For homeowners facing steep property tax bills alongside high housing costs, the state and local tax deduction (SALT) may offer some federal tax relief in 2026 — especially for those in high-tax states who itemize their deductions.

The SALT deduction is larger than before 2025, and this year's limit gets another increase due to scheduled inflation adjustments. These changes could allow some taxpayers to deduct substantially more of their property and state income taxes than they could under the $10,000 cap that had been in place for years.

Here's more to know.

New SALT tax deduction 2026 limit

The SALT deduction allows taxpayers who itemize to subtract certain state and local taxes from their federal taxable income.

For the 2026 tax year, taxpayers who itemize can deduct up to $40,400 in qualifying state and local taxes. The limit is $20,200 for married couples filing separately

That's a $400 increase from the $40,000 limit that applied for the 2025 tax year.

• The deduction can include qualifying state and local income taxes, sales taxes and property taxes, subject to the overall limit.
• Taxpayers generally can deduct either state and local income taxes or sales taxes, but not both.

The expanded limit is particularly notable for homeowners because property taxes can account for a significant portion of the annual cost of owning a home. Under the old rules, taxpayers could be limited to a $10,000 SALT deduction even if they paid far more in state and local taxes.

Higher-income SALT deduction phaseout

But…keep in mind that the $40,400 deduction isn't available in full to every taxpayer.

• For 2026, the expanded SALT deduction begins to phase down when modified adjusted gross income (MAGI) exceeds $505,000, or $252,500 for married couples filing separately.
• The deduction is reduced by 30% of the amount by which income exceeds the applicable threshold.
• The reduction can't push the SALT deduction below $10,000, or $5,000 for married couples filing separately.

That means some higher-income taxpayers can still claim a SALT deduction, even after the expanded portion of the benefit has phased out.

Yes, you still have to itemize

The higher SALT cap doesn't mean every homeowner gets a $40,400 tax deduction. (SALT is an itemized deduction, so taxpayers need to compare their itemized deductions with the standard deduction.)

For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.

For some homeowners, property taxes, combined with state income taxes, mortgage interest, and other deductible expenses, could make itemizing worthwhile. For others, the standard deduction may still provide the larger tax benefit.

And remember: A tax deduction isn't a dollar-for-dollar reduction in taxes. It reduces the amount of income subject to tax.

The big SALT change came in 2025

The 2026 $40,400 SALT cap is part of a temporary expansion created by the Trump/GOP 2025 tax law overhaul.

First, a little background: Before 2018, there was no limit on the amount that could be deducted. But the 2017 Tax Cuts and Jobs Act (TCJA), also known as the "Trump tax cuts," imposed a $10,000 SALT deduction cap ($5,000 for married individuals filing separately) from 2018 through 2025.

In his second term as president and amid political debate over the cap being too low, Donald Trump called for increasing the SALT deduction limit. So, the SALT cap increased from $10,000 to $40,000 for 2025 and is scheduled to increase by 1% each year through 2029. The income threshold for the phaseout also increases by 1% annually.

Under current law, the SALT cap is scheduled to be:

2025: $40,000

2026: $40,400

2027: $40,804

2028: $41,212

2029: $41,624

2030: $10,000

*Income phase-outs for each of those years will also adjust accordingly.

Beginning in 2030, if Congress doesn't act with new legislation, the SALT deduction cap is scheduled to return to $10,000 for most taxpayers and to $5,000 for married couples filing separately.

Other homeowner tax breaks to know

SALT isn't the only federal tax break that may help offset some of the costs of owning a home.

Mortgage Interest: Homeowners who itemize generally can deduct interest paid on qualifying mortgage debt, subject to federal limits. Interest on a home equity loan or line of credit can also qualify when the money is used to buy, build, or substantially improve the home.

Mortgage Points: Points paid on a mortgage used to buy or substantially improve a primary residence may be deductible, subject to IRS requirements.

Home Sale Gains: Homeowners who sell a primary residence at a profit may be able to exclude up to $250,000 of the gain, or up to $500,000 for married couples filing jointly, if they meet the ownership and use requirements.

Homeowner tax breaks that don't carry into 2026 are the federal credits for energy-efficient home improvements. The 2025 tax law ended the Energy Efficient Home Improvement Credit and Residential Clean Energy Credit for qualifying activity after Dec. 31, 2025.

Related

• Federal Tax Brackets 2026 and Marginal Rates
• Capital Gains Tax Exclusion for Homeowners: How It Works
• The Mortgage Interest Deduction: What to Know
• New Bill Proposes $1 Million Capital Gains Exclusion for Homeowners 65-Plus

Back-to-school brings a familiar cash-flow crunch for parents. Between upcoming college tuition bills, essential supplies, and student loan obligations, families face tough financial trade-offs.

One of the costliest compromises is saving less for later in life.

According to the American Institute of CPAs (AICPA), over half (53%) of personal and parent borrowers say student debt directly hinders their ability to save for retirement. For these households, the default reaction may be to reduce or even pause monthly 401(k) contributions.

However, scaling back 401(k) savings may trigger a higher income tax bill and forfeit compounding growth — all while causing taxpayers to miss out on federal relief. Here's what you can do.

The hidden tax penalty of pausing 401(k) contributions

AICPA data shows that over 70% of parent and personal student loan recipients are worried about their ability to keep up with payments. To cope with this financial pressure, many borrowers may be quietly cutting back on long-term retirement savings.

But reducing pre-tax 401(k) contributions doesn't just free up cash; it can immediately raise your federal tax bill.

What does that look like in practice?

Suppose a family pauses their $8,000 annual pre-tax 401(k) contribution to pay down student loans.

Because 401(k) contributions lower their adjusted gross income (AGI) dollar-for-dollar, pausing them exposes $8,000 to the following potential tax traps:*

• Tax bracket creep: a higher AGI can push a portion of that income into a higher federal marginal tax bracket (e.g., jumping from 22% to 24%).
• Shrinking loan deductions: the student loan interest deduction (worth up to $2,500) phases out at higher income levels, meaning your tax break shrinks just as your taxable income rises.
• Loss of credits and Roth eligibility: a higher AGI can reduce your eligibility for child tax credits, education credits, and direct Roth IRA contribution limits.

*Note: The exact impact depends on your filing status and overall income.

In short, cutting retirement savings to cover student loans may improve cash flow today, but create a financial headache at tax time.

The SECURE 2.0 solution: the 'student loan match'

While it may feel like an all-or-nothing choice: pay off student debt or capture workplace retirement matching funds, you can actually use federal tax law to achieve both.

Thanks to the SECURE 2.0 Act, some employers now provide matching contributions to 401(k), 403(b), governmental 457(b), and SIMPLE IRA plans based on your qualified student loan payments (QSLPs).

How the rule works:

• To qualify, you must be making student loan payments and have a direct legal obligation to repay the loan (guarantors do not qualify).
• Parents paying installments on Parent PLUS loans taken out for their children's education are also eligible for this match (which may provide much-needed relief, as new caps of $20,000 per year and a $65,000 lifetime limit per student went into effect under the 2025 Trump tax bill).
• Total matched loan payments and direct 401(k) contributions combined cannot exceed the annual federal IRS deferral limit ($24,500 for 2026, excluding catch-up contributions).

Here's an example. Say your employer offers a 4% match on your 401(k), and you contribute at least 4% of your salary toward eligible student loans. Your employer can deposit the full match into your 401(k).

You also don't need to send every bank receipt to HR to qualify. Under IRS guidelines, you only need to provide a simple annual certification confirming your payment amounts and loan details.

The bottom line. You receive 100% of your employer's free retirement match money without putting a single new dollar directly into the 401(k) plan yourself. For more information, check out Kiplinger's report on the SECURE 2.0 Act.

How to find out if your employer offers a student loan match

However, not all companies offer student loan matching. So follow these steps to check your options and protect your budget:

1. Ask HR about "QSLP matching": Review your company's 401(k) plan documents to see whether student loan matching is enabled. Because employer adoption is optional, companies must proactively add this feature to their plan.
2. Scale back to a "micro-contribution" (if unsupported): If your employer doesn't offer student loan matching yet and you can't afford the full match amount, try contributing a small amount to your 401(k). Even contributing just 1% or 2% to a tax-advantaged account is better than nothing.
3. See if you're eligible for the $2,500 interest deduction: Check if you qualify for the federal student loan interest deduction. This tax break helps claw back some of the interest you pay to your loan servicer — and best of all, you can still claim the standard deduction.

Strategies for borrowers to protect retirement funds

If your employer hasn't adopted a 401(k) student loan match, here are some further ideas to help balance retirement savings with your monthly budget.

• Look into income-driven repayment (IDR) plans: An IDR plan bases your federal student loan payments on your income and family size instead of your total debt. This lowers monthly payments for some and may free up extra cash to put toward your 401(k). (Keep in mind: Parent PLUS loans have special rules and may need to be combined into a single direct-consolidation loan first.)
• Explore other tax-free employer assistance: Under Section 127 of the tax code, employers can provide up to $5,250 annually in tax-free student loan repayment assistance directly to employees. Ask your benefits department if this student loan benefit is available.
• Time extra payments wisely: If you have extra cash to save, prioritize capturing your full employer 401(k) match before making accelerated principal payments on low-interest student debt. An employer match represents an immediate 50% to 100% return on your investment, a rate that typically outperforms the interest saved by paying down low-rate loans early.

Managing student debt shouldn't force you to sacrifice your long-term financial security. By taking advantage of federal tax law, you may be able to pay down loans today without putting your retirement on hold.

Read More

• Does Your College Student Really Have to File Taxes This Year?
• Don't Overpay the IRS: 6 Mistakes That Could Be Raising Your Tax Bill
• SECURE 2.0 Act Summary: New Retirement Savings Changes to Know

For many retirees, managing taxes becomes just as important as managing investments. The way income is withdrawn in retirement can have a meaningful impact on how much of that income ultimately stays in your pocket.

While tax laws are complex, certain provisions can create valuable opportunities when used thoughtfully.

One such opportunity, sometimes informally referred to as the Big Beautiful Bill, offers a potential tax benefit for retirees who meet specific income thresholds.

Understanding how it works, and how withdrawals are structured each year, can make a noticeable difference in after-tax income. As a financial adviser and owner of New Smyrna Beach Retirement Solutions with more than a decade and a half in the financial industry, I can help with that.

What is the Big Beautiful Bill?

The Big Beautiful Bill is a colloquial term used to describe the One Big Beautiful Bill Act (OBBBA), a tax law that, among other things, allows eligible retirees to claim an additional deduction when their taxable retirement income stays at or below $150,000 per year.

For individuals age 65 and older, this bonus deduction can help reduce taxable income and lower overall tax liability.

On the surface, the rule appears simple. Stay under the income threshold and qualify for the deduction. In practice, however, many retirees exceed income limits unintentionally because they do not fully understand how different income sources are taxed or how withdrawals interact with one another.

Pensions, Social Security benefits, required minimum distributions (RMDs) and investment withdrawals can all contribute to taxable income in different ways. Some income is fully taxable, some partially taxable and some not taxable at all.

Without a clear strategy, it is easy for income to creep higher than expected.

Why withdrawal strategy matters

In retirement, income often comes from multiple sources. Traditional IRAs and 401(k)s are generally taxable when withdrawals are taken. Roth IRAs may provide tax-free income if certain requirements are met. Taxable investment accounts can generate income through interest, dividends and capital gains.

The key to taking advantage of income-based tax deductions is deciding how much to withdraw from each type of account in a given year. Drawing too heavily from tax-deferred accounts may push income above the threshold, while a more balanced approach could help keep taxable income within qualifying limits.

This is where coordination matters. By intentionally selecting the portion of income that comes from taxable, tax-deferred and tax-free sources, retirees may be able to manage their income level more effectively and preserve eligibility for valuable deductions.

This does not mean one account type is always better than another. It means coordination matters.

When withdrawals are planned intentionally, retirees may have more control over their taxable income and greater flexibility to adapt as tax rules and personal circumstances change.

Know what actually counts as taxable income

A practical first step is gaining clarity around what income is fully taxable, partially taxable or not taxable at all. Many retirees assume that income equals cash received, but the tax code treats different sources differently.

Understanding how Social Security benefits are taxed, how RMDs affect income and how capital gains are calculated can help prevent surprises. This awareness creates a foundation for better decision-making before withdrawals are taken.

Map out income before the year begins

Rather than reacting at tax time, retirees may benefit from projecting income at the start of each year. Estimating how much income is needed to support spending allows withdrawals to be structured more intentionally.

This forward-looking approach can highlight potential issues early. For example, it may reveal that a full RMD combined with other income sources would exceed the $150,000 threshold for the bonus deduction for older people. Seeing that in advance creates opportunities to adjust.

Use account diversification to your advantage

Retirees who have savings spread across taxable, tax-deferred and tax-free accounts often have more flexibility. If one source would push income too high, another may help fill the gap without increasing taxable income as much.

This might involve taking smaller withdrawals from traditional accounts in certain years, supplementing income from Roth accounts or being mindful of capital gains in taxable accounts.

Over time, this type of coordination can help preserve eligibility for deductions and reduce unnecessary taxes.

Pay attention to timing

Timing matters in retirement income planning. Some retirees experience lower taxable income in the early years of retirement before RMDs begin. These years can offer planning opportunities.

Others may face income spikes due to large withdrawals, one-time expenses or changes in investment income.

Recognizing when income is likely to rise or fall can help guide withdrawal decisions and avoid crossing important thresholds unintentionally.

A strategy that requires annual attention

Unlike some financial decisions that can be made once and left alone, income planning is ongoing. Tax brackets change, RMDs increase, and personal needs evolve.

Because of this, strategies designed to capture income-based deductions should be reviewed annually. Even small adjustments can make a difference. A slightly different mix of withdrawals, taken at the right time, may help preserve tax benefits that would otherwise be lost.

Regular reviews also help retirees adapt to changes in tax law and market conditions without making reactive decisions under pressure.

The bottom line

The OBBBA's provisions are examples of how thoughtful income planning can support a more tax-efficient retirement. While the bonus deduction for older people may seem modest, the cumulative impact of managing withdrawals carefully over many years can be meaningful.

For retirees, the broader lesson is clear. How income is structured often matters just as much as how much income is received.

Taking proactive steps to understand income sources, coordinate withdrawals and review strategies regularly can help ensure that available tax benefits are not overlooked and that retirement savings are used as efficiently as possible.

Related Content

• Four Keys to Planning Your Retirement Income Distributions
• I Tried a New AI Tool to Answer One of the Hardest Retirement Questions We All Face
• From Buying a New Car to Having a Baby: How the OBBBA Affects Everyday Taxpayers
• 5 Ways the OBBBA Rewards the Midwestern Millionaire: You Won't Want to Ignore These Tax Planning Opportunities
• Should You Jump on the Roth Conversion Bandwagon? A Financial Adviser Weighs In

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The financial professionals who contribute to Kiplinger's Adviser Intel are always here to share expert insights on wealth building and preservation.

