Most people will enter retirement with less money than they need, so you're wise to minimize taxes. In fact, even if you have saved a lot of money, you'll still want to pay the 澳洲幸运5官方开奖结果体彩网:lowest amount of taxes possible since you're living on a fixed income. If you want to 澳洲幸运5官方开奖结果体彩网:pay fewer taxes to the government in retirement, you've got to know what's taxed and your tax bracket before you can make money-saving financial decisions♔. Here's how to save money on taxes in retirement🌞.

1. Know What’s Taxable

澳洲幸运5官方开奖结果体彩网:Just about everything is taxable. The question is, when is it taxable? If you have investments outside of 澳洲幸运5官方开奖结果体彩网:tax-advantaged retirement accounts, they’re taxable each year, whether you are retired or not. These may include 澳洲幸运5官方开奖结果体彩网:brokerage accounts, 澳洲幸运5官方开奖结果体彩网:real estate, savings accounts, and others.

Most retirement-designated income, on the other hand, is not taxable until you actually retire. Withdrawals from 澳洲幸运5官方开奖结果体彩网:traditional IRAs, 401(k)s and 403(b)s, and payments from 澳洲幸运5官方开奖结果体彩网:annuities, pensions, military retirement accounts, a🐭nd many others m🦩ay be taxable.

The Roth IRA or Roth 401(k), on the other hand, is different. The money you put into a Roth account is taxable before you make the deposit, but the investment gains are tax-free if you wait to withdraw them—at minimum, you need to wait five years after the first deposit was made in the accoun♌t. And to avoid an early withdrawal penalty, you need to be at least 59 ½.

2. Know Your Tax Bracket

For tax year 2025, the top tax rate is 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly). The other rates are as follows:

• 35% for incomes over $250,525 ($501,050 for married couples filing jointly)
• 32% for incomes over $197,300 ($394,600 for married couples filing jointly)
• 24% for incomes over $103,350 ($206,700 for married couples filing jointly)
• 22% for incomes over $48,475 ($96,950 for married couples filing jointly)
• 12% for incomes over $11,925 ($23,850 for married couples filing jointly)
• 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly)

For 2024, the top tax rate is 37% for individual single taxpayers with incomes greater than $609,350 ($731,200 for married couples filing jointly). The other rates for 2024 are as follows:

• 35% for incomes over $243,725 ($487,450 for married couples filing jointly)
• 32% for incomes over $191,950 ($383,900 for married couples filing jointly)
• 24% for incomes over $100,525 ($201,050 for married couples filing jointly)
• 22% for incomes over $47,150 ($94,300 for married couples filing jointly)
• 12% for incomes over $9,950 ($19,900 for married couples filing jointly)
• 10% for incomes $11,600 ($23,200 for married couples filing jointly)

Understanding how much tax you'll pay on income earned can help with proper planning.

3. Convert to a Roth

A Roth IRA taxes you now instead of when you withdraw the money. While you’re still working, paying tax🐼es now eliminates the tax burden later in life when you need all the money you can get.

Assuming no changes to the tax code in the future, doing a Roth conversion in the years when your income is low will allow you to pay taxes at a lower tax bracket. The downside to this strategy is that it assumes that you can reasonably 🐷estimateꦡ your tax bracket during your retirement years.

4. Diversify Your Taxes

Just as you should diversify your investment portfolio to avoid large-scale losses, you should do the same with your taxes. This is beca൲use your🎶 tax bracket will likely fluctuate at various times. When taxes are high, taking income from tax-free accounts can be useful. Then, when taxes are low, you may choose to take income from a taxable account.

5. Consider Moving

Ever wonder why Florida is among the most popular 澳洲幸运5官方开奖结果体彩网:destinations for retirees? It’s not just the beaches and weather— there's also no state income tax. Seven states in total have 澳洲幸运5官方开奖结果体彩网:no state income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming. New Hampshire will join that list in 2025 when it fully phases out taxes on investment and interest income. Also, Washington only taxes investment income and 澳洲幸运5官方开奖结果体彩网:capital gains for certain high income taxpayers.

The Bottom Line

The key to keeping your retirement taxes low is to start planning early. Make plans well before you need to rely on your retirement savings as your main source of income. It may be a good idea to seek the advice of a financial advisor with experience in designing tax-efficient 澳洲幸运5官方开奖结果体彩网:wealth management plans.