For most of the past eight years, the pitch for Roth conversions was simple: convert now, before the Tax Cuts and Jobs Act sunsets at the end of 2025 and rates go back up.
Then the One Big Beautiful Bill Act was signed on July 4, 2025, and the sunset was canceled. The seven-bracket structure (10%, 12%, 22%, 24%, 32%, 35%, 37%) is now permanent.
Some clients heard the news and assumed Roth conversions no longer made sense. That is wrong. Conversions still reduce future RMDs, create tax-free retirement income, and improve what heirs receive after the 10-year inherited IRA rule. What changed is the tempo. You no longer need to race. You can be precise.
This post walks through the 2026 math: how to fill brackets methodically, where the IRMAA cliffs are hiding, and why Florida retirees have a structural advantage in this strategy.
The shift from speed to precision
Before the OBBBA, advisors pushed aggressive conversion schedules. The logic was sound: if rates were going up, front-loading conversions at today's lower rates made sense even if it meant jumping into a higher bracket.
That urgency is gone. The lower rates are locked in. The optimal approach now is to convert the right amount each year, filling lower brackets without spilling into the next one, without triggering IRMAA surcharges, and without pulling Social Security benefits into taxation unnecessarily.
Think of it like filling a glass. The old strategy was pouring fast before someone took the glass away. The new strategy is pouring slowly to the brim without spilling a drop.
2026 tax brackets at a glance
These are the permanent brackets under the OBBBA, adjusted for inflation (married filing jointly):
- 10%: $0 to $24,800
- 12%: up to $100,800
- 22%: up to $211,400
- 24%: up to $403,550
- 32%: up to $512,450
- 35%: up to $768,700
- 37%: Over $768,700
The 2026 standard deduction for married filing jointly is $32,200. For each spouse age 65 or older, there is an additional $1,650 standard deduction. The OBBBA also introduced a new senior deduction: $6,000 per qualifying person age 65 or older (up to $12,000 for a couple), which phases out between $150,000 and $250,000 of modified adjusted gross income for joint filers. This senior deduction is temporary, currently set for tax years 2025 through 2028.
For a retired couple where both spouses are 65 or older and their MAGI is under $150,000, total deductions can reach $47,500 ($32,200 standard + $3,300 age-based + $12,000 OBBBA senior). That means a couple with no other income could convert up to $47,500 at an effective federal tax rate of zero.
Bracket-filling in practice
Here is how the math works for a hypothetical couple.
Jim and Susan are 66 and 64, married, retired in Northwest Florida. Jim has a $1.2 million traditional IRA. Susan has a $400,000 traditional IRA. Combined pre-tax retirement assets: $1.6 million. Jim receives $36,000 per year in Social Security. Susan has not yet filed. No other earned income.
Step 1: Start with deductions. The couple takes the joint standard deduction ($32,200). Jim, at 66, adds the age 65+ additional deduction ($1,650) and the OBBBA senior deduction ($6,000). Susan is 64, so she adds neither yet. Total deductions: $39,850.
Step 2: Determine how much bracket space is available. The top of the 12% bracket for married filing jointly is $100,800 in taxable income. Adding back deductions, Jim and Susan have gross conversion capacity of roughly $140,650 before entering the 22% bracket.
Step 3: Account for Social Security taxation. This is where most online calculators get it wrong. A large conversion increases provisional income, which can pull up to 85% of Social Security benefits into taxable income. With a $140,650 conversion, approximately $30,600 of Jim's Social Security becomes taxable, which is 85% of his $36,000 benefit and the statutory maximum. That pushes total taxable income to about $131,400, well into the 22% bracket.
Step 4: Solve iteratively. To stay within the 12% bracket after accounting for the Social Security interaction, the conversion has to come down to roughly $110,000. Once provisional income clears $44,000 the 85% inclusion is already maxed, so that $30,600 of taxable Social Security is fixed, and it consumes bracket space that would otherwise hold conversion income. The exact number depends on their specific situation, but the principle holds: Social Security taxation eats into your bracket space.