The recent article Retirement Milestone Ages Most People Miss (And What to Do About Each One) outlined the key moments in retirement planning from your 50s to your 70s, and how the decisions you make work together to form a coordinated strategy. You can find out now how well-versed you are on the importance of these ages.

This quiz is designed to test how much you know about some of the more obscure milestones. (And don't worry if you miss an answer: You can follow the links below the quiz to brush up on your knowledge.)

Please note that this quiz has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or financial advice.

Read More From Adviser Intel

• Retirement Milestone Ages Most People Miss (And What to Do About Each One)
• The 9 Key Milestone Ages in Retirement
• 5 Quick Tax Tips for Retirees for 2025 and 2026, From a Financial Planner

For many retirees, a pension is one of the greatest financial assets they have.

It provides predictable income, reduces the stress of market volatility and creates confidence that monthly expenses will be covered regardless of how their investments are doing.

But that guaranteed income comes with a trade-off that many people don't anticipate: Taxes. Much of the retirement advice you'll find online assumes retirees have little taxable income beyond Social Security and occasional withdrawals from savings. That's often not the case for pension recipients.

I know this because, as a CERTIFIED FINANCIAL PLANNER® and the founder and CEO of Peak Retirement Planning, I specialize in serving those with pensions. Between pension payments, Social Security and required withdrawals from retirement accounts, many retirees discover they're paying more in taxes than they ever expected.

The good news is that these challenges can often be managed with thoughtful planning (I wrote a book for those with pensions, The 2% Club, that you can request for free here).

Below are 13 ways a pension can reshape your retirement tax strategy.

No. 1: Your pension may keep you in a higher tax bracket

Many workers assume they'll automatically move into a lower tax bracket once they retire, and while that can be true for some households, retirees with pensions often experience something different.

Consider these three primary sources of retirement income:

• Pensions
• Social Security benefits
• Withdrawals from traditional retirement accounts such as 401(k)s, IRAs, TSPs, 403(b)s or deferred compensation plans

Each source may seem manageable on its own, but combined, they can produce enough taxable income to keep retirees in the same tax bracket, or even a higher one, than during their working years. That's why retirement tax planning should begin well before required distributions begin.

No. 2: Required minimum distributions can make the problem worse

Many retirees focus on today's tax bill but overlook how their taxes could evolve over the next 20 or 30 years. Required minimum distributions (RMDs), which generally begin at age 73 or 75, depending on your birth year, force you to withdraw a portion of your tax-deferred retirement savings annually.

Those required withdrawals typically increase as you age. If your investments continue growing over time, your account balances might also increase, resulting in even larger RMDs later in retirement.

This creates more taxable income, potentially pushing you into higher tax brackets, increasing Medicare premiums and affecting other aspects of your retirement plan.

No. 3: Retirement income is more connected than you think

Many retirees think about each income source independently, but in reality, every piece of your retirement income affects the others.

Your pension provides guaranteed income. Social Security may become taxable depending on your total income, and withdrawals from traditional retirement accounts add even more taxable income to the equation.

Because of the way these income sources interact, one decision can create a ripple effect throughout your tax picture. Coordinating them instead of managing each in isolation leads to better long-term outcomes.

No. 4: Higher income can increase capital gains taxes

Taxes in retirement aren't limited to ordinary income. Long-term capital gains have their own tax rates, currently 0%, 15% and 20%, but your taxable income determines which rate applies.

For retirees with substantial pension income, qualifying for the 0% capital gains rate might be difficult.

In addition, RMDs that aren't needed for spending are sometimes reinvested in taxable brokerage accounts, where future appreciation can generate additional capital gains taxes.

Understanding how investment income fits into your broader tax strategy can help reduce unnecessary taxes over time.

No. 5: Your pension may cause more of your Social Security to be taxable

One of retirement's biggest surprises is that Social Security isn't always tax-free. Depending on your overall income, up to 85% of your Social Security benefits may become taxable.

For retirees with sizable pensions, this often isn't a temporary issue. Pension income alone can push total income high enough that most or all of Social Security remains taxable throughout retirement.

While you might not eliminate this entirely, planning the timing of retirement account withdrawals and other income sources can sometimes reduce the overall tax burden.

No. 6: Medicare premiums are also affected by income

Taxes aren't the only expense influenced by retirement income. Medicare uses your modified adjusted gross income to determine whether you'll pay the income-related monthly adjustment amount (IRMAA), which increases premiums for Medicare Part B and Part D.

Higher pension income, larger RMDs and significant retirement account withdrawals can all contribute to crossing an IRMAA threshold. Even modest planning several years before Medicare enrollment could help reduce these additional healthcare costs.

No. 7: Don't overlook the widow's penalty

Retirement tax planning shouldn't stop with today's circumstances. When one spouse dies, the surviving spouse often experiences what financial planners call the widow's penalty. The surviving spouse generally:

• Loses one Social Security benefit
• Files taxes as a single taxpayer rather than married filing jointly
• Receives a smaller standard deduction
• Faces narrower tax brackets

This typically results in higher taxes despite having less household income.

Preparing for this possibility before it occurs can make a significant difference in a surviving spouse's financial security.

No. 8: Roth conversions may be especially valuable for pension holders

Because pension recipients often expect higher lifetime taxable income, Roth conversions frequently become an important planning tool.

A Roth conversion moves money from a traditional IRA or similar retirement account into a Roth IRA. Taxes are paid on the amount converted today, but future qualified growth and withdrawals are generally tax-free. Conversions can also reduce future RMDs.

The objective isn't necessarily to pay the least tax this year. Instead, it's to pay the lowest taxes possible over your lifetime, and in many cases, paying a reasonable tax rate today could help avoid larger tax bills decades later.

No. 9: There's no universal Roth conversion formula

A misconception about Roth conversions is that everyone should convert the same amount each year. The appropriate strategy depends on several factors, including:

• Your current tax bracket
• Expected future tax brackets
• Future RMD projections
• Medicare premium thresholds
• Social Security taxation
• Potential widow's penalty
• Estate planning goals
• Future tax law changes

Looking only at this year's tax return might lead to missed opportunities, and long-term projections often provide a clearer picture of whether a conversion makes sense.

No. 10: Tax diversification creates more flexibility

Many retirees have accumulated most of their savings inside tax-deferred retirement accounts. While those accounts provide valuable tax savings during working years, relying exclusively on them in retirement can limit your flexibility.

Creating a mix of assets in traditional retirement accounts, Roth accounts and taxable brokerage accounts gives retirees more choices when determining where to draw income, and that flexibility can make it easier to manage tax brackets from year to year.

No. 11: Where you hold investments matters, too

Asset location can be just as important as asset allocation. Different investments might be better suited for different account types.

For example, investments with higher long-term growth potential could benefit from being held inside Roth accounts, where future appreciation can occur tax-free.

Meanwhile, taxable brokerage accounts can offer favorable capital gains treatment and potential step-up-in-basis benefits for heirs.

Matching investments with the most appropriate account type can improve after-tax outcomes without changing your investment strategy.

No. 12: Pension distribution decisions have tax consequences

Some pensions offer a choice between receiving lifetime monthly income or taking a lump-sum distribution. While taxes shouldn't be the only factor in that decision, they deserve careful consideration.

Evaluating how each option affects future taxable income, Roth conversion opportunities, survivor benefits and long-term retirement goals can help retirees make a more informed choice.

No. 13: Charitable giving can reduce taxes

For retirees who regularly support charitable organizations, philanthropy can become part of an effective tax strategy. Qualified charitable distributions (QCDs) allow individuals age 70½ and older to donate directly from an IRA to qualified charities. Those distributions can satisfy charitable goals while reducing taxable income.

Donor-advised funds (DAFs) may also benefit retirees who wish to bunch charitable deductions, donate appreciated investments or simplify future giving.

These strategies can support causes you care about while improving tax efficiency.

Your taxes in retirement shouldn't be an afterthought

Many people build retirement plans around investments, income and spending, and taxes are often addressed only after those decisions have been made.

For retirees with pensions, that approach can leave meaningful planning opportunities on the table.

Taxes influence nearly every aspect of retirement, from investment withdrawals and Medicare premiums to Social Security, estate planning and charitable giving. Viewing taxes as the foundation of your retirement strategy, rather than an annual exercise, can help you make more informed decisions over the course of retirement.

After all, it's not simply about reducing this year's tax bill. It's about creating a retirement income strategy that remains efficient, flexible and sustainable for decades to come.

Related Content

• 10 Retirement Fixes You Can Implement Today to Strengthen Your Financial Plan
• When Is a Roth Conversion a Bad Idea? 6 Situations Retirees Should Consider Carefully
• This Changes Your Social Security Decision (Especially if You're in the 2% Club)
• Do You Need $1 Million-Plus to Retire if You Have a Pension?
• Many Retirees With a Pension and $1 Million-Plus Do These 7 Things (and Regret It Later)

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

People other than spouses who inherit annuities can be hit hard with taxes. But there are ways to lessen the blow.

Here's the background.

Unlike qualified financial accounts such as IRAs and 401(k)s, most nonqualified accounts don't provide tax deferral. A nonqualified deferred annuity, however, allows earnings to accumulate tax-deferred.

This is a major benefit of annuities because deferral lets your money compound faster without taxes eroding your returns.

Generally, only a surviving spouse can inherit a "nonqualified annuity" and enjoy full tax deferral for their lifetime, assuming no interest withdrawals are made.

But the IRS and state tax collectors eventually will take their share of all the accumulated taxes that were put off. The "nonspouse" beneficiaries will pay those taxes.

If a beneficiary takes the proceeds as a lump sum or large distributions over a few years, they might get kicked into a higher tax bracket. For an annuity with a large untaxed gain, a lot of the money would go to the taxman.

Fortunately, a nonspouse beneficiary can spread out payments and taxes to ultimately net more money:

• Annuitization is one way
• The annuity stretch is another way, if your annuity company offers it

The default method can cause a tax bomb

The default way is the five-year rule. Nonspouse beneficiaries can always take up to five years to receive the proceeds. They can take them gradually or in a lump sum anytime up until the fifth anniversary of the owner's death.

Spreading proceeds over five years sounds good, but there's a problem: An annuity normally includes both reinvested gains and nontaxable principal. The gains are distributed first.

Consider an annuity with $100,000 in gains and $100,000 in principal. The beneficiary won't receive the tax-free principal until after receiving all of the gains.

Someone who inherits this annuity and takes proceeds evenly over five years would still have $40,000 of additional taxable income in year one, which would likely result in a higher federal income tax bracket and perhaps a higher state tax rate.

Someone who waits five years would have that $100,000 taxable gain plus any additional interest earned in the interim.

For some people, however, delaying can pay off. For instance, in year one, the individual could be working and in a high tax bracket, but in year five, they could be retired and in a lower tax bracket.

Annuitization: More tax deferral

The other option that's usually available is annuitization. Here, the nonspouse beneficiary directs the insurer to annuitize the proceeds: Turn the money into a stream of income for either a set period of time or a lifetime. Nearly all insurers provide an annuitization option.

Besides guaranteed monthly income, annuitization offers continuing partial tax deferment. Each payment includes both taxable gains and nontaxable return of premium (the "exclusion amount").

Annuitization can be a great choice, but you give up flexibility. Once you've annuitized, there's no cash value. You've traded that for long-term income.

I'm a big advocate of having a lifetime annuity. It offers guaranteed income you can't outlive — your own private pension that serves as longevity insurance.

But I recognize that many are unwilling to exchange cash liquidity for future income.

Stretching it out without annuitizing

The stretch method is more complex but worth considering. Here, the beneficiary receives monthly, quarterly or annual payments based on his or her life expectancy according to an IRS table.

Since the payments are spread out over the life expectancy, annual income tax bills are smaller. And the additional taxable income is far less likely to push the recipient into a higher tax bracket than a lump sum.

The money remaining in the annuity continues to grow tax-deferred.

Flexibility is another plus. Many insurers allow the beneficiary to stop the scheduled payments and take the remaining balance as a lump sum.

What happens if the beneficiary dies prematurely? Suppose the beneficiary's life expectancy was 20 years, but he or she dies after just 10 years. Most insurers permit a properly named successor beneficiary (such as a grandchild of the original owner) to continue receiving the remaining payments. This is an important advantage of the stretch option.

Not so fast!

Unfortunately, a beneficiary often can't use the stretch plan because the issuing insurance company has to be willing to support it. My ballpark estimate is that perhaps only 15% to 20% of companies do.

Nonspouse beneficiaries generally have one year from the death of the annuity owner to set up the stretch distribution. Only people — not trusts or charities — can choose it. Only nonqualified annuities are eligible.

When available, the stretch option can be applied to a multi-year guarantee annuity (MYGA), which behaves much like a bank certificate of deposit, or an indexed annuity.

Ask questions

No one distribution method is best across the board. Fortunately, if there are multiple beneficiaries, each one is free to choose the option that is best for them.

If you're an annuity buyer, ask your agent if the issuing insurer offers a stretch option if that's important to you.

If you're a nonspouse beneficiary, consider your tax situation and financial needs and compare your two or three distribution options before you decide on one.

Ken Nuss is the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed, and lifetime income annuities. Ken is a nationally recognized annuity expert and widely published author. A free rate comparison service with interest rates from dozens of insurers is available at www.annuityadvantage.com or by calling (800) 239-0356. The firm also offers an income-annuity quoting service. There are no fees or charges for the firm's services; 100% of the client's money goes to work for them in their annuity.

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• Are You Retiring Soon and Need Income? An Immediate Annuity May Sound Boring, But Hear Me Out
• Too Scared to Dive Into a Fixed-Rate Annuity? Interest Rates Make It Worth Dipping Your Toe In
• Income and Life Expectancy Not Adding Up? An Annuity Could Solve the Equation

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Proposed legislation targeting "mega" retirement accounts has put high-net-worth IRAs and 401(k)s back in Washington's crosshairs.

The bill would force wealthy account holders to take mandatory distributions and block new contributions — a response to data showing some investors have accumulated multi-million-dollar balances through early-stage private equity and startups.

But while similar proposals have stalled in the past, this bill may reflect a broader policy trend. The legislative effort coincides with recent U.S. Department of the Treasury measures targeting other "aggressive planning" strategies like Section 351 ETF exchanges.

So whether this specific measure advances through Congress or not, the debate highlights key considerations for long-term tax, liquidity, and asset-location planning.

Here's what high-earning IRA account holders need to know in 2026.

Newly proposed limit cap on IRAs and 401(k)s

Sen. Ron Wyden (D-Ore.) and Rep. Richard E. Neal (D-Mass.) recently introduced legislation to cap IRA and 401(k) balances for high-net-worth accounts.

