junkanoo
Full time employment: Posting here.
Or 49,500 to be specific. Because the new math for a couple filing MFJ when both are 65+ is:
Standard Deduction (2026) : $32,200
Extra Senior Deduction: 3,300
Senior Deduction 12,000
Charitable Cash Contribution: 2,000
Total 49,500
or $41,850 if only one of them is 65+
I know someone is going to squawk about the new $2K cash contribution deduction in 2026, but I think it's reasonable that many standard deduction filers give that amount to their church or key charities (last year) without getting a dime in deductions. Now, you're getting that $2K deduction. Either way, it doesn't affect the main conclusions.
So, I just watched a video where the creator had a scenario of a couple (let's call them Couple A, both 65) *not* taking SS yet (post 65) and then (besides a small amount of interest received $1,925) they would be funding their income needs from their T-IRA account (140K T-IRA withdrawal). Which highlighted that $47,575 of that 140K amount was tax-free. Thus, that 401K contribution back-in-the-day that you never paid a dime on taxes on (turned into a T-IRA) ... now $47,575 of that arrives to you tax-free because of the new math.
Pretty slick, except I'm not sure how many people make it past 65 without at least one of the spouses taking SS. After all, not all couples are both high SS earners. So, for one of the spouses to take SS early while the other higher earner waits until 70 is quite reasonable in many cases.
So, let's consider another couple (Couple B), both also 65, where one spouse is getting 20K in SS and the other is waiting. To make it reasonably apples to apples, let's make the "Gross" Income the same ($141,925), thus both couples need/want the same income to live on while Couple A defers taking two SS incomes and Couple B is deferring taking only one (larger) SS payout. Let's also assume that the second couple is not as interested in maxing out how much their T-IRA withdrawal will be tax-free and more interested in a more optimal tax situation. This they model by staying under the taxable income limit (so that LTCGs are not taxed at all) while being wary about taking much from their taxable account - that is significantly lower than their T-IRA account.
This is their first attempt; interest income stays the same, LTCG is 20K and the balance of their income comes from their T-IRA account.
In this first effort, slightly over $30K of T-IRA withdrawals are NOT taxed, which is much lower than the other couple's result of nearly $50K in non-taxed T-IRA distributions ... BUT, still, directionally reach their goal as they are paying $7,835 in Federal Taxes compared to the other couple that are paying $10,595 on the same "Gross" income. This is achieved because (1) 3K of SS was not taxed and they stayed below the limit so that $20 in LTCGs was not taxed.
Thoughts?
Standard Deduction (2026) : $32,200
Extra Senior Deduction: 3,300
Senior Deduction 12,000
Charitable Cash Contribution: 2,000
Total 49,500
or $41,850 if only one of them is 65+
I know someone is going to squawk about the new $2K cash contribution deduction in 2026, but I think it's reasonable that many standard deduction filers give that amount to their church or key charities (last year) without getting a dime in deductions. Now, you're getting that $2K deduction. Either way, it doesn't affect the main conclusions.
So, I just watched a video where the creator had a scenario of a couple (let's call them Couple A, both 65) *not* taking SS yet (post 65) and then (besides a small amount of interest received $1,925) they would be funding their income needs from their T-IRA account (140K T-IRA withdrawal). Which highlighted that $47,575 of that 140K amount was tax-free. Thus, that 401K contribution back-in-the-day that you never paid a dime on taxes on (turned into a T-IRA) ... now $47,575 of that arrives to you tax-free because of the new math.
Pretty slick, except I'm not sure how many people make it past 65 without at least one of the spouses taking SS. After all, not all couples are both high SS earners. So, for one of the spouses to take SS early while the other higher earner waits until 70 is quite reasonable in many cases.
So, let's consider another couple (Couple B), both also 65, where one spouse is getting 20K in SS and the other is waiting. To make it reasonably apples to apples, let's make the "Gross" Income the same ($141,925), thus both couples need/want the same income to live on while Couple A defers taking two SS incomes and Couple B is deferring taking only one (larger) SS payout. Let's also assume that the second couple is not as interested in maxing out how much their T-IRA withdrawal will be tax-free and more interested in a more optimal tax situation. This they model by staying under the taxable income limit (so that LTCGs are not taxed at all) while being wary about taking much from their taxable account - that is significantly lower than their T-IRA account.
This is their first attempt; interest income stays the same, LTCG is 20K and the balance of their income comes from their T-IRA account.
| Type of Income - Couple B | Amount Received | Taxed At | Federal Income Tax |
| Excluded Social Security (untaxed 15% of total) | $ 3,000 | 0% | $ - |
| Taxable SS Against Standard Deduction + Senior Deduction + $2K Charitable Cash Contribution | $ 17,000 | 0% | $ - |
| Taxable Interest Against Standard Deduction + Senior Deduction + $2K Charitable Cash Contribution | $ 1,925 | 0% | $ - |
| Taxable T-IRA Distribution against Standard Deduction + Senior Deduction + $2K Charitable Cash Contribution | $ 30,575 | 0% | $ - |
| Taxable T-IRA Distribution against 10% Bracket | $ 24,800 | 10% | $ 2,480 |
| Taxable T-IRA Distribution against 12% Bracket | $ 44,625 | 12% | $ 5,355 |
| Non-Taxable LTCGs | $ 20,000 | 0% | $ - |
| "Gross" Income & Total Fed Taxes | $ 141,925 | $ 7,835 | |
| Adjusted Gross Income (AGI) | $ 138,925 | ||
| Effective Tax Rate based on AGI | 5.6% | ||
| Taxable Income | $ 89,425 | ||
| Effective Tax Rate based on Taxable Income | 8.8% |
In this first effort, slightly over $30K of T-IRA withdrawals are NOT taxed, which is much lower than the other couple's result of nearly $50K in non-taxed T-IRA distributions ... BUT, still, directionally reach their goal as they are paying $7,835 in Federal Taxes compared to the other couple that are paying $10,595 on the same "Gross" income. This is achieved because (1) 3K of SS was not taxed and they stayed below the limit so that $20 in LTCGs was not taxed.
Thoughts?
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). With the tax changes in 2025, even with my good pension and DW's small SS, we were able to (including Roth conversion) and sneak into the 12% bracket for the first time. The added charitable deduction will help this year, since we give a lot more than the limit.I just have to decide if I want to stay in the 12% or move back into the 22% with larger Roth conversions (first world problem for sure 
)
