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For those planning on retirement in the coming years, it\u2019s important to understand just how much taxes on retirement income have quietly shifted in America.<\/p>\n
Learn More: What 2026 Senior Tax Deduction Means for Social Security and Retirement Planning<\/strong><\/p>\n Try This: 9 Low-Effort Ways To Make Passive Income (You Can Start This Week)<\/strong><\/p>\n Thanks to ever-changing social, economic and political landscapes, the older, more traditional means of retirement income taxation has changed \u2014 as well as who pays more on those taxes now.<\/p>\n Speaking to GOBankingRates, estate planning and investment advisor Greg Reese noted that retirement taxation has moved from defined benefit plans to defined contribution plans that are funded by employees on a pretax basis.<\/p>\n \u201cThe old-style pensions came with predictable, partially-taxable income,\u201d Reese noted, \u201cbut today\u2019s retirees rely on 401(k) plans and traditional IRAs, which are fully taxable when withdrawn.\u201d<\/p>\n Additionally, the threshold for taxing Social Security ($32,000 for married couples) \u201chas not been indexed to inflation, making more and more middle-income families subject to 85% of benefits being taxed.\u201d<\/p>\n Trending Now: Maximize Your Tax Refund by Avoiding This Common Mistake<\/strong><\/p>\n \u201cMarried couples in the middle and upper-middle incomes from multiple sources\u201d pay more in retirement income taxes now, according to Reese, thanks to Social Security, required minimum distributions (RMD), brokerage dividends and part-time work.<\/p>\n \u201cThis is where we see \u2018stealth\u2019 marginal rates defined by the tax code,\u201d he added.<\/p>\n To counter this excess of taxation, Reese suggested that, prior to RMD age, taxpayers should coordinate withdrawals from taxable, tax-deferred and Roth accounts in order to optimize \u201cincome smoothing.\u201d As he put it, \u201cretirement is about spending efficiently, not just saving.\u201d<\/p>\n