But the proposed restrictions don't apply to everyone with a large account balance. Instead, to trigger mandatory withdrawals and contribution bans, a taxpayer must meet two criteria in the same tax year:

• High-income floor: Modified adjusted gross income (MAGI) over $400,000 for single filers (or $450,000 for married couples filing jointly).
• Total asset cap: Combined retirement balances exceeding $10 million across all traditional IRAs, Roth IRAs, and defined contribution plans (like 401(k)s and 403(b)s).

If passed, the legislation would bar any individuals meeting both rules from making further contributions to their tax-advantaged retirement savings accounts for that year.

Additionally, forced withdrawals of the aggregate excess would be required (more on that below).

The two-tiered forced withdrawal rule

For high earners with over $10 million in affected accounts, the proposal requires accelerated withdrawals from tax-advantaged accounts. Yet the withdrawal rules are slightly different depending on how much you have saved for retirement.

Traditional IRAs and 401(k)s are normally subject to required minimum distributions (RMDs) beginning at age 73 or 75, under the SECURE 2.0 Act. By requiring a 50% payout of the aggregate excess over $10 million, this proposal creates a much steeper payout schedule that applies regardless of age.

Additionally, while Roth accounts are funded with after-tax dollars and allow tax-free withdrawals without lifetime RMDs, the bill targets high-net-worth Roth IRAs by requiring excess funds to be transferred to standard taxable accounts (if an account is worth $20 million or more).

Once forced money leaves a Roth, it enters a regular brokerage or bank account. From that day forward, any dividends, interest, or capital gains generated by those funds are subject to annual federal and, where applicable, state income taxes.

Why it's proposed (and why it faces resistance)

Wyden and Neal introduced their mega-IRA cap legislation in conjunction with Joint Committee of Taxation (JCT) data showing that over 32,000 Americans hold more than $10 million in tax-advantaged accounts.

Notably, the data presented a core group of about 200 individuals who hold an average of $409 million each — largely through early-stage private equity or startup investments placed inside self-directed IRAs, as reported by The Wall Street Journal.

"Tax-preferred retirement accounts are not supposed to be a loophole for the ultra-rich to shelter immense fortunes," Wyden stated in a press release. "They’re a lifeline for working Americans who may not otherwise have a dignified retirement.”

However, this is not the first attempt at a cap. A similar provision was included in early drafts of the Biden-era Build Back Better Act before lawmakers removed it from the final bill.

The primary pushback came from the financial services industry, including groups like the Retirement Industry Trust Association (RITA) and alternative asset custodians.

Critics claimed that forcing rapid distributions on private equity, startup stock, or real estate assets would force account holders to sell non-public assets at fire-sale prices just to satisfy cash distribution mandates.

Congressional Republicans and conservative think tanks, like The Heritage Foundation, also opposed these measures. They claimed that forcing new distribution rules onto existing balances would unfairly penalize investors who followed the law as originally written.

What high-net-worth investors should watch in 2026

While the debate over this specific bill continues, the renewed discussion signals that mega-retirement accounts remain in the legislative limelight. High earners and savers can use these proposed rules as a "stress test" for their long-term estate and tax plans:

• Diversify across account types. Holding all your wealth in a single tax-deferred vehicle can create legislative risk, or, at the very least, increase your total lifetime tax burden. Spreading assets across traditional, Roth, and taxable brokerage accounts gives you flexibility to manage your adjusted gross income (AGI) if distribution rules or federal tax brackets shift.
• Build liquidity alongside private assets. Self-directed IRAs containing private equity, startup stock, or real estate face liquidity risks when required distributions apply. Maintaining liquid buffers, like public equities or cash equivalents, may help prevent forced sales of illiquid assets during regulatory changes or normal RMD years.
• Keep alternative asset valuations audit-ready. IRAs holding private stock or real estate may draw increased IRS scrutiny because misvalued assets can trigger accidental "self-dealing" or other prohibited transactions. Thus, keeping annual, independent appraisal records could help your portfolio stay compliant if valuation enforcement tightens.

For high earners, watching Washington is wise, but you don't have to wait for a final vote on a key piece of legislation. A flexible tax plan built on true asset diversification remains one of the single best protections against an ever-shifting tax code.

Read More

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Humanity has always been obsessed with looking up. From Copernicus proving the Earth revolves around the sun to Newton mapping gravity, we can’t help but stare into the cosmos.

That fascination is on full display this month with the August 12 total solar eclipse sweeping across Greenland, Iceland, and Europe, alongside the annual Perseid meteor shower. Both events are tracked closely by NASA — America's publicly funded civil space agency.

But as you gaze up at the night sky, you could be wondering what's falling out of your wallet.

As it turns out, tax dollars fund NASA, yet nowhere near as much as you might think. So grab your eclipse glasses, snag a calculator, and let's break down what it actually costs to reach for the stars.

This is how much we pay NASA

If you'd guess NASA is eating up a big chunk of your annual tax bill, you're in good company.

When Business Insider polled over 1,000 U.S. adults, the average American estimated that NASA gets roughly 6.4% of the entire federal budget.

The reality? In 2026, NASA receives about 0.36% of federal spending. That translates to roughly a third of a cent for every dollar Uncle Sam spends.

Put another way: if your household pays $10,000 in annual federal income taxes, your contribution to NASA might be about $36 a year. That's less than the price of a dinner out — or a few months of your favorite streaming service.

And while that bill may be surprisingly modest, the return could be substantial.

According to an economic impact report commissioned by the agency, NASA estimates that its operations generate between $2.50 and $3.00 in broader economic output for every federal dollar spent — totaling over $75.6 billion in nationwide economic activity.

Though some economists debate how those math models are calculated, the agency estimates its funding supports more than 304,000 American jobs.

Here's the disconnect

Why are we so convinced NASA's budget is bigger than it actually is? Part of the answer lies in human psychology and how we process information.

It's everywhere on our screens. From surreal snapshots by the James Webb Space Telescope to high-stakes rocket launches broadcast around the globe, NASA has a massive media presence.

And because the agency's sci-fi-sounding missions (like putting humans back on the moon) are so highly publicized, our brains naturally assume its funding must be equally astronomical. This mental shortcut is known as the "availability heuristic."

Our minds also struggle with mega-numbers. We simply aren't wired to visualize the chasms between a million, a billion, and a trillion. Once a figure hits nine or twelve zeroes, our brains blur them together into an abstract category of "huge." Scientists dub this phenomenon "magnitude neglect."

Since we lack an intuitive sense of scale for federal spending, we unconsciously overestimate what it takes to pull off deep-space exploration, assuming it must consume a far larger chunk of the U.S. budget than it actually does.

What your tax dollars fund at NASA

Despite operating on 0.36% of federal funding, here is how NASA's $24.8 billion budget from last year broke down across its primary mission areas (with a few real-world examples from each bucket):

• Deep space exploration systems (~$7.7 billion): Funded the Artemis program, along with the Space Launch System (SLS) rocket and Orion crew capsules.
• Science mission directorate (~$7.3 billion): Covered everything from climate-tracking satellites and wildfire monitoring here on Earth to Mars rovers and deep-space telescopes.
• Space operations (~$4.2 billion): Kept the International Space Station (ISS) running in orbit and covered commercial cargo and crew flights with private partners, including SpaceX.
• Facilities, IT, and salaries (~$3.1 billion): Supported base operational infrastructure across NASA centers nationwide, including physical facility maintenance, cybersecurity, and administrative operations.
• Space technology (~$1.1 billion): Invested in research grants for universities and startups testing futuristic tech, such as laser internet and 3D-printed structures made from moon dust.
• Aeronautics research (~$0.9 billion): Focused on aviation down here on Earth, including quieter supersonic commercial jets and lower-emission engines.

Still, a nearly $25 billion budget is a large chunk of cash. Government watchdogs, like the Government Accountability Office (GAO), often point out that some major space projects — like NASA's new Artemis moon rocket — frequently run billions of dollars over budget and take longer than planned to finish.

NASA budget compared to Medicare, Social Security, and more

To put financials in perspective, NASA typically receives around 0.36% of total federal funding. Meanwhile, major mandatory spending categories get a much bigger piece of the pie:

• Social Security benefits generally account for about 22%,
• Yearly Medicare expenditures may be roughly 13.5%, and
• Annual Medicaid spending is around 10%.

Here’s a breakdown showing just how dwarfed space spending really is compared to these and other federal budget buckets:

Would Americans pay more for space exploration?

When it comes to space funding, public opinion is a mixed bag.

On one hand, a recent YouGov poll found that 48% of Americans believe space missions are a "good use" of taxpayer money, compared to 30% who disagree.

Interestingly, it's one of the few issues that bridges political lines — with 54% of surveyed self-identified liberals and 57% of surveyed conservatives agreeing that the returns generally justify the price tag.

That said, most people might not be eager to write a bigger check to NASA. Polling from nonpartisan analysis group Good Authority noted that while 51% of taxpayers favor keeping current spending steady, only about 20% think federal funding for space exploration is "too little."

But even if taxpayers aren't clamoring to open their wallets, they're definitely tuning in.

An overwhelming 90% of Americans in the YouGov survey had heard about the upcoming Artemis II lunar flight. This outpaced public awareness of the Trump administration's budget and mainstream healthcare news covering GLP-1 weight-loss drugs (semaglutide).

Bottom line

While NASA carries enormous public visibility, its impact on the individual taxpayer's annual bill remains relatively small.

Beyond space exploration, federal investments in the agency also yield practical technological commercialization.

Everyday tools we rely on, including LASIK eye surgery techniques, thermal insulation, and scratch-resistant lenses, all benefited from early NASA research (even if private companies built the final products).

So as you watch the skies this August, remember what you pay for outer-space discoveries — and you can decide whether it's worth it.

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If a sweltering summer has you longing for a place with four vibrant, distinct seasons, Ohio may be calling.

While many know the Buckeye State for its sprawling farmland and thriving sports culture, Ohio is also a Midwest powerhouse for expanding tech, healthcare, and advanced manufacturing sectors, according to economic development data.

And in addition to job opportunities, the state offers a lower cost of living for major expenses like housing, and average prices on everyday items like groceries and utilities.

Best of all, Ohio lets you keep more of your hard-earned money thanks to a friendly 2.75% flat income tax rate, state tax-free Social Security income, and zero estate or inheritance taxes for your heirs.

So if you're ready to enjoy four true seasons without breaking the bank, here are the ten cheapest places to live in Ohio.

Cheapest places to live in Ohio

After ranking property tax bills from highest to lowest per county in Ohio, one thing’s for sure: Rural areas win out. You can generally find more affordable living in the countryside than in the hustle and bustle of, say, Columbus or Cleveland.

If you’re game to explore rolling hills, state parks, and local history (and maybe want to commute for other enjoyments), check out these cheap places to live in Ohio.

Note: Kiplinger used the latest data presented by the Tax Foundation (sourced from the U.S. Census Bureau) to find the cheapest counties to live in Ohio.

Jackson County

Median property tax bill: $1,363

Median home price: $150,700

Homes are relatively affordable in Jackson County, with the median sitting right around $150,000. Property tax bills are similarly budget-friendly, averaging roughly $1,363 per year according to the latest data from the Tax Foundation.

Located about 90 minutes southeast of Columbus, Jackson County is deeply rooted in rich Appalachian foothill heritage and historic mining tradition.

Outdoor enthusiasts can hike scenic, cliff-lined forest trails at Lake Katharine State Nature Preserve, enjoy peaceful boating and fishing at Jackson Lake State Park, or browse rural bakeries, blacksmith shops, and greenhouses operated by the local Amish community.

Plus, every fall, the region hosts the famous Jackson County Apple Festival. Spanning nearly a week, this event fills downtown Jackson with parades, carnival rides, marching bands, and of course, tons of local craft and apple vendors. Residents partake of fresh-picked apples, hot cider slushies, and homemade apple butter cooked in traditional copper kettles.

Searching for a welcoming, down-home atmosphere paired with a remarkably low property tax bill? Check out Jackson County, Ohio for a classic slice of Midwest pie.

Adams County

Median property tax bill: $1,356

Median home price: $164,200

Nestled along the banks of the Ohio River, Adams County carries the highest median home price on our list, hovering around $164,200. However, despite higher home values, the median annual property tax bill remains remarkably low at just $1,356.

Geographically, Adams County is characterized by its rolling wooded hills, sweeping prairie patches, and dramatic limestone gorges. Nature lovers may spend countless hours hiking through the gigantic Edge of Appalachia Preserve or birdwatching along the river.

Much like Jackson County, Adams is also home to a thriving Amish community. Visitors can stop by bakeries, quilt shops, and hand-built furniture stores. The area also exudes a nostalgic, old-school Americana vibe, featuring a timeless local diner and historic shops like Blake Pharmacy in West Union.

Come to Adams County, Ohio, for the surprisingly low property tax bill, but stay for the quiet, down-home lifestyle and breathtaking natural scenery.

Pike County

Median property tax bill: $1,355

Median home price: $163,800

Pike has the second-highest median home price on our list, sitting just under $164,000. But property taxes are only $1,355, according to U.S. Census Bureau data, making the county the 8th-cheapest place on our list.

If you're seeking a lively mix of outdoor adventure and classic Midwest festival culture, Pike might just have you covered. Water sports enthusiasts can go boating, water skiing, and tubing on Lake White State Park. Or, for something a little quieter, there's paddling, fishing, and disc golfing at nearby Pike Lake State Park.

Families can head to Long's Retreat Family Resort in Latham for a full day of go-karting, mini-golf, and swimming at the splash pad.

And the excitement continues into summer and fall with the annual Pike County Fair, including tractor pulls and demolition derbies, in addition to a live bluegrass festival. Plus, for a unique trip back in time, history buffs can explore Dogwood Pass — a living-history Old West town complete with an authentic saloon, jail, chapel, and live stunt shows.

If you want affordable housing, inland lakes, and plenty of weekend entertainment, Pike County, Ohio might make a compelling destination for your family.

Harrison County

Median property tax bill: $1,279

Median home price: $121,500

Harrison County home prices are among the most accessible in the Buckeye State, with the median home value sitting around $121,500. Annual property tax bills are similarly budget-friendly, averaging roughly $1,279 according to data from the Tax Foundation — cheaper than many neighboring Eastern Ohio counties.

Love the water? Harris is famous for its "Big Three Lakes" — Tappan Lake, Clendening Lake, and Piedmont Lake. Together, these reservoirs offer more than 4,200 acres of open water for kayaking, boating, and fishing.

The lakes are flanked by over 15,000 acres of public parklands and picturesque campgrounds, which means outdoorsmen can also explore more than 40 miles of the famous Buckeye Trail, alongside 20,000 acres of public hunting grounds.

But if you're not outdoorsy, no worry; the county seat of Cadiz adds a touch of classic Hollywood history to the rural landscape. As the birthplace of Clark Gable, the "Gone with the Wind" actor often dubbed the "King of Hollywood," Cadiz hosts an annual birthday celebration and features a dedicated museum filled with Gable memorabilia.