Step 5: Project forward. At roughly $110,000 per year, Jim and Susan convert about $770,000 of their $1.6 million over seven years at a blended federal rate between 10% and 12%. The remaining balance takes RMDs when the time comes. Compared to letting the entire $1.6 million grow and then taking fully taxable RMDs starting at 73, the conversion strategy can meaningfully reduce their lifetime tax bill.
This is the kind of year-by-year planning work that turns a good retirement plan into a great one. For more on sequencing, see our guide on which accounts to spend first in retirement. It is not a one-time transaction.
The conversion window: why ages 62 to 73 matter
The golden window for Roth conversions opens when earned income stops and closes when required minimum distributions begin.
Under SECURE 2.0, RMDs now begin at age 73 for those born between 1951 and 1959, and age 75 for those born in 1960 or later. That creates a planning runway of 7 to 13 years for a couple retiring in their early 60s.
During this window, three things work in your favor. First, without earned income, your tax bracket is usually lower than it was during your working years. Second, if you have not yet filed for Social Security (or are receiving a modest benefit), your provisional income is low, which means less Social Security taxation from the conversion. Third, RMDs have not yet begun, so there are no forced distributions competing for bracket space.
For clients along the Emerald Coast and 30A, there is one more advantage: Florida has no state income tax. A Roth conversion in Florida is taxed only at federal rates. The same conversion in a high-tax state carries a state bill on top of the federal one. Top marginal rates reach 13.3% in California, 10.9% in New York and 10.75% in New Jersey, though those top rates apply only at very high income levels, so a retiree converting six figures would more likely land in a middle state bracket. Either way the state tax is real, and avoiding it compounds every year the converted dollars remain in the Roth account.
The IRMAA cliff that bites
Medicare's Income-Related Monthly Adjustment Amount is not a marginal system. It is a cliff. One dollar over the threshold triggers the full surcharge for the entire year.
For 2026, the first IRMAA threshold for married filing jointly is $218,000 in modified adjusted gross income (based on your 2024 tax return, given the two-year lookback). Below that line, each spouse pays the standard Part B premium of $202.90 per month. Step over it by even two dollars, and each spouse pays $284.10 per month for Part B plus an additional $14.50 per month for Part D.
The cost of crossing that first cliff: approximately $2,297 per year for a couple. A $2 increase in income triggers $2,297 in additional Medicare premiums. That is an effective marginal tax rate that no bracket can match.
For Medicare-age clients, the IRMAA threshold often becomes the binding constraint on conversion size, not the tax bracket boundary. The 24% bracket extends to $403,550, but IRMAA makes converting above $218,000 in MAGI expensive unless you are already well above that line and the additional surcharge tiers are already in play.
And because of the two-year lookback, a conversion done in 2026 affects your 2028 Medicare premiums. That has a consequence worth stating plainly: the 2028 IRMAA thresholds have not been published. CMS releases them in late 2027, long after a 2026 conversion is irrevocable. The $218,000 figure above governs the 2026 premium year and is context, not a safe limit for a 2026 conversion. Thresholds are indexed and have risen most years, so the 2028 first threshold plausibly lands somewhere above the current figure, but that is an estimate rather than a published number. Model a range, treat the current threshold as a conservative floor, and size the conversion so that being wrong about 2028 by a few thousand dollars does not erase the benefit. You need to plan forward, not just for this year's tax bill.
The Social Security taxation torpedo
Between $32,000 and $44,000 of provisional income for married filing jointly, each additional dollar of income can cause $1.50 to $1.85 in taxable income. That is because the dollar itself is taxable and it also pulls 50 to 85 cents of previously untaxed Social Security into the taxable column.
This interaction creates a hidden marginal rate that is higher than the posted bracket rate. A couple nominally in the 12% bracket can face an effective marginal rate above 22% when the Social Security torpedo is active.
