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How do tax brackets work in retirement?

Quick answer

In retirement, your taxable income comes from Social Security (up to 85% may be taxable), retirement account withdrawals (fully taxable from traditional accounts), investment income, and any part-time earnings. Managing which bracket you're in each year, through strategic withdrawals and Roth conversions, can save tens of thousands over your retirement.

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A 1040 tax return with a calculator, coffee, and a Tax Strategies reference book, the federal and Illinois tax planning we do for retirees
Where the tax savings hide

Not paying more than you owe.

Illinois exempts Social Security, IRA distributions, and pensions from state income tax. Federal Roth conversions, QCDs, and bracket management compound those savings over a 25-year retirement.

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