Afterward, residents can unwind with a tasting at one of the area's scenic countryside wineries.

Stop by Harrison County for a weekend on the lake or a tour of local Hollywood history — and linger for the substantial property tax savings.

Morgan County

Median property tax bill: $1,268

Median home price: $150,900

Morgan County highlights a median home price tag of only $150,900. The median property tax bill is also pretty low, sitting around $1,268, per the latest data from the U.S. Census Bureau.

Tucked into the foothills of the Appalachian Mountains in southeastern Ohio, Morgan is nicknamed "The Front Porch of the Great Outdoors" by county officials.

The area is famous for the Muskingum River Parkway, home to a historic series of hand-operated river locks — one of the last remaining functional systems of its kind in the nation.

Residents can spend peaceful weekends navigating the river, driving quaint backroads past covered bridges, or hiking and kayaking through nearby Burr Oak State Park and the expansive Jesse Owens State Park.

The county is also anchored by historic villages like McConnelsville, where brick-lined streets have 19th-century architecture, local diners, and independent shops. Between its tranquil riverfront views and tight-knit small towns, Morgan County delivers a timeless rural vibe.

Ergo, whether you're in the market for a slower pace of life or quite low-cost home options, Morgan County could be your next destination.

Jefferson County

Median property tax bill: $1,257

Median home price: $127,800

Jefferson County home prices are pretty low compared to others on this list, at around $127,800. Property taxes are also relatively cheap, as the median bill is only $1,257, according to 2026 Tax Foundation data.

Situated along the Ohio River in eastern Ohio, Jefferson is known as the birthplace of famous entertainer Dean Martin.

Today, the county is a lively hub of outdoor recreation and riverfront living. Friendship Park in Smithfield spans 1,320 acres and includes camping, mountain biking, horseback riding, and a spacious 80-acre lake ideal for fishing and boating.

When winter arrives, the county seat of Steubenville transforms into a holiday destination featuring the region's famous Nutcracker Village. Over 200 life-sized handcrafted nutcrackers line the historic downtown streets along with nativity displays, festive hayrides, an open-air Advent Market, and light shows at Historic Fort Steuben.

For a delightful blend of historic charm, outdoor parklands, and winter festivities, Jefferson County offers a rich quality of life combined with a low property tax bill.

Meigs County

Median property tax bill: $1,238

Median home price: $119,300

Meigs is only a few dollars cheaper than Jefferson in terms of annual property taxes, with a median bill of roughly $1,238. However, the county has the lowest median home price on the list, at just over $119,000. This might be due to Meigs's quiet, rural footprint of approximately 21,600 residents, per the U.S. Census Bureau.

Don't let the uncrowded area fool you, though — there's still plenty to do in this scenic corner of Ohio. Meigs has 57 miles of Ohio River shoreline alongside the 102-acre lake at Forked Run State Park. The historic river village of Pomeroy sits in a narrow strip between the river and wooded bluffs, creating a "stacked" architectural look of houses climbing into the hillside.

Downtown Pomeroy is lined with weathered 19th-century storefronts, local dining spots, and riverfront shops. Music lovers flock to the area each summer for the Big Bend Blues Bash on the riverbank, and history lovers can dive deep into Ohio's rich Civil War heritage at the Buffington Island Battlefield Memorial Park.

Leave the heavy mortgage and property tax bills behind and discover a charming, slower-paced way of living in Meigs County, Ohio.

Lawrence County

Median property tax bill: $1,215

Median home price: $144,000

Lawrence County property taxes are relatively inexpensive, as the annual median bill reaches barely above $1,200. Median home prices can also be cheap, at around $144,000, per the latest Tax Foundation data.

Bordering both Kentucky and West Virginia, Lawrence County is imbued with river history and Appalachian heritage. The county seat of Ironton played a major role in the 19th-century iron industry and is famously home to the Ironton-Lawrence County Memorial Day Parade — recognized as the longest-running Memorial Day parade in the nation, celebrating every year since 1868.

Active families also find plenty of recreation throughout the county. You can go camping, hiking, and ATV riding across the trails of Wayne National Forest. And while Lake Vesuvius is temporarily closed for paddling and swimming due to dam repairs, it's expected to reopen in September 2027.

But if you want to check out the local history, the Lawrence County Museum displays exhibits on iron furnaces, Victorian-era antiques, and artifacts from the 1920s Ironton Tanks, an early pro-football team that defeated both the Chicago Bears and New York Giants before the modern NFL era.

For budget-friendly family fun and rich sports history, you might consider putting down roots in Lawrence County, Ohio.

Noble County

Median property tax bill: $1,180

Median home price: $163,600

As the second-most affordable place to live on our list, Noble County, Ohio, boasts a median home price of just $163,600. Paired with a modest median property tax bill of $1,180 according to U.S. Census Bureau data, Noble's property taxes are lower than those in most neighboring counties.

Defined by lush, undulating hills, winding roads, and quiet farmland, Noble County is a dream for anyone seeking a peaceful rural retreat. Residents can head to Wolf Run State Park for a relaxing afternoon of fishing, swimming, or hiking along tree-lined lake trails. Or, residents can head to conservation parks to spot rare local species like the northern harrier.

Additionally, Noble is nearby The Wilds — one of the largest wildlife conservation centers in North America. Spanning about 10,000 acres, this safari park lets visitors view rhinos, giraffes, and wild horses roaming free.

Come to Noble for sweeping natural landscapes and exotic wildlife, and stay to enjoy the low property taxes.

Monroe County

Median property tax bill: $1,176

Median home price: $142,700

Monroe County is the cheapest place to live in Ohio. Homebuyers may secure a median property tax bill of just $1,176 and a relatively accessible median home price of around $142,700, according to 2026 data from the Tax Foundation.

Widely known as the "Switzerland of Ohio," Monroe has dramatic topography with steep hills and deep river valleys that somewhat resemble European mountain terrain. Rooted in the heritage of early Swiss immigrants, this spacious destination is an ideal spot for outdoor adventure — from motorcycle rides along the ridges to kayaking down Sunfish Creek.

And for art aficionados and road-trippers alike, the county offers the Monroe County Quilt Barn Tour. Residents can take the backroads to discover 20 century-old wooden barns showcasing hand-painted quilt blocks by local artist Scott Hagan, nationally known as "The Barn Artist."

So if you're looking for rugged Appalachian ridges and hand-painted barn quilts — you might say "yes" to the cheapest place to live in Ohio.

More Cheap Places

• 10 Cheapest Places to Live in Florida
• 10 Cheapest Places to Live in North Carolina
• 10 Cheapest Places to Live in Tennessee
• 10 Cheapest Places to Live in Texas

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at four tax questions from readers pertaining to whether an activity is a hobby or a Schedule C business engaged in for profit. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Hobby income and expenses

Question: I like to knit hats. Lately, I have started selling some of the hats that I knit at craft shows. I have a full-time job, and my hat knitting is just a fun extracurricular activity that I engage in sporadically. It's not a business. Do I have to report the sales proceeds I get from selling my hats on my Form 1040? And can I deduct my expenses?

Joy Taylor: You will have to report the sales proceeds on your Form 1040. Since you said your hat knitting activity is not a business, but a fun activity that you engage in sporadically, the activity is likely considered a hobby. You would report your hobby revenue as other income on Schedule 1 of the 1040.

Unfortunately, you will not be able to deduct your expenses. The 2017 Tax Cuts and Jobs Act temporarily eliminated, through 2025, all miscellaneous itemized deductions previously subject to the 2%-of-adjusted-gross-income threshold. That includes hobby expenses. Last year's One Big Beautiful Bill permanently ended this tax write-off.

2. Hobby versus business

Question: My spouse and I both work full-time. I also have a dog-breeding activity that I run in my spare time. Can I deduct the losses from my dog-breeding activity on Schedule C of my Form 1040?

Joy Taylor: It depends. You can deduct the loss on Schedule C only if your dog-breeding activity is a business. The activity must be conducted with continuity and regularity in a businesslike manner, and you must have a reasonable, good-faith objective of making a profit from it.

If your activity rises to the level of a business, then yes, you can deduct the losses on Schedule C. If not, then you would report revenues from the activity on Schedule 1 of your Form 1040, and you cannot deduct your expenses.

3. Hobby-versus-business factors

Question: What factors does the IRS look at in determining whether losses reported on Schedule C are from a business or a hobby?

Joy Taylor: The IRS and the courts look at many factors in determining whether the reported Schedule C activity is a hobby or instead rises to the level of a business/for-profit activity.

IRS regulations provide a safe harbor. If your activity generates a profit in three out of five consecutive years, or two out of seven years for horse breeding, the law presumes you're in business to make a profit unless the IRS establishes otherwise.

The hobby-business analysis is trickier if you can't meet the safe harbor. That's because the determination of whether an activity is properly categorized as a hobby or a business is then based on each taxpayer's facts and circumstances, with the IRS and the courts generally looking at the following nine factors:

• Expertise of the taxpayer and advisers
• Manner in which one carries on the activity
• Time and effort devoted to the venture
• Expectation that assets from the activity may appreciate
• History of income and losses (the more years of large consecutive losses, the harder it is to show a profit motive, unless the activity is still in its start-up stage)
• The amount of occasional profits
• Success in carrying out other activities
• Elements of personal pleasure or recreation
• Whether the taxpayer has substantial income from other sources, such as wages or investment income

4. Audit red flag

Question: I keep reading that claiming losses on Schedule C from an activity that sounds like a hobby is an IRS audit red flag. Is this true?

Joy Taylor: Yes. Claiming large hobby losses on Schedule C is a perennial audit red flag. The IRS is on the hunt for taxpayers who year after year report large losses from hobby-sounding activities on Schedule C or F of the 1040 to help offset wages, business or investment earnings, or other income.

The hobby loss rules are often litigated in the Tax Court. When people think of hobby losses, horse, cattle and/or dog breeding generally comes to mind. Of course, the Tax Court has addressed those ventures. But other cases involve activities as varied as ecotourism, rodeo events, acting, writing and researching, flying antique fighter jets, poker playing, collecting law enforcement badges, donkey breeding and restoring old cars. The IRS usually wins these cases, partly because it tends to settle cases in which it doesn't believe it can prevail. But taxpayers have also pulled off a victory in a number of cases.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not, and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

More Reader Questions Answered

• All Ask the Editor Q&As
• Ask the Editor: Will I be Audited by the IRS?
• Ask the Editor: Estimated Tax Payments and Withholding
• Ask the Editor: Questions on Selling a Home
• Ask the Editor: 10-Year Rule for Inherited IRAs
• Ask the Editor: Tax Questions on Roth IRA Conversions
• Ask the Editor: Tax Rules for Landlords

Many 1031 investors — especially those who are nearing retirement — don't understand the full breadth of replacement options available to them.

Most of them are in a similar spot: They own a rental or a small commercial building, and they're worn out from the day-to-day management. They're ready to sip piña coladas on the beach, not answer phone calls or text messages about how the plumbing stopped working or what the pet fee will be if their tenant gets a fourth cat.

In 2024, 38% of landlords said property upkeep is one of their biggest issues, and in 2026, a survey of 4,055 independent landlords showed that ownership costs rose for 74.4% of them.

That paints a clear picture of collective landlord psychology: They're sick of maintenance, and to make matters worse, prices keep rising.

Since the 1031 exchange is such a good option for deferring taxes, most landlords are heavily incentivized to keep the money working for them in real estate (and that's especially true for retirees who are investing for cash flow).

So, what are their options? Most investors think there are only two:

• Go passive through a Delaware statutory trust (DST)
• Stay in control by buying another building and doing the work all over again

Completely passive with lower returns or potentially stroke-inducing total control?

In reality, this is a false dichotomy.

The actual range of options is much wider.

Once you sell, you have 45 days to formally identify a replacement property and 180 days to close. That window is short — and the IRS is not lenient at all about missing deadlines, so let's get started.

The full range of options, from most work to least

Another active property. This is the default option. And, frankly, for some sophisticated investors who have the time and patience for it, it's the right answer.

You trade into another rental, a multitenant building or a value-add project, and you keep full control along with full responsibility:

• Tenants
• Repairs
• Vacancies
• Taxes
• Insurance

If the reason for the exchange was the work itself, this puts you back where you started, usually with a larger asset. Not ideal for someone nearing retirement.

Tenancy in common (TIC). A TIC lets several investors hold direct, fractional title to a single property. You keep the standing of a direct owner, which is more control than a fractional trust interest gives you, but decisions generally require coordination among the other owners, and financing is more complicated because the lender underwrites the group.

It sits in the middle, and it has become less common than it once was.

A Delaware statutory trust. With a DST, you buy a fractional beneficial interest in a professionally managed, institutional-grade asset, and a sponsor runs everything.

The appeal is convenience: A DST can close in three to five business days, minimums are low, and you can spread proceeds across several of them for diversification.

Those are meaningful advantages when the 45-day clock is tight or the remaining balance to place is small.

The trade-off, of course, is control.

In order to qualify for a 1031, a DST has to follow a set of IRS rules (often called the seven deadly sins): Among them, the trust:

• Cannot take on new financing
• Cannot sign new leases
• Cannot make major capital improvements
• Cannot reinvest sale proceeds

Investors get no vote on when the property sells, and because proceeds cannot be redeployed inside the trust, the sponsor's exit sets the timing of your next exchange.

Fees are the other consideration, since front-end fees on DST offerings commonly run 10% to 15% and are disclosed inside a lengthy private placement memorandum.

For frustrated, burnt-out landlords, that seems like it's an easy trade … but it's not the only option available to you if you want to move from being fully active to being mostly passive.

The lesser-known middle-ground options

Single tenant NNN (triple net). While this is still technically 100% ownership, it stands out because it shifts the maintenance responsibilities onto the tenant. With a NNN property, you hold title outright and lease the building to a single tenant, usually on a long 10- to 15-plus-year lease, and the tenant pays the three nets:

• Property taxes
• Insurance
• Maintenance

You keep control (the hold, the sale and the timing of your own exchange), and the operating burden shifts to the tenant, so your responsibilities as owner are low.

The pricing behaves a lot like fixed income: Single tenant net lease assets traded around a 6.80% cap rate as of the first quarter of 2026, and the yield tracks the tenant's credit and the remaining lease term more than the building itself.

Absolute NNN. This is a triple net lease taken to its furthest point. The short version: The tenant carries everything, including the roof and structure, which is not always true of all NNN leases.

A REIT. Worth naming mostly to correct a common assumption: You cannot complete a 1031 exchange directly into REIT shares, because a share of a trust is not like-kind to real property.

There is an indirect path called an UPREIT (a DST interest can later be contributed to a REIT operating partnership through a Section 721 exchange), but that is effectively a one-way door out of 1031 treatment, since you generally cannot exchange out again afterward.