The planning takeaway: if you are receiving Social Security and considering Roth conversions, the posted tax bracket is not your real rate. Model the full interaction before deciding how much to convert.
The pro-rata rule: a trap for backdoor Roth users
The IRS requires that all traditional, SEP, and SIMPLE IRAs be treated as one aggregated pool when calculating the taxable portion of a conversion. You cannot cherry-pick just the after-tax dollars.
If you have $500,000 in pre-tax IRA money and make a $7,500 non-deductible contribution for a backdoor Roth conversion, only 1.48% of that conversion ($111) is tax-free. The other 98.52% ($7,389) is taxable.
The fix is to roll pre-tax IRA balances into a current employer's 401(k) before executing the backdoor. Employer plan balances are excluded from the pro-rata calculation. That clears the deck for a clean conversion.
One detail that catches people: the IRS uses your December 31 balance for the calculation, not the balance on the date of conversion. Converting in January and rolling the IRA to a 401(k) in March does not help. The December 31 snapshot is what matters.
Mega backdoor Roth: 2026 numbers
For clients still working with employer plans that allow after-tax contributions and in-service distributions, the mega backdoor Roth remains one of the most powerful wealth-building tools available.
The 2026 Section 415(c) annual additions limit is $72,000. Subtract your employee deferral ($24,500) and your employer match. Whatever remains is potential after-tax contribution space that can be converted to Roth with zero tax on the principal.
One detail worth getting right: age-based catch-up contributions do not count against the 415(c) limit. The $8,000 catch-up for those 50 and older, and the $11,250 SECURE 2.0 super catch-up for ages 60 to 63, sit on top of the annual additions cap rather than inside it. Only the $24,500 standard deferral reduces your after-tax room.
A 55-year-old deferring the full $24,500 plus the $8,000 catch-up, with a $7,200 employer match, has $40,300 of mega backdoor Roth space per year: $72,000 less the $24,500 deferral and the $7,200 match, with the catch-up excluded from the calculation. Over a decade, that is roughly $403,000 in additional Roth funding on top of regular contributions.
Common mistakes
Converting too much in one year. The goal is to fill brackets, not overflow them. Jumping into a higher bracket or over an IRMAA cliff destroys the efficiency.
Paying conversion taxes from the IRA. If you convert $100,000 and withhold $24,000 for taxes from the IRA, only $76,000 goes into the Roth. The $24,000 withheld is also subject to the 10% early withdrawal penalty if you are under 59 and a half. Always pay taxes from outside funds.
Ignoring the Social Security interaction. As discussed above, the torpedo can push your effective rate well above the posted bracket.
Forgetting the IRMAA lookback. A large conversion in 2026 raises Medicare premiums in 2028. Factor the surcharge into the all-in cost.
Overlooking the estate planning angle. Inherited Roth IRAs are still subject to the 10-year distribution rule for most non-spouse beneficiaries, but those distributions are tax-free. If your heirs are in high tax brackets, converting during your lifetime at a lower rate can significantly increase the after-tax value of what you leave behind.
The bottom line
The One Big Beautiful Bill Act took away the deadline, but it did not take away the math. Roth conversions are not about beating a clock anymore. They are about building a tax-efficient retirement income plan, one year at a time, with precision.
The right amount to convert depends on your brackets, your Medicare situation, your Social Security timing, your state of residence, and what you want to leave behind. For the foundational framework, see our guide to Roth conversion strategies in retirement. That is a planning conversation, not a product sale.
If you are approaching retirement or already there with significant traditional IRA balances, the next few years may be the best window you will have. Not because rates are going up, but because your income is down, your RMDs have not started, and every dollar converted at 10% or 12% is a dollar that never gets taxed at 22% or 24%.
This article is for educational purposes only and does not constitute tax advice. Consult your tax advisor before executing Roth conversion strategies. Tax laws and thresholds are subject to change by Congress.
