What it computes
Your tax bracket is not your marginal rate. In retirement, one more dollar of IRA withdrawals can also make more of your Social Security taxable[1], push capital gains out of the 0% band[2], shrink the senior deduction[3], expose investment income to the net investment income tax[4], and add state tax. On top of those rates sit two cliffs that are not rates at all: Medicare’s IRMAA surcharges, which jump at fixed income tiers and are charged 2 years later[5][6], and the ACA premium credit, which shrinks with income and vanishes one dollar past 400% of the poverty line[7][8][9].
This map runs the simulator’s own 2026 tax, Social Security, Medicare and ACA functions at every $100 of withdrawals and compares each step with the one before, so each shaded hump is a rule you can name. Enter your household and move the marker to your income. The readout says what your next $1,000 really costs and why.
Worked example
The chart opens on a sample household: married filing jointly, both 67, with $48,000 a year of Social Security, $5,000 of qualified dividends and long-term gains, on Medicare, with state tax left out. Read from left to right:
- The first $29,300 of IRA withdrawals is tax-free: the standard, age-65 and senior deductions cover it, even though part of it is already making Social Security taxable.
- Social Security tax torpedo from $29,300 to $56,000: adds up to 10.2% to the rate: each extra dollar also makes more of your Social Security taxable, up to 85 cents of benefit per dollar until the inclusion cap is reached. The Social Security tax torpedo
- Capital gains pushed up a rate from $100,600 to $105,500: adds up to 16.8% to the rate: gains and qualified dividends sit on top of ordinary income, so each extra dollar pushes a dollar of them into a higher capital-gains rate. How capital gains stack on ordinary income
- Senior deduction phase-out from $104,200 to $204,200: adds up to 2.6% to the rate: each extra dollar of income shrinks the temporary deduction for people 65 and over, so more income is taxed. Federal tax brackets and standard deductions
- Net investment income tax from $204,200 to $209,200: adds up to 3.8% to the rate: above the threshold, each extra dollar of income exposes a dollar of investment income to the surtax. The net investment income tax
- The highest rate in the range is 30.2%, between $104,200 and $105,400, where the plain bracket rate is 12%.
- IRMAA tier 1 at $172,201 of withdrawals (IRMAA MAGI $218,001, which does not count untaxed Social Security): Medicare premiums rise by $2,297 a year for the household. The higher premiums are charged 2 years later, because IRMAA looks back 2 years.
- IRMAA tier 2 at $228,201 of withdrawals (IRMAA MAGI $274,001, which does not count untaxed Social Security): Medicare premiums rise by $3,473 a year for the household. The higher premiums are charged 2 years later, because IRMAA looks back 2 years.
- IRMAA tier 3 at $296,201 of withdrawals (IRMAA MAGI $342,001, which does not count untaxed Social Security): Medicare premiums rise by $3,470 a year for the household. The higher premiums are charged 2 years later, because IRMAA looks back 2 years.
At $40,000 of withdrawals, your next $1,000 of IRA withdrawals costs $185 (18.5%): $100 income tax at the 10% bracket + $85 because it makes more Social Security taxable.
The point of the map is the difference between the dashed line (the bracket you are “in”) and the shaded top (what the next dollar really costs). Withdrawals taken where the two are close are cheap; the humps are where a dollar of IRA money costs far more than its bracket suggests. That is why the same Roth conversion or withdrawal can cost very different amounts in different years.
What it ignores
- Everything is one tax year at 2026 figures: no inflation, no future law changes, no multi-year effects beyond the IRMAA lookback note.
- Withdrawals are treated as ordinary income from a traditional IRA or 401(k). Wages (payroll tax), interest, tax-exempt interest, itemized deductions and credits are not modeled.
- State tax is the simulator’s simplified model of each state’s rules, and local taxes are left out.
- Medicaid below the poverty line, cost-sharing reductions, and the ACA plan you actually choose are not modeled; the ACA credit is figured on the benchmark premium you enter.
- This tool shows how the rules interact. It does not tell you what to do, so check important decisions with a tax professional.
The rule behind it
The full explanation, with sources, is in The Social Security tax torpedo.
See it over a full plan
If you already have a saved plan, the link only takes you to the right panel; your plan is not changed.
This tool shows how the rules work. It is not financial, tax or investment advice. See the disclaimer.
Sources
- IRS Publication 915: how much of Social Security benefits is taxable ↩
- IRS Rev. Proc. 2025-32: 2026 brackets, standard deduction and capital-gains thresholds ↩
- 26 U.S. Code §151(d)(5)(C): the temporary deduction for seniors and its phase-out ↩
- IRS: Net investment income tax ↩
- CMS: 2026 Medicare Parts A & B premiums and IRMAA tiers ↩
- SSA: Medicare premiums, the income-related adjustment and its lookback ↩
- 26 U.S. Code §36B: the premium tax credit (100% and 400% of the poverty line) ↩
- IRS Rev. Proc. 2025-25: applicable percentage table ↩
- HHS poverty guidelines (Federal Register) ↩