There are also plenty of hidden risks associated with this strategy.

Weighing your options: Two questions to answer

In evaluating these options, you need to answer two questions:

• How much control do you want to keep?
• How much of the work are you willing to do yourself?

A DST gives up control almost entirely in exchange for simplicity, which suits an investor who just wants it all to be over with.

A single tenant absolute NNN property keeps title, control and exchange timing in your hands while keeping the work low, which suits an investor who was tired of the job rather than tired of owning. Another active building keeps everything: Control and work alike.

Each is a legitimate answer to a different set of priorities.

Whatever you land on, three habits pay off early: Match the structure to whichever of those priorities is most important to you, read the underlying documents (the lease on a net lease deal, the private placement memorandum on a trust) and make sure to cross your t's and dot your i's. The 45-day clock rewards the investors who have thought it through before they sell.

Related Content

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• Should I Sell or Rent My House When I Relocate for Retirement?
• Do 1031 Exchanges Make Sense for Baby Boomers?

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

As more people in the U.S. remain in their homes as they grow older ("age in place"), the cost of making a home safer and more accessible can be a significant hurdle.

A new proposal in Congress would ease that burden by creating a federal tax credit for older homeowners who invest in accessibility upgrades.

The Senior Accessible Housing Tax Credit Act of 2026 would provide a credit of up to $10,000 for taxpayers age 60 and older who make qualifying improvements to help them remain safely and independently in their homes.

The legislation addresses a gap for older adults because Medicare generally doesn't cover structural home modifications, like installing wheelchair ramps, widening doorways, or remodeling bathrooms for accessibility. As a result, many homeowners must pay those often substantial costs out of pocket.

Here's more to know.

New $10,000 home tax credit for older adults?

The Senior Accessible Housing Tax Credit Act of 2026, recently introduced by Sens. Angela Alsobrooks (D-Md.) and Kirsten Gillibrand (D-N.Y.), would create a federal tax credit of up to $10,000 for taxpayers age 60 and older who make qualifying accessibility improvements to their homes.

"This critical legislation allows for seniors to stay in their homes — for many that means homes they love and have been in for decades —and install essential, aging-related modifications," Sen. Alsobrooks stated in a release announcing the proposal.

Sen. Gillibrand, top Democrat on the U.S. Senate Committee on Aging, added that "a safe, accessible place for seniors to live should be a right, not a privilege."

The measure, which has received support from the National Association of Realtors, also has companion legislation in the House, introduced by Democratic Rep. George Latimer of New York. According to the bill's sponsors:

• If enacted, the bill would create a nonrefundable tax credit for eligible taxpayers age 60 or older for expenses related to certain home modifications on their principal residence or a qualifying second home
• The credit would be equal to the cost of eligible expenditures, with an annual limit of $10,000
• Qualifying expenditures would also include certain labor costs related to the preparation, assembly, or installation of an eligible modification

What kind of projects are lawmakers talking about? Installing wheelchair ramps, grab bars, non-slip flooring, bathtub cuts or shower seats, furniture risers or chair lifts, or widening doorways would generally qualify under the proposal.

Replacement of toilets and bathroom vanities and kitchen or bathroom faucets are also mentioned in the bill. However, a general remodeling project, like a kitchen renovation designed primarily for appearance, likely wouldn't qualify.

Aging in place home modifications

The proposal comes as more older adults in the United States look for ways to remain in their homes. According to AARP's 2024 Home and Community Preferences Survey, 75% of adults age 50 and older want to remain in their current homes as they age.

But so-called "aging in place" often requires more than simply remaining in a longtime home. As some people get older, features like stairs, narrow doorways, high thresholds, and traditional bathrooms can make everyday tasks more difficult or increase the risk of falls.

As a result, some homeowners may need to install grab bars or step-free entrances, widen doorways or make other accessibility upgrades to continue living safely and independently.

Those improvements can vary widely in cost. According to data compiled by NerdWallet on aging-in-place home renovations:

• Installing grab bars can cost about $100 to $400
• Widening doorways can cost roughly $600 to $2,000 per doorway
• A stair lift can cost about $7,000 on average

For homeowners who need multiple changes, the expense can be significant.

As mentioned, another challenge is that Medicare generally doesn't pay for these types of home modifications.

Medicare Part B may cover certain medically necessary durable medical equipment (DME) prescribed by a doctor for use in your home (e.g., walkers, wheelchairs, hospital beds), provided deductible and supplier rules are met. But Medicare doesn't cover structural modifications to a home or, for example, bathroom "convenience" items like grab bars or raised toilet seats.

That leaves many paying these expenses out of pocket or looking for other sources of assistance.

Home accessibility tax deductions under current law

Keep in mind that the proposed $10,000 tax credit isn't currently available. Congress would need to pass the legislation and have it signed into law by President Trump before eligible taxpayers could claim it. It's unclear if there's sufficient bipartisan support for the measure to gain traction.

But…all is not lost. As Kiplinger has reported, under current IRS rules, certain home modifications may qualify as deductible medical expenses.

Under existing law, a taxpayer generally must itemize deductions to claim medical expenses, and only eligible medical expenses that exceed 7.5% of adjusted gross income (AGI) can be deducted.

Reimbursed medical expenses are not deductible, and the modification(s) must be made primarily to provide medical care for the taxpayer, a spouse, or a qualifying dependent.

Additionally:

• The improvement generally must be tied to a specific medical need. A homeowner who installs a ramp because of a diagnosed medical condition may be able to deduct some of the cost, but someone who adds accessibility features simply as a precaution generally would not receive a tax benefit.
• If a home improvement increases the value of the property, only the portion of the cost that exceeds the increase in the home's value generally qualifies as a medical expense deduction.

For example, if an accessibility improvement costs $20,000 but increases the home's value by $8,000, generally only the remaining $12,000 may qualify as a medical expense deduction, assuming the other IRS requirements are met.

For more information and specific rules, see IRS Publication 502. Consider speaking with a trusted tax professional if you're unsure whether a specific upgrade might be deductible on your return, as this information is provided for educational purposes.

If you're concerned about the costs of making a home upgrade, you may also want to check for programs or organizations in your state or community that may provide assistance for eligible aging-in-place improvements.

What to Read Next

• Tax-Deductible Home Improvement in Retirement
• New Bill Proposes $1 Million Capital Gains Home Exclusion
• 5 Little-Known Senior Tax Deductions
• Property Tax Changes Homeowners Over Age 65 Should Watch in 2026

By the time September arrives, taxes are probably the last thing on your mind.

Summer is winding down, spring filing is behind you, and the third-quarter estimated payment due on September 15 feels like a formality.

For most business owners, it is whatever they paid last quarter, sent off without much thought.

That habit is where the money leaks.

By September, you can see most of the year:

• Two-thirds of your income is already on the books
• You know whether the year is running ahead of plan or behind it
• The spring projection your estimates were built on is probably out of date

The Q3 payment is a great opportunity to true up before the year closes. Skipping that recalculation is one of the most common and most avoidable mistakes I see.

I'm a CPA and head of Tax at Gelt, and here is what the conversation with your own CPA should cover before the deadline.

Recalculate the number — don't repeat it

Most business owners pay their Q3 estimate by copying the Q2 figure forward. That works only if nothing changed, and for a growing business, something almost always has.

A strong sales quarter, a large client payment, a capital gain or a major asset purchase can all push your income far from what you projected in April. If your estimates are still built on that spring number, you are likely to be underpaying, or worse, overpaying, and not find out for months to come.

The fix is to rerun the projection with actual numbers through August:

• Pull your year-to-date income and compare it to the figure your estimates were based on
• Add any one-time events you're still expecting that may not have been in the original plan
• Recalculate what you owe for the full year, then check it against what you have paid so far

As a CPA, I'd recommend doing this in early September, not on September 14. If the review turns up a shortfall, you want time to act on it.

Know the number that protects you

You do not have to predict your tax bill perfectly to avoid a penalty. The IRS gives you a safe harbor, and hitting it is the goal.

You generally avoid an underpayment penalty if you pay the smaller of two amounts:

• 90% of what you owe this year
• Or 100% of what you owed last year

If your adjusted gross income last year was over $150,000, that second figure rises to 110%.

A few numbers worth keeping in mind:

• You face a penalty only if you are short by $1,000 or more after withholding and credits
• The penalty is really interest, currently 7% a year compounded daily, charged on what you underpaid
• It runs from each missed deadline until you pay, so a Q3 shortfall keeps costing you until you close it

For most business owners, the prior-year safe harbor is the one to lean on, because it is a known, fixed number. You already know last year's tax. Paying 100%, or 110% if you are over the income threshold, across four even installments is the cleanest way to stay protected when this year's income is hard to pin down.

Use withholding as a late-year fix

If your September review turns up a gap, there is a tool most business owners overlook.

Estimated payments count only for the quarter you actually make them. Withholding works differently. The IRS treats withholding as if it were paid evenly across all four quarters, even if it all came out of a December paycheck.

If you or a spouse has W-2 income, increasing that withholding late in the year can patch an earlier shortfall in a way a catch-up estimated payment cannot.

There is also relief if your income is genuinely uneven. The annualized income installment method lets you match your payments to when you actually earned the money, so a large third or fourth quarter is not treated as income you should have paid tax on back in April.

If most of your income lands later in the year, this can lower or even erase a penalty. It takes more documentation, so it is a conversation to have with your CPA rather than a box to check on your own.

At Gelt, we treat the September estimate as a planning moment, not just a payment. It is the point where the year is finally clear enough to act on, and there is still time left to act.

Make September 15 a checkpoint, not just a payment

What makes this deadline matter, beyond the payment itself, is what it sets up. A wrong Q3 estimate does not stay contained in Q3. It follows you into the final January 15 installment and into the bill you settle in April.

When you recalculate now, you get more than a correct payment. You get an early read on where the year will land, and that gives you room to make real moves before December, such as adjusting your compensation, timing a large purchase, funding a retirement plan or accelerating a deduction.

So before September 15, ask your CPA three questions:

• What do I actually owe for the year based on income through August?
• Am I on track to hit my safe harbor?
• If I am short, do I fix it with an estimated payment, with withholding or by annualizing my income?

Those three questions turn a routine deadline into the most useful tax checkpoint of your year.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

One of the first questions many people ask after learning they’ll receive an inheritance is: "Will I owe taxes?"

It’s an understandable worry. Taxes can be confusing, especially during an already emotional time when someone has passed away. But there is some good news — receiving an inheritance doesn’t automatically mean you’ll owe taxes to the IRS.

That's because for most people, the inheritance itself isn’t a taxable event. Whether you owe anything depends on what you inherit, where you live, and whether those assets later produce income or are sold.

Still, before you decide what to do next, it helps to understand which tax rules might apply to your situation and when. Here's more to know.

Do you owe taxes on an inheritance?

When you first inherit money or property, your instinct might be to prepare for a heavy tax bill on your next federal income tax return. It's a natural concern, but the IRS actually treats inheritances with a surprising amount of grace.

As a general rule, the federal government doesn't handle inherited assets as taxable income.

Simply receiving cash, a house, a stock portfolio, or other property won't trigger an automatic tax event or change your baseline tax situation for the year. In most cases, you aren't required to report the initial inheritance on your federal return.

Where tax responsibilities tend to enter the picture is not from the gift itself. The inheritance itself is generally a "clean slate," so to speak; what you choose to do with those assets is what determines which tax rules may apply.

Different inherited assets come with different tax rules

If you inherit cash: For most people, inheriting cash doesn’t create a federal income tax bill. That's because, as mentioned, the inheritance itself isn’t taxable. But any income it earns afterward might be.

For example, if you deposit inherited money into a high-yield savings account, any interest you earn is generally taxable. The same applies if you invest the money and later receive dividends or realize capital gains.

If you inherit a house: Inheriting a home generally isn’t a taxable event. If you later sell the property, however, capital gains tax rules may apply.

That’s where the tax picture can start to change.

• Most inherited homes receive a stepped-up basis, which adjusts the property’s value to its fair market value at the time of the owner’s death.
• That can reduce the amount of taxable gain if you later sell the home.

For example, if you inherit a home worth $400,000 and later sell it for about that amount, you may owe little or no capital gains tax. If the home’s value increases after you inherit it, you may owe tax only on the appreciation that occurs after the inheritance.*

*This is a simplified example solely for educational purposes. Consult a trusted financial professional to help determine possible capital gains tax liability if you plan to sell an inherited home.

If you inherit stocks or investments: Stocks, mutual funds, and other investments generally aren’t taxable when you inherit them.

Much like inherited real estate, inherited stocks, mutual funds and other investments generally receive a stepped-up cost basis. If you sell them later, you may owe capital gains tax only on the appreciation that occurs after you inherited the assets.

If you inherit an IRA or retirement account: Inherited retirement accounts follow different tax rules than most other inherited assets.

While inheriting the account itself usually isn’t taxable, withdrawals often are. The rules depend on your relationship to the original account owner, the type of retirement account, and other factors.

• For example, distributions from an inherited traditional IRA are generally taxable, while qualified withdrawals from an inherited Roth IRA are typically tax-free.
• However, even though inherited Roth IRA distributions aren't taxed, most non-spouse beneficiaries are required under the SECURE 2.0 Act to withdraw all funds from the account within 10 years.

Because inherited retirement account rules can be complex, it’s important to understand these distribution timelines before taking money out and to consult a trusted tax advisor who knows your individual circumstances.

Common inherited assets and when taxes may apply

State inheritance taxes

Although there is no federal inheritance tax, a handful of states impose an inheritance tax paid directly by the beneficiary.

(Note: This is separate from a state estate tax, which is paid from the deceased person’s estate before assets are distributed.)

Whether you’ll owe state inheritance tax depends on where the deceased lived or owned property and your relationship to them — spouses and close relatives are often exempt.

If you’re unsure whether your state imposes an inheritance tax, our guide might help, but also consult a trusted tax professional or financial planner since every beneficiary's situation is different.

Keep in mind: Whether you’ll owe an inheritance tax largely depends on the state involved and your relationship to the deceased.

Frequently asked questions about inheritance taxes

Even though most inheritances aren’t subject to federal income tax, there are a few situations that can confuse beneficiaries.

Can you owe taxes years after receiving an inheritance?

Yes. While the inheritance itself usually isn’t taxable, you may owe taxes later if inherited assets earn interest or dividends, appreciate before you sell them, or require taxable withdrawals from a retirement account.

Does every state tax inheritances?

No. Only a handful of states impose an inheritance tax, and many exempt spouses and other close relatives. In most states, beneficiaries don’t owe a state inheritance tax.

Should you talk to a tax professional?

If you inherit a retirement account, real estate, a business, or other high-value assets, a qualified tax professional can help you understand how federal and state tax rules apply to your situation.

You can also find additional guidance in IRS Publication 559, Survivors, Executors, and Administrators, which explains the tax responsibilities of beneficiaries, executors, and estates.

