How Much Tax Will a Roth Conversion Actually Cost You? (2026)

A Roth conversion is taxed as ordinary income in the year you convert. The converted amount stacks on top of your other income and fills your tax brackets from there upward, so the rate you pay depends on how much room you have left in each bracket. In 2026 a married couple can convert well into the 12% and 22% brackets at modest cost; the art is filling up low brackets without spilling into higher ones or triggering IRMAA.

• A conversion adds to your taxable income for the year and is taxed at your marginal rate. There is no separate "conversion tax."
• In 2026 the 12% bracket runs to $100,800 of taxable income for a married couple and the 22% bracket to $211,400. These are the ceilings to "fill."
• Paying the tax from a taxable (non-retirement) account is generally preferable so the full converted balance keeps growing tax-free. If you are under 59½, using IRA dollars to pay the tax can also trigger a 10% penalty on that portion.
• Watch the second-order costs: a big conversion can raise your Medicare Part B and Part D premiums two years later through IRMAA, and can push your income high enough to trigger the 3.8% net investment income tax on other investment income.

When you convert money from a Traditional IRA to a Roth IRA, the converted pre-tax amount is added to your ordinary income for that year and taxed at your marginal rate. There is no special "conversion tax rate." The conversion simply stacks on top of your other income and fills your brackets from there upward. That single idea explains almost everything about conversion planning. If your other taxable income already reaches into the 24% bracket, every converted dollar is taxed at 24% (and up). If your income is low, say in an early-San Diego retirement gap year, the first slice of a conversion may be taxed at just 10% or 12%.

Because the conversion stacks on top, portions can fall into different marginal brackets. A $60,000 conversion might have its first $40,000 taxed at 12% and its last $20,000 at 22%, depending on where your other income leaves off. The goal is rarely to convert everything at once. It is to convert deliberately: fill up the low brackets you have available this year, stop before you spill into a materially higher one, and repeat over several years.

One important wrinkle: if you have made nondeductible (after-tax) contributions to a Traditional IRA, the pro-rata rule applies. Each dollar you convert is treated as part taxable and part nontaxable, based on the ratio of after-tax money to total balances across all your Traditional, SEP, and SIMPLE IRAs. For someone whose IRA is entirely pre-tax, the full conversion is taxable. For someone with meaningful after-tax basis, a portion of each conversion comes out tax-free.

Our page on Roth conversion strategies covers the full framework; this article focuses on the one question everyone asks first: what will it cost?

To estimate a conversion's cost you need the 2026 brackets, because those are the ceilings you are trying to fill without overshooting. These are taxable-income figures (after your standard or itemized deduction).

For 2026 the standard deduction is $16,100 (single) and $32,200 (married filing jointly), with an extra $2,050 (single) or $1,650 per spouse (joint) once you are 65 or older. A temporary "senior deduction" of up to $6,000 per person 65+ also applies through 2028, but it phases out at a rate of 6 cents per dollar of income above $75,000 (single) or $150,000 (married filing jointly). A large Roth conversion raises your income for the year, which can reduce or even eliminate this deduction, so factor that into the true cost of a conversion.

Consider a married couple, both 64, retired, with $40,000 of taxable income this year before any conversion (after their standard deduction). They want to convert $60,000 from a Traditional IRA. Here is how those converted dollars stack:

Because their pre-conversion income was $40,000, they had about $60,800 of room left in the 12% bracket (which ends at $100,800). The full $60,000 conversion fits inside it, so the entire amount is taxed at 12%, producing roughly $7,200 of federal tax, an effective 12% cost. This assumes all converted funds are pre-tax and no other tax interactions change the calculation. Convert $80,000 instead and the last $19,200 would spill into the 22% bracket, where each of those dollars is taxed at 22% rather than 12%. That progressive jump from 12% to 22% is exactly the line we watch.

Now take a couple with $150,000 of taxable income, already inside the 22% bracket, which runs to $211,400 in 2026. They have about $61,400 of room before the 24% bracket begins. A conversion up to that amount costs 22% federal; go beyond it and the excess is taxed at 24%.

Is 22% a good rate to convert at? Sometimes yes. If this couple expects large Required Minimum Distributions in their 70s that would push them into the 24% or 32% bracket anyway, or if one spouse is likely to file as a single taxpayer someday at even higher rates, paying 22% now to avoid a higher rate later can be a genuine win. The rate you convert at only matters relative to the rate you would otherwise pay.

The single most common mistake is paying the conversion tax out of the converted dollars. If you convert $60,000 and withhold $12,000 for taxes from the IRA, only $48,000 actually lands in the Roth, and if you are under 59½, that $12,000 can be treated as an early withdrawal subject to a 10% penalty.

Paying the tax from a taxable (non-retirement) account is generally preferable because it lets the entire converted balance keep compounding tax-free, which is the whole point. It is not universally required, but having outside cash available is often the deciding factor in whether a conversion makes sense this year.

A conversion's true cost is not just the income tax. Because the converted amount raises your income, it may increase how much of your Social Security benefit is taxable and can raise your Medicare premiums two years later through IRMAA surcharges on both Part B and Part D.

A conversion itself is not "investment income" and is not directly subject to the 3.8% net investment income tax (NIIT). But because the conversion raises your modified adjusted gross income (MAGI), it can push you past the NIIT threshold, which then applies to your other investment income such as interest, dividends, and capital gains.

These are the "hidden" costs that a bracket table alone misses. A conversion sized to stay under a Social Security taxation threshold or an IRMAA line can be markedly cheaper than one that crosses it. This is why we coordinate conversions with the rest of your withdrawal plan rather than treating them in isolation; the goal is the lowest lifetime tax, not the lowest tax this April.

If you are a California resident, yes. California taxes a Roth conversion as ordinary income at state rates that range from 1% to 13.3%, with no preferential treatment. For many retirees the relevant California marginal rate is in the 8–9.3% range, so a conversion that costs 12% federally might cost roughly 20% all-in. These are illustrative estimates; your actual state tax depends on your deductions, credits, and overall income.

That is not a reason to avoid conversions. The Roth still grows and comes out tax-free at both levels, but it is a reason to be realistic about the bill. Some clients who plan to relocate to a no-income-tax state weigh timing conversions around that move; that is a personal decision we model rather than a rule.

We start from the end: we project your income, brackets, RMDs, and IRMAA exposure across the next 10–20 years, then ask how much to convert each year to smooth your lifetime tax rate rather than let it spike later. Often the answer is "fill this year's 12% or 22% bracket, then stop."

A conversion is one of the few moves where doing a little each year usually beats doing a lot once. For related year-round tax moves that pair well with conversions, see seven ways to reduce taxes before you retire.

A Roth conversion "costs" whatever marginal rate the converted dollars land in, so the entire game is choosing how much to convert, in which years, to keep those dollars in the lowest brackets available while respecting Social Security and IRMAA. Run the projection before you convert, and pay the tax from outside the account when you can.