discover ten proven strategies to lower your tax burden, and find out why regular reviews with a tax professional matter.
This article is for educational purposes only and not personalized tax advice. Every person’s situation is different, and tax laws change, so please consult a qualified tax professional before making decisions.
Not all retirement income is treated the same. Some are taxed, some are partly taxed, and some may be tax-free. For example:
Your Social Security benefits may be taxable depending on how much other income you have.
Withdrawals from traditional IRAs or 401(k)s are typically taxed as ordinary income because you didn’t pay tax when you contributed.
Withdrawals from a Roth IRA, when done under qualified rules, can be tax‑free since you already paid tax on the money going in.
By knowing which income is taxed, when it’s taxed, and how much, you can plan withdrawals to lower taxes in retirement and keep your income higher.
Thoughtful tax planning doesn’t end when you retire, but it definitely shifts gears. Instead of saving for future growth, your goal becomes stretching your savings and keeping your tax burden low. These ten strategies will help you do just that.
Choosing which account to withdraw from and when can make a big difference in how much you pay in taxes. For example, starting with taxable accounts, then using tax‑deferred accounts, and later tapping tax‑free accounts like Roth IRAs can help you stay in a lower tax bracket and reduce how much of your Social Security is taxed.
This method takes a bit of planning but can save you thousands.
Your Social Security benefits may be taxed depending on your other income. Timing when you start claiming benefits can minimize your tax bill. Sometimes delaying for just a few years can reduce the taxable amount. It’s also important to understand your provisional income, which is the total used to determine how much of your Social Security is subject to tax.
By planning around these rules, you can maximize your benefits while keeping taxes lower.
A Roth conversion moves money from a tax‑deferred account into a Roth, where future withdrawals can be tax‑free. If your current tax rate is relatively low, converting now may pay off later. It also helps you manage your tax bracket and avoid large spikes in taxable income.
At age 65 and older, you’re eligible for a higher standard deduction, which reduces your taxable income. On top of that, the One Big Beautiful Bill Act, which takes effect from 2025 to 2028, grants an additional deduction for seniors.
Also, consider a “bunching” strategy. Group deductible expenses, such as medical bills or charitable donations, into one tax year so you exceed the standard deduction, and itemizing makes sense.
Not only can you save on the senior menu while eating out, but there are also retiree tax breaks designed just for older adults, like the Credit for the Elderly or Disabled. These senior tax deductions reduce your tax owed dollar‑for‑dollar. Many states also offer senior tax credits, so check your local rules.
If you have a high-deductible health plan and an HSA, you get a triple tax benefit. Contributions are tax‑deductible, the money grows tax‑free, and withdrawals for qualified medical expenses are tax‑free. HSAs are a great tool for retirement to reduce healthcare costs and more.
Once you’re 70½ or older and you have an IRA, you can make a QCD and donate directly from your IRA to a charity. That donation counts toward your required minimum distribution (RMD) and isn’t included in taxable income. The IRS has guidelines for the type of accounts and charities you can use.
Where you live impacts your retirement taxes. Some states don’t tax retirement income, and some exclude Social Security. Moving to a tax‑friendly state, or even planning a part-time residence, can reduce your overall tax burden.
While you’re still working, it’s best to boost your retirement savings as much as possible. If you’re 50+, you can make “catch‑up” contributions to your IRAs and 401(k)s to boost savings and reduce your taxable income. If your spouse has limited income, consider a spousal IRA to establish more tax‑efficient retirement savings.
Your Medicare Part B and Part D premiums may be higher if your income exceeds certain thresholds. This surcharge is known as IRMAA. Since those premiums are based on your income from two years prior, coordinating your withdrawals and income this year affects what you’ll pay later.
Many retirees overlook important planning areas:
Taking RMDs too early
Ignoring state taxes
Poor coordination between spouses
Forgetting to adjust withholding
Avoiding these mistakes can save you money and stress.
There’s no one‑size‑fits‑all plan. Working with a CPA or tax advisor who knows retirement tax rules is vital. Annual reviews allow you to adjust your plan as laws change or your income shifts. These adjustments help you minimize taxes and protect your savings.
Reducing taxes in retirement doesn’t have to be complicated. But it does require planning and attention. By using the tax‑efficient withdrawal strategies listed above, taking advantage of senior tax benefits, and working with a trusted advisor, you can keep more of your hard‑earned money and live the retirement you deserve.
There’s no age at which taxes automatically stop. Even after 65, Social Security, pensions, or retirement account withdrawals may still be taxed.
Yes. If you’re 65 or older, you’re eligible for a higher standard deduction. And thanks to the One Big Beautiful Bill Act, there’s an additional deduction available from 2025‑2028.
Keeping your overall income lower, choosing withdrawals carefully, and timing Social Security benefits can reduce the amount of your benefits that’s taxable.
A strategy that balances withdrawals from taxable accounts, then tax‑deferred accounts, and finally tax‑free accounts (like Roth IRAs) tends to minimize tax and keep you in a lower bracket.
A Roth conversion makes sense if your current tax rate is lower than what you expect in future years. It also helps control future tax brackets and legacy planning.
Yes, several U.S. states either exempt retirement income or Social Security benefits from state tax. It’s worth checking state tax rules if relocation is a possibility.
IRS. (2023). Credit for the Elderly or the Disabled. https://www.irs.gov/publications/p524
IRS. (2025). One Big Beautiful Bill Act: Tax deductions for working Americans and seniors. https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors
IRS. (2025). Retirement Plan and IRA Required Minimum Distributions FAQs. https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
Social Security Administration (SSA). (2025). Must I pay taxes on Social Security benefits? https://www.ssa.gov/faqs/en/questions/KA-02471.html
Merryl Lynch. (2025). The Do's and Don’ts of Taxes In Retirement. https://www.ml.com/articles/taxes-in-retirement.html