Related

• Inherited an IRA? Key Distribution Rules to Know
• States That Won’t Tax Your Death
• Estate Tax vs Inheritance Tax: Who Actually Pays the Bill?
• Filing a Deceased Person's Final Income Tax Return

New York City’s new tax on high-value second homes is moving from the policy stage to enforcement. But the first challenge involves determining which property owners actually owe it.

The pied-à-terre tax was approved as part of the state budget signed into law in May 2026 and applies to certain non-primary residences in NYC beginning the 2026-2027 property tax year.

But as the city begins implementing the new levy, some homeowners are questioning why they received notices indicating their properties might be subject to the tax.

In response to the confusion, the Department of Finance extended the deadline to apply for a pied-a-terre tax exemption until Sept. 18, 2026. The move is designed to give property owners more time to review their notices and provide documentation showing why the tax shouldn't apply.

"We are announcing the extension of the exemption application deadline to ensure that New Yorkers who received the ‘You may be subject to...’ letters have the time and information they need," New York City Mayor Zohran Mamdani said in a statement.

The administration has said the goal is to ensure that residents who shouldn't owe the tax have an opportunity to establish their exemption eligibility.

So, how does New York City’s pied-à-terre tax work and who's actually affected?

NYC Pied-à-Terre Tax exemption deadline extended

NYC’s pied-à-terre tax is a surcharge on certain residential properties that are not used as an owner’s primary residence.

The measure is designed to raise revenue from high-value homes and apartments maintained as second residences, particularly those owned by people who live elsewhere.

Mamdani has described the tax, which is expected to generate about $500 million annually, as "an important new tool to help our city collect the revenue we need for safer streets, cleaner parks, and other critical investments across the five boroughs."

Some key points:

• The new law, which took effect July 1, 2026, applies during the 2026–27 (phase-one) and 2027–28 property tax years.
• The levy applies to certain non-primary residences. That includes one-, two- and three-family homes, condominiums and cooperative units, based on property type and market value.

• One-, two- and three-family homes are subject to the surcharge if the property has a market value of $5 million or more. Condominium and cooperative units are subject to the surcharge if the unit has a market value of $1 million or more.
• Properties used as a primary residence by the owner or an immediate family member are exempt. Properties leased for at least one year as a primary residence may also qualify for an exemption.

It's important to note that the surcharge is not part of a homeowner’s regular property tax bill. Instead, it creates an additional tax obligation for qualifying non-primary residences that meet the applicable value threshold and don't qualify for an exemption.

How much is the tax? The amount a homeowner could owe will depend on the property’s standardized fair market or assessed value and the applicable surcharge rules.

Class 1 (one-, two-, and three-family homes)

• $5 million to $15 million: 0.8%
• More than $15 million to $25 million: 1.05%
• More than $25 million: 1.3%

Condominiums and co-ops (FY 2026-27 and FY 2027-28)

• $1 million to $3 million (Phase One Market Value): 4.0%
• More than $3 million to $5 million (Phase One Market Value): 5.25%
• More than $5 million (Phase One Market Value): 6.5%

Which homeowners actually owe the tax

As the city began implementing the new levy, confusion has emerged over which properties might be subject to it.

• On July 24, the Department of Finance published a list of more than 900,000 properties, prompting some homeowners to question why their homes appeared on the list.
• The city later added a disclaimer clarifying that inclusion on that larger list didn't necessarily mean a property was subject to the pied-à-terre tax.

The city's Department of Finance has since reportedly sent notices to about 17,000 property owners who may be affected by the new surcharge. (That number was larger than the state’s earlier estimate of roughly 10,000 to 13,000 affected non-primary residences, which has raised questions about how many properties will ultimately qualify once exemptions are reviewed.)

Some homeowners are reportedly concerned about the notices they received.

For example, a Brooklyn homeowner told The Wall Street Journal that he received a notice indicating a potential $44,048 surcharge, despite stating that the property was his primary residence. The Gothamist reported on another New York resident who said she would owe close to $43,000 in tax without an exemption for a property she says has always been her primary address.

Those types of disputes highlight why implementation could prove difficult. The city is not only identifying valuable properties — it's trying to determine how those properties are actually used.

Under NYC law, the surcharge generally applies to qualifying properties that are not used as a primary residence. The Department of Finance determines primary residency based on legal factors, including whether the property is occupied for a majority of days during the calendar year by a covered owner.

But…in some cases, that determination may require more than a review of ownership records.

• A property deed may show who owns a home, but it doesn't necessarily establish how the property is used
• Properties held through trusts, limited liability companies, or other ownership structures may require additional review
• The city may request documentation related to residency, occupancy, ownership details, or other information relevant to an exemption

For homeowners who received notices, a key challenge could be showing their property doesn't meet the criteria for the surcharge.

What NYC homeowners need to know

Keep in mind: Receiving a notice does not automatically mean a homeowner owes NYC’s second-home tax. Instead, it means the property has been identified as potentially subject to the new rules and the owner may need to submit information showing why an exemption applies.

City officials have said that homeowners who believe their properties shouldn't be taxed under the measure should complete the exemption application by Sept. 18, 2026.

The documentation required will depend on each homeowner’s circumstances. The Department of Finance has a webpage that includes frequently asked questions, an eligibility tool, and instructions for submitting documentation.

And since every homeowner's situation is different, you may want to consult a trusted tax professional who can help you determine whether your property qualifies for an exemption.

Related

• New York POWER Utility Rebates Are Coming: What to Know
• Mamdani's Millionaire Tax: Will a New York Exodus Begin?
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When we talk about retirement, the conversation usually focuses largely on building a nest egg.

With employers moving away from offering pensions and average life expectancies increasing, saving for retirement has fallen on the employee.

As a result, industry professionals consistently encourage workers to maximize contributions to their IRAs or 401(k)s.

While asset accumulation is important, and fundamental to affording retirement, financial planning doesn't stop once you leave the workforce, because saving for retirement and living in retirement are different and require separate approaches.

New hurdles for retirees

When entering retirement, many retirees face new hurdles when it comes to tax planning, healthcare expenses, account withdrawals and making their savings last. When you're working, retirement planning is often centered around saving.

For example, financial professionals might help you identify your risk tolerance, guide you through long-term investments and many employers offer a retirement plan with a matching program as an incentive to contribute.

If savings fall behind while you're still working, it can be fixed by increasing contributions, delaying retirement or working a side gig, if your schedule allows.

In retirement, circumstances are different. Rather than actively earning income, which can come with raises and bonuses, retirees must rely largely on their savings, which are likely fixed.

This phase of life is also when federal programs, such as Social Security and Medicare, become prevalent, raising questions about when to claim benefits, what Medicare options to pick and how to withdraw money from those retirement accounts without triggering access taxes or becoming penalized.

Rather than focusing solely on growth, retirees must figure out how to turn their savings into a reliable source of income that lasts.

A big mistake

One of the biggest mistakes I see retirees make is assuming the investment strategy that helped them build their nest egg will work the same once it's time to live on it. When you're working, market volatility is easier to recover from because you're actively earning income, and you have the time to recover from downturns.

However, once your portfolio becomes your main source of income, you might need to make withdrawals regardless of where the market stands. For some, this could mean selling investments at a lower value to meet income needs.

Over time, this can strain your savings, potentially depleting your portfolio prematurely.

Generating income from your investments involves much more than taking out money when you need it. Traditional IRAs, Roth IRAs, brokerage accounts, Social Security benefits and pensions, if you have one, are all taxed differently.

Without a coordinated withdrawal strategy, you could unintentionally pay more in taxes or miss opportunities to make savings work more efficiently.

One coordinated strategy

Instead of viewing retirement accounts as separate buckets of money, a retirement income plan allows you to manage withdrawals, taxes and income needs under one coordinated strategy.

Unfortunately, many people wait until they're in retirement to start thinking about their retirement income strategy.

In addition to prioritizing growth, the time leading up to retirement can also be used to start planning for how those assets will be used.

Estimating future income needs, reviewing healthcare costs, coordinating retirement accounts and understanding how they'll work together in retirement will make the transition much easier when that time comes.

Saving for retirement is crucial, but the financial planning doesn't end once your golden years begin. The transition from earning income to living off retirement savings requires a different mindset and a new approach.

Developing a retirement income plan that addresses how income will be generated, how withdrawals will be taxed and how your savings will support future spending needs can help ensure the nest egg you've spent decades building serves you throughout retirement.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The past few years gave many investors exactly what they hoped for — and also set them up for some major risks.

If you bought the right stocks and held them through the volatility of the past few years, your positions have grown substantially. The problem is that "substantial" and "safe" are not the same thing.

We talk to a lot of clients who have watched a single holding climb to 20, 30 or even 40% of their net worth. Sometimes it's a tech stock they've owned for a decade, or a company stock that has accumulated through a career of compensation packages. Either way, they're sitting on significant gains.

Many investors recognize the risks of holding too much in a single stock — they just don't act.

Investors who struggle in retirement are often the ones who held for so long that the decision was eventually made for them, whether by a market correction, an estate situation or the realization that the tax bill they were trying to avoid had grown far larger than if they'd started earlier.

The position that built your wealth doesn't have to be the one that defines your retirement. Getting there is mostly a matter of being willing to ask the question.

The attachment problem

When a stock has been good to you for a long time, it starts to feel like a relationship. Clients who've held Nvidia (NVDA) or Apple (APPL) or Microsoft (MSFT) through multiple cycles have watched those stocks get them through a lot. The idea of selling feels like betrayal. It isn't rational, but human nature rarely is.

That attachment compounds over time. The longer a position has outperformed, the more convinced investors become that it will keep outperforming. We don't want the discomfort of being wrong after so many years of being right.

Consider this: If you didn't already own this stock, would you choose to put 35% of your retirement savings into it today? For most people, the honest answer is no.

At a certain point, the conversation ought to shift from maximizing returns to protecting what you've already built. Unlike institutions, individual investors don't have the benefit of perpetuity — there's a finite window to use and enjoy wealth.

The tax trap

Many advisers recommend reducing concentrated positions. The problem is, most people know that intellectually, but as soon as advisers bring it up, all the client hears is "taxes." They're not entirely wrong to do so.

Investors often let the tax tail wag the dog — prioritizing the avoidance of a tax bill over making decisions that better align with their long-term goals.

A position worth $1 million with a $100,000 cost basis carries $900,000 in embedded gains. In higher-tax states, the combined federal and state rate could reach 37.1%, meaning selling could result in a tax bill of more than $330,000.

So investors hold. They tell themselves the position is still performing. They say they'll deal with it later. But deferring a decision is still a decision, just not a conscious one.

Eventually, "later" becomes "now." The closer a client is to retirement, the more that tax liability weighs on their financial decisions. Spending decisions, income planning and even how much they let themselves enjoy retirement all get filtered through the same question: What will it cost me in taxes?

People end up taking the minimum required by their RMDs and missing the years when they actually have the energy and desire to use their wealth. The government's distribution schedule isn't designed around your travel plans.

Building a way out

The good news is that selling everything at once is rarely the right answer anyway. There are structured approaches that can gradually reduce concentration, spread tax consequences over time and preserve flexibility.

The most straightforward is staged selling across multiple tax years, which allows an investor to recognize gains in manageable increments rather than all at once.

Paired with detailed cash flow modeling in retirement, this approach can actually free people up to spend more by making the tax exposure visible and predictable.

For investors who want to build a more systematic tax strategy, they can offset their gains through tax-loss harvesting.

Direct indexing strategies have also evolved considerably. The newer long/short variation is particularly relevant for people dealing with concentrated positions.

These methods are designed to generate losses over time, which may help offset gains as a concentrated position is gradually reduced. The goal isn't to predict market direction, but to create flexibility and improve after-tax outcomes.

Another option worth serious consideration, especially in the current interest rate environment, is the charitable remainder trust.

The core appeal is simple: An investor contributes appreciated stock to the trust, and the trust sells the stock tax-free and reinvests the full proceeds.

The investor receives an income stream from the trust over their lifetime, and the tax liability on the original gain is spread across those payments rather than being due all at once.

With current interest rates, distribution rates from these trusts may exceed 10%, and the deduction generated can be paired strategically with Roth conversions in the years before RMDs begin.

None of these strategies requires perfection or a full exit. What they do require is a willingness to start. A conversation with your financial adviser is a meaningful way to get the ball rolling.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

For decades, you've saved in tax-deferred retirement accounts, watching your balance compound untaxed. Then you turn 73, and the IRS comes calling.

Required minimum distributions (RMDs) force you to begin withdrawing and paying taxes on those savings — whether you need the money or not.

What many retirees don't realize until it's too late is that RMDs don't just create a tax bill. They trigger a cascade of consequences that can raise Medicare premiums, subject Social Security to taxation, push you into higher brackets and affect your estate planning.

Understanding these traps before your first RMD can save you thousands over your retirement.

1. The Medicare premium surcharge trap

One of the most common surprises hits retirees in their monthly Medicare bills. Part B and Part D premiums are income-based, with higher earners paying more through income-related monthly adjustment amounts (IRMAAs).

The trap: IRMAA is based on your modified adjusted gross income (MAGI) from two years prior, so a large RMD in 2025 raises your premiums in 2027.

For 2026, surcharges begin at $218,000 for joint filers. At the highest tier, Part B premiums reach $689.90 per month per person, versus the standard $202.90.

A $1 million account generates an RMD of roughly $37,736 at age 73. If that pushes you just over an IRMAA threshold, you could pay an extra $2,000 to $5,000 a year in premiums — money that never shows up on your tax return but flows directly from your RMD.

2. The Social Security taxation trap

Up to 85% of your Social Security benefits can become taxable depending on your combined income (adjusted gross income, tax-exempt interest and half of your benefits). The thresholds are surprisingly low: $32,000 for joint filers and $25,000 for single filers.

Large RMDs push many retirees over these thresholds, turning tax-free Social Security income into taxable income. Consider a couple with $40,000 in Social Security and $30,000 in pension income.

Without RMDs, they might owe minimal tax, but add a $50,000 RMD and suddenly $34,000 of their Social Security becomes taxable (85% of $40,000), sharply raising their bill.

The math gets worse because the effect is marginal. In the phase-in range, every additional dollar of income makes 85 cents of Social Security taxable.

3. The tax bracket cascade

RMDs don't just add to your taxable income — they can push you into higher tax brackets, where each additional dollar is taxed at a higher rate. The 2026 federal brackets create several danger zones where modest RMDs trigger significant tax increases.

For married couples filing jointly, the jump from the 12% to 22% bracket occurs at $100,800 of taxable income. The next jump to 24% happens at $211,400. These thresholds are inflation-adjusted annually, but RMD amounts grow faster as you age and your life expectancy decreases on the IRS tables.

The hidden trap: Many retirees assume they'll be in a lower bracket in retirement. But combine RMDs with Social Security, pensions and perhaps part-time or investment income, and your marginal rate can exceed what it was in your working years.

4. The net investment income tax trap

Once your MAGI exceeds $250,000 (joint) or $200,000 (single), you face the 3.8% net investment income tax (NIIT) on interest, dividends and capital gains.

The indirect trap: RMDs don't count as net investment income themselves, but they raise your MAGI. If that pushes you over the NIIT threshold, your investment income becomes subject to the extra 3.8% tax.

For retirees with substantial taxable accounts, this can add thousands to the annual bill.

5. The charitable deduction trap

Many retirees donate to charity and assume they can deduct it. But the 2017 Tax Cuts and Jobs Act nearly doubled the standard deduction to $31,500 for joint filers in 2025, making itemizing unnecessary for most households.

The trap: if you take the standard deduction, your charitable contributions provide zero tax benefit, while your RMD increases your taxable income. The solution is a qualified charitable distribution (QCD), but many retirees don't learn about it until after they've already taken their RMD and made separate gifts, missing the chance to lower their taxable income.

QCDs let retirees 70½ and older transfer up to $111,000 annually, directly from an IRA to charity. The distribution counts toward your RMD but doesn't appear in taxable income, effectively making your giving tax-deductible even if you take the standard deduction.

6. The state tax trap

While the federal consequences of RMDs are widely discussed, state treatment varies dramatically. Some states fully exempt retirement distributions, others tax them at ordinary income rates, and a few have special provisions.

In high-tax states, RMDs can trigger substantial bills. California's top rate is 12.3% (plus a 1% surcharge over $1 million), and New York's reaches 10.9%. A $100,000 RMD could generate $10,000 or more in state taxes alone.

The trap: Retirees who move to low- or no-income-tax states, such as Florida, Texas and Nevada, can avoid this. Those who delay the move may pay substantial state taxes on RMDs for years.

7. The widow's penalty

When one spouse dies, the survivor faces a particularly painful RMD trap. Joint filers enjoy wider brackets and higher standard deductions than single filers. After the year of death, the survivor must file as single, with brackets roughly half the width of joint ones.

Yet the RMD continues at nearly the same level, based on the account balance and the survivor's age, not filing status. This combination often pushes widows and widowers into significantly higher brackets, a phenomenon planners call the "widow's penalty."

How to minimize RMD tax traps

While you can't avoid RMDs entirely once you reach the required age, several strategies can reduce their tax impact.

Roth conversions before RMDs begin. Converting traditional IRA funds to Roth IRAs in your 60s and early 70s lets you control the timing and amount of taxable income. Roth IRAs have no RMDs during the owner's lifetime, and qualified withdrawals are tax-free.

Strategic timing of other income. Delay Social Security or spread capital gains across multiple years to create lower-income years for Roth conversions or to minimize the impact of early RMDs.

Qualified charitable distributions. Use QCDs to satisfy RMD requirements while reducing taxable income if you're charitably inclined.

Asset location planning. Keep tax-efficient investments (index funds, municipal bonds) in taxable accounts and high-income holdings (REITs, bonds) in Roth accounts where possible.

The key is planning ahead. By the time you face your first RMD, many of the most effective strategies are off the table. Working with a financial adviser in your 60s to model scenarios can help you avoid these hidden traps before they cost you.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

For nearly three decades, financial planning experts relied on a 30-year benchmark: retire at 65, and your money will last to age 95. However, medical advancements, earlier career exits, and active longevity have shifted the baseline.

According to Social Security Administration (SSA) data, a 65-year-old married couple has about a 50% chance that at least one partner will live past 90, and a 20% chance of reaching 95. So, preparing for a 40-year retirement is becoming the new normal for many.

Yet while most investors recognize that living longer requires a larger nest egg, few might account for how a four-decade timeline reshapes the tax landscape. Stretching a retirement portfolio across that span exposes wealth to escalating forced withdrawals, Medicare surcharges, and bracket jumps that standard 30-year models might not capture.

Here are the primary financial and tax risks of a potential 40-year retirement — and how you might adapt your strategy accordingly.

Financial Risks

1. The compounding math of inflation

Across a 30-year period, inflation is already a hassle to deal with. But over 40 years, it can significantly degrade your purchasing power.

A quick way to visualize this decay is the "Rule of 72." This rule states that, at a modest 3% annual inflation rate, your buying power is cut in half roughly every 24 years. By year 40, a single dollar retains barely 30% of its original value, as shown in the table below.

So, a lifestyle that costs $100,000 at age 60 could require over $326,000 annually by age 100 to maintain the same standard of living, assuming a flat inflation rate (though, of course, economic periods fluctuate — more on that below).

2. Exposure to more market downturns

Historically, the S&P 500 Index enters a bear market (a decline of 20% or more) roughly once every 4 to 5 years. While market cycles are unpredictable, these historical patterns suggest that over a typical retirement:

• A 30-year plan will navigate between 6 and 7 bear markets.
• A 40-year plan must survive 8 to 10 major downturns.

Naturally, when these downturns occur matters just as much as how many you face.

Research on sequence-of-returns risk shows that a severe crash in the first three years of retirement is far more damaging to a portfolio’s longevity than one occurring two decades later.

Extending your retirement to 40 years compounds this vulnerability in two ways. 1) It doubles your chances of starting retirement during a market trough. 2) Even if you survive an early crash, adding a fourth decade increases the odds of a second prolonged downturn later in life — when years of withdrawals have already left your portfolio with less capital to recover.

3. A multiple-decade healthcare horizon

In a typical 30-year plan, healthcare and long-term care expenses are frequently modeled as a late-stage spike occurring in the final three to five years of life.

But in a 40-year plan, medical expenses can become a multi-decade expense.

Fidelity recently reported in its annual Retiree Health Care Cost Estimate that a single 65-year-old retiring today can expect to spend an average of $185,500 (or roughly $371,000 for a couple) out of pocket on healthcare throughout retirement (and that assumes standard Medicare coverage without long-term care needs).

Comprehensive long-term care or extended medical needs over 40 years can push total healthcare expenditures well beyond $600,000 for a couple, far outpacing general consumer price index (CPI) inflation rates.

Managing these financial risks over 40 years requires careful portfolio drawdowns. But withdrawing more capital to keep up with inflation and healthcare introduces a secondary threat: triggering a domino effect of late-life tax penalties.

Tax Risks

1. The RMD expansion spike

When you save money in a traditional IRA or 401(k), the government lets you defer paying income taxes on it right away. But they won't wait forever.

Under current law (SECURE 2.0), starting between ages 73 and 75, the government enforces a rule called a required minimum distribution (RMD). This rule requires you to withdraw a set amount each year so they can tax it.

The catch? The older you get, the bigger the percentage you are forced to take out.

The IRS divides your account balance by a life expectancy divisor that shrinks every year you live. Because you divide by a smaller number, the required withdrawal percentage spikes as you age:

• Age 75: Divisor 24.6 (~4.07% of balance mandatory withdrawal)
• Age 85: Divisor 16.0 (~6.25% of balance mandatory withdrawal)
• Age 95: Divisor 8.9 (~11.24% of balance mandatory withdrawal)

If tax-deferred accounts compound undisturbed for 15 to 20 years before RMDs begin, a $1.5 million balance at age 60 could easily grow to over $3 million by age 80.

A forced 6.25% withdrawal on $3 million means $187,500 in mandatory taxable income in a single year. This extra income can push you into higher tax brackets and exceed your actual lifestyle cash-flow needs.

2. The survivor or 'widow's tax' penalty

When one spouse passes away during a multi-decade retirement, the surviving spouse often inherits the combined balance of tax-deferred accounts. However, their tax filing status changes from married filing jointly to single the next year after their spouse passed away.

Single federal tax brackets are approximately half as wide as joint brackets for the same rate tiers. The result? Higher taxes on the surviving spouse, also known as the "widow's tax" penalty.

• For example, the threshold to enter the 24% or 32% single federal tax bracket is roughly half the dollar amount allowed for joint filers.
• The impact is that the surviving spouse receives nearly the same mandatory RMD income stream from inherited accounts, but pays higher marginal tax rates at much lower income levels. Over a 40-year horizon, this survivor penalty can erode wealth when late-life health costs peak.

For more information, check out Kiplinger's report, Avoiding the Widows' Penalty Tax Trap After a Spouse Passes.

3. Social Security 'tax torpedo' and IRMAA surcharges

During a standard 30-year retirement, tax traps are often viewed as short-term hurdles in late life. With a 40-year projection, however, decades of tax-deferred growth force larger required distributions, which can subject your wealth to multi-decade tax penalties:

Social Security tax torpedo. The IRS determines Social Security benefit taxation using a figure called "provisional income."

• This is basically your adjusted gross income (AGI) plus tax-exempt interest and 50% of your Social Security benefits.
• By increasing provisional income with, say, higher RMDs, up to 85% of your Social Security benefits may become subject to federal income tax.
• For instance, taking just $1,000 extra from an IRA can expose up to $850 of Social Security benefits to taxation, effectively pushing your marginal tax rate above 40%.

IRMAA Medicare surcharges. Realized capital gains or large IRA withdrawals can also cross Medicare's income-related monthly adjustment amount (IRMAA) thresholds.

• In 2026, the first IRMAA threshold begins at $109,000 for single filers and $218,000 for joint filers. (Because Medicare uses a two-year tax lookback, your 2026 premiums are actually determined by your modified adjusted gross income (MAGI) from your 2024 tax return.)
• Because IRMAA uses strict "cliff" thresholds rather than marginal tiers, crossing these thresholds by as little as $1 can cost you thousands in retirement through full monthly premium surcharges on Part B and Part D for both spouses.

Absorbing high-tier IRMAA surcharges ($6,900 to $13,800+ annually for a couple) over 15 to 20+ years, rather than just a few final years, can dramatically accelerate portfolio depletion in your 80s and 90s.

Related: 7 Ways to Plan Now to Save on Medicare IRMAA Surcharges Later.

Update Your Tax Plan

Although minimizing your taxes on a four-decade retirement plan isn't everything, avoiding taxes can help you control your tax brackets across different life phases.

Below are a few strategies that may help protect a 40-year portfolio (though this list is certainly not exhaustive; be sure to consult a qualified tax professional regarding your specific situation).

1. Maximize the 'gap years' with strategic Roth conversions

The period between your career exit and the start of Social Security and forced RMDs (typically ages 60 to 73 or 75) can be used as a valuable planning window. During these relatively "low" income periods, your marginal tax rate might be lower than when you were working.

Instead of letting this low-tax window go to waste, you can try a multi-year Roth conversion.

How it works: Suppose a retired couple (both born in 1960 or 1961) pays $80,000 in annual living expenses from savings, which generates $2,200 in high-yield taxable interest income.

To capitalize on this temporary "tax valley," they convert $100,000 from a traditional IRA to a Roth IRA in 2026:

• Gross income: $102,200 ($100,000 conversion + $2,200 interest)
• Deductions: -$35,500 (2026 standard deduction for joint filers 65+)
• Net taxable income: $66,700

This taxable income figure of $66,700 falls squarely into the lowest federal tax tiers — the 10% and 12% brackets (which max out at $100,800 for joint filers in 2026).

Paying this relatively low tax rate today permanently shifts those funds into tax-free Roth status.

By the time RMDs kick in at age 75, the couple’s traditional IRA balance is substantially smaller, suppressing forced distributions, mitigating the Social Security tax trap, and shielding them from higher tax brackets in their 80s and 90s.

Related: 6 Tax Reasons to Convert Your IRA to a Roth (and When You Shouldn't).

2. Treat your HSA as an extended-life medical account

Health savings accounts (HSAs) offer an unmatched triple-tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are 100% tax-free.

In 2026, individuals can contribute up to $4,400 (or $8,750 for family coverage), plus a $1,000 catch-up contribution for those age 55 and older. (Provided they are not yet enrolled in Medicare, which stops all active HSA contributions).

Furthermore, expanded 2026 eligibility rules now include certain catastrophic marketplace plans and direct primary care (DPC) arrangements alongside traditional high-deductible health plans (HDHPs).

How it works: Instead of spending HSA funds as medical bills arise during your working years, pay those bills out of pocket, digitally scan and back up the receipts, and leave the HSA invested in low-cost index funds. Over 20 to 30 years, an HSA balance can grow into a multi-hundred-thousand-dollar tax-free health fund.

• Then, when late-life healthcare costs inevitably rise in your 80s or 90s, you can draw from the HSA completely tax-free to cover doctor bills and long-term care.
• This eliminates the need for extra traditional IRA distributions, keeping your taxable income low and protecting your core retirement portfolio.

3. Establish a three-bucket asset location model

A 40-year portfolio may need more spending flexibility than a 30-year window. To help navigate market cycles over four decades, structure your wealth across three distinct tax environments:

How it works: Having balanced amounts across all three buckets allows you to "blend" annual withdrawals. For example, if you need an extra $10,000 in a given year for a home improvement or medical event, withdrawing that money from a Roth account or using unrealized cash/principal from a taxable brokerage account may keep your taxable income from crossing an IRMAA cliff or perhaps triggering higher Social Security income taxes.

A quick warning on taxable accounts: Liquidating appreciated stock in a taxable brokerage account to generate cash triggers realized capital gains tax. These gains increase your modified adjusted gross income (MAGI), which can inadvertently trigger an IRMAA surcharge.

Furthermore, high earners should watch out for the 3.8% net investment income tax (NIIT), which sits on top of capital gains tax rates and can push your total capital gains tax rate up to 23.8%.

The bottom line

Living to 95 or 100 should be celebrated without fear of financial liability. But stretched over four decades, tax drag becomes a compounding weight on your portfolio if you rely on an outdated 30-year model.

Thus, achieving a 40-year retirement isn't just about accumulating a larger total sum — it's about controlling when, where, and how you pay the IRS over the next forty years.

By converting pre-tax assets early, building multi-bucket flexibility, and leveraging tax-free accounts like Roths and HSAs, you might help ensure your wealth lasts as long as you do.

This article does not cover state income tax and is for educational purposes only. The content does not constitute financial, legal, or tax advice.

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I grew up in a time when it felt possible to figure things out on your own. It was before smartphones and online tutorials. If something broke, we learned how to fix it. If we wanted to learn something, we found a way.

That mindset is still alive and well today, although we have more access to information than any generation before us. Whether we're repairing a vehicle, researching a medical diagnosis or learning a new skill, the answer is often just a few clicks away.

That same confidence has served many people well in their financial lives. They learned how to budget, save, invest and build wealth.

However, retirement introduces a different challenge altogether. The challenges of retirement can often leave someone who is typically "good with money" feeling overwhelmed and vulnerable.

Why does retirement shift the goalposts?

Many people who consider themselves financially adept have spent their working years focused on one primary objective: Growth. They have worked hard, saved consistently, invested diligently and delayed gratification.

For many, that process built on discipline, knowledge and consistency has enabled them to accumulate meaningful retirement savings, pay down debt, raise families and build successful careers.

Retirement, however, changes the approach entirely. This is the point in the journey when three financial disciplines begin to intersect: Income, investments and taxes.

During our working years, these areas often operate independently. But in retirement, when people are in the distribution phase rather than the accumulation phase, they become interconnected.

The transition from accumulating wealth to coordinating wealth is one of the most overlooked and important challenges in personal finance.

Income

Income planning in retirement asks a different question than accumulation planning. The goal shifts from maximizing account balances to answering a much more practical question: "How am I going to get paid?"

Income planning becomes essential for creating a sustainable paycheck from assets that may need to last 30 years or more.

Investments

Investment planning also changes during retirement. During the growth phase, throughout your working years, market declines can often be viewed as temporary setbacks or even opportunities to invest at a discount.

But during retirement, the timing of losses matters. The same market decline that felt insignificant at age 40 can feel very different when withdrawals are occurring simultaneously. Protecting savings becomes increasingly important when regular contributions and dollar-cost averaging are no longer part of the equation.

Taxes

Then there is tax planning. For many retirees, taxes become more complicated.

• IRA withdrawals can affect tax brackets
• Tax brackets can affect how much Social Security becomes taxable
• Income can influence Medicare premiums for several years
• Decisions made today may affect surviving spouses and even the tax burden left to children

Making the pieces fit

In retirement, a decision in one area often affects the other two.

• If you increase withdrawals, taxes may rise
• Increase taxable income and Social Security taxation or Medicare premiums may change
• Reduce investment risk and future income potential may be affected

Everything becomes connected.

I've noticed a pattern among people approaching retirement. Many arrive with spreadsheets, account statements and years of disciplined saving behind them. They know what they've accumulated, but they're uncertain about how all the pieces fit together.

Questions begin to surface, such as:

• How much can I safely spend?
• When should I claim Social Security?
• Should I prioritize reducing taxes or maximizing income?
• How much investment risk should I still be taking?
• What happens if one spouse dies first?
• How will today's decisions affect my children tomorrow?

What makes these questions so unsettling is that they rarely have simple answers. Instead, the answers come only through developing careful, intentional strategies. And the reality is, in this space, there isn't a practice round.

During our working years, progress is relatively easy to measure. We receive a paycheck. We watch account balances grow. We contributed more this year than we did last year. Success is naturally measured by accumulation.

But retirement changes the scoreboard.

The questions become less about growth and more about sustainability. Instead of asking, "How much have I saved?" people begin asking, "Will what I've saved be enough?" The focus shifts from building wealth to making decisions that support a desired lifestyle for decades.

So many decisions

For those staring into the fog of retirement, uncertainty often has less to do with the size of a portfolio and more to do with the number of decisions that suddenly appear. The closer retirement gets, the more interconnected those decisions become.

What was once a straightforward objective — save and invest — becomes a series of questions involving income, taxes, risk, healthcare costs, legacy goals and lifestyle choices.

Understanding how those pieces work together often becomes more important than any individual investment selection.

You may be "good with money," but this season of life may leave you with more questions than ever.

However, having questions and needing clarity doesn't make someone bad with money.

Rather, it is a sign that the realities of retirement are coming into focus. And at this moment, making wise decisions is paramount in preserving the income, freedom and lifestyle that often take decades to build.

Retirement asks us to think differently about wealth. It is no longer measured solely by account balances or annual returns. It is measured by the ability of our resources to support the life we want to live.

Income, investments and taxes each play an important role. Yet their true value is realized only when they work together.

Dan Dunkin contributed to this article.

This appearance in Kiplinger was obtained through a public relations program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at four tax questions from readers pertaining to federal income tax credits, including the difference between refundable and nonrefundable tax credits. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Refundable v. nonrefundable credits

Question: What is the difference between a refundable income tax credit and a nonrefundable income tax credit?

Joy Taylor: The federal tax code generally has two types of income tax credits for individuals — refundable credits and nonrefundable credits. Refundable credits allow taxpayers with zero to little income tax liability to benefit from the credit because the credit can exceed the amount of tax liability and result in a refund. A nonrefundable credit can only offset a taxpayer's tax liability and cannot create a refund.

Examples of refundable credits include the American Opportunity tax credit, the earned income credit and the health premium tax credit. Examples of nonrefundable credits include the credit for child and dependent care expenses taken by working parents, the foreign tax credit and the now-expired tax credits for buying electric vehicles and installing eco-friendly improvements in your primary residence.

2. Expired electric vehicle credit

Question: I bought a used Tesla earlier this year for personal use. Can I claim a federal income tax credit on my 2026 Form 1040 for this purchase?

Joy Taylor: No. Unfortunately, the clean-vehicle credit for buying a new or used electric vehicle (EV) has expired. The up-to-$7,500 credit for buying new EVs and the up-to-$4,000 credit for buying used EVs ended after September 30, 2025. So you can't claim a credit for your 2026 used EV purchase. Congress chose to eliminate this credit in the "One Big Beautiful Bill" legislation that it enacted in July 2025.

3. Adoption credit

Question: I have clients who adopted a baby last year. I am now filling out their 2025 Form 1040, which they received a filing extension for, and I see that part of the adoption tax credit is now refundable. When was this change enacted?

Joy Taylor: The adoption tax credit can be taken on up to $17,670 of qualified expenses per eligible child in 2026. The 2025 amount was $17,280. Qualified expenses include adoption fees, court costs, legal expenses, travel, meals and other expenses directly related to a legal adoption. The full credit is available for the adoption of a special-needs child, even if it costs less. The credit starts phasing out for filers with 2026 modified adjusted gross incomes (AGI) over $265,080 and ends at $305,080. The 2025 figures are $259,190 and $299,190. The credit amount and the modified AGI amounts are adjusted annually to account for inflation. Parents claim the adoption credit on IRS Form 8839.

Up to $5,120 of the adoption credit is fully refundable in 2026. This new rule, which was included in the "One Big Beautiful Bill," gives adopting parents $5,120 of the credit as a refund, even if they have no income tax liability. The refundable amount is adjusted annually to account for inflation. It was $5,000 for 2025 tax returns. (The remaining portion of the credit is a nonrefundable tax credit that can be carried forward for five years).

4. Dependent care credit

Question: I work and also take care of my elderly father. I pay for his care when I am at work. Can I take the dependent care credit for him?

Joy Taylor: To claim the dependent care credit for your dad, he needs to have lived with you for at least six months during the year and be unable to care for himself. Additionally, you must provide over half of his support.

Other rules for the dependent credit must also be met. For example, expenses for the care must be incurred so you can work, and you must report the provider’s tax ID number on IRS Form 2441.

If your dad qualifies as a dependent for this purpose, you can claim a maximum dependent care credit of $1,500 for him on your 2026 Form 1040 that you file next year, depending on the amount of your income.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not, and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

More Reader Questions Answered

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Historically, summer is a quieter period for trading as market volumes slow down. But 2026 is breaking the rules. With recent tech-sector rotations and unexpected volatility shaking portfolios, putting your investments on autopilot right now could be a costly mistake.

In fact, research shows that 86% of financial advisors ramp up tax management strategies during volatile periods, rather than waiting for a particular season, like year-end.

And one of those employed strategies is tax-loss harvesting — selling underperforming investments to offset capital gains, or even ordinary income. Not only does this practice lock in paper losses early, but it positions your portfolio for tax advantages before filing season arrives.

Here's how to target the right assets to turn your tax losses into a potentially lower federal income tax bill.

This article does not cover state income tax and is for educational purposes only. The content does not constitute financial, legal, or tax advice. Consult a certified financial advisor before making trading decisions based on your individual tax situation.

Why market dips are the strategic time to harvest

Tax-loss harvesting means selling losing investments in taxable accounts to lower the capital gains tax you owe on your winning ones. By taking advantage of this strategy during market dips, you gain three strategic advantages:

• Capturing market dips before they disappear. Selling during dips locks in tax offsets before potential year-end rallies erase your paper losses.
• Avoiding the year-end rush. Executing trades in late November or December (or other times of the year where tax planning is "trending") comes with liquidity pinches, trade execution delays, and wider bid-ask spreads as everyone rushes to rebalance at once. Selling losses as they occur can help avoid all that.
• Proactive portfolio rebalancing. Reviewing your holdings periodically throughout the year gives you breathing room to realign your asset allocation and see trends like asset class drift, sector overconcentration, or performance divergence before they expose you to unintended market risks.

Identifying your tax harvesting targets

But, of course, you don't want just to sell an investment because it's underperforming. Otherwise, you could lose out on savings that would bring more benefit than tax-loss harvesting might (more on that below).

Review your portfolio for these key indicators that an investment might be a good candidate for tax-loss harvesting:

• Focus only on taxable brokerage accounts. Tax-loss harvesting only applies to taxable brokerage accounts where you buy stocks, bonds, mutual funds, or ETFs. Tax-advantaged accounts like IRAs, Roth IRAs, and 401(k)s are ineligible.
• Target assets below cost basis. Focus on positions trading noticeably below what you originally paid for them to generate the most usable realized losses. When placing your sell orders, ensure your brokerage uses "specific identification" or "highest-in, first-out" (HIFO) lot selection so you can sell your specific underwater shares instead of triggering default "first-in, first-out" (FIFO) rules on older, more profitable shares.
• Look for temporary displacements. Identify high-quality assets that have decoupled from their long-term fundamentals during volatility swings.

For instance, in the summer of 2026, the tech sector saw a global sell-off as investors grew increasingly anxious that AI investments were outstripping immediate revenue returns. This anxiety impacted Nvidia (NVDA), Advanced Micro Devices (AMD), and Alphabet (GOOGL) stocks.

For more information on up-to-date stock news, check out Kiplinger's reporting on Stocks: News, Features and Analysis.

How tax savings actually add up: Tax-loss benefits

Selling an asset at a loss in a taxable account gives you a potentially powerful tool to lower your overall tax burden at year-end. This happens across three tiers:

• Offset capital gains dollar-for-dollar. Your losses directly cancel out capital gains realized from winning stock sales or real estate. So, if you made $10,000 in profits earlier this year, $10,000 in harvested losses brings your federal taxable capital gain to $0.
• Deduct up to $3,000 against ordinary income. If your total capital losses exceed your capital gains for the year, you can deduct up to $3,000 ($1,500 if married filing separately) of the excess against ordinary income, like wages or retirement distributions.
• Carry forward the excess indefinitely. Do you have more than $3,000 in net losses with no other gains to net them against? No worries. Unused capital losses don't expire. So you can carry them forward into 2027, 2028, and beyond to offset future gains.

Examples: when tax-loss harvesting can lower your tax bill

How does tax-loss harvesting benefit other items on your tax bill? Here are a couple of examples:

• If you’re subject to the highest tax rate on capital gains (20%), you can potentially avoid that tax through tax-loss harvesting, resulting in valuable savings. Those savings can be reinvested in securities or used to help rebalance your portfolio. (Note: If your income falls into the 0% long-term capital gains tax rate, harvesting long-term losses might not offer immediate savings, as your gains are already tax-free.)
• By deducting up to $3,000 of capital losses against ordinary income, you can save on taxes typically levied on retirement plan distributions, pensions, and other ordinary income sources. An unlimited amount of capital loss might be carried forward to offset gains you anticipate from real estate sales, mutual funds, ETFs, etc.

But don't forget: While the top federal capital gains rate is 20%, there's a net investment income tax (NIIT) that may apply an extra 3.8% on top of that, bringing the total federal rate to 23.8% for some high-income earners.

Navigating the IRS wash sale rule

Before executing trades for tax-loss harvesting, you must navigate the IRS "wash sale" rule.

The rule: If you sell a security at a loss and buy a "substantially identical" security within a 61-day window (30 days before, the day of, or 30 days after the sale), you cannot claim the loss on your current-year tax return. Instead, the loss is deferred — the disallowed amount is added to the cost basis of the new shares, which adjusts your future tax obligation when you eventually sell them.*

This means that, if you want to preserve your target market exposure (without breaking IRS rules), you might:

• Switch to a non-identical replacement. Reinvest sale proceeds into a similar (but not substantially identical) asset. For example, swapping a tech ETF tracking the S&P 500 Information Technology Index for one tracking the MSCI USA IMI Technology Index.
• Try the "double-up" strategy. Buy a matching block of the same security today using available cash. Hold both positions for at least 31 calendar days (so the original purchase falls outside the 30-day pre-sale window), and then sell the original, underwater lot to harvest the loss. (Keep in mind this temporarily doubles your exposure to that investment for 31 days and carries additional market downside risk.)

You should also watch out for other, "hidden" wash sale tax traps, like:

• Automatic Dividend Reinvestment (DRIP). Some portfolios are set up so that dividends are automatically reinvested in the harvested stock or fund during the 61-day window. If a dividend automatically reinvests, that could trigger the wash sale rule.
• The IRA wash sale trigger. While IRAs and Roth IRAs are disallowed from claiming a tax-loss harvest, they can accidentally trigger the wash sale rule if one of them buys back a harvested asset inside the 61-day window. Because retirement accounts don't track cost-basis adjustments, this can permanently eliminate your potential tax deduction rather than just deferring it.

Your financial advisor may have other strategies. But whichever you choose, ensure you account for trading fees or bid-ask spreads (the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to sell). You don't want these costs to outweigh the savings you generate through tax-loss harvesting.

*Note: The rule applies across all accounts you or your spouse own.

What you can do now

If you're ready to turn current or future market volatility into tax savings, follow this summary checklist:

1. Audit year-to-date gains. Tally up any capital gains you've already realized in 2026.
2. Scan taxable accounts. Locate positions affected by recent rotations that are trading below cost basis.
3. Analyze the impact of a sale. If you were to sell the chosen investment, how would you utilize the cash proceeds? How much would brokerage fees eat into your profit margin? Be sure you know the answer to these (and other) applicable questions before making any trades.
4. Execute and swap. Sell chosen losing positions and immediately deploy your capital into suitable, non-identical replacement assets or another strategy. Remember to pause any automatic DRIP reinvestment plans on that security.
5. Document everything. Maintain clean trade receipts and cost-basis logs to help streamline your income tax preparation come spring.

Market volatility is inevitable, but paying unnecessary taxes isn't. By taking a proactive, year-long approach rather than reacting in December, you can transform short-term paper losses into immediate tax savings — freeing up capital to stay invested and compound over time.

So use an hour this week to review your portfolio, consult your tax advisor, and make the next market dip work for you.

Read More

• Here Are The Capital Gains Tax Rates for 2026
• Taxable Income: What It Is and How to Calculate It
• 2026 Tax Brackets and Federal Income Tax Rates: What to Know
• How Long Should You Keep Tax Records?

You've probably spent real time getting your investment costs down. You moved out of a high-fee mutual fund years ago. You watch your expense ratios. That instinct has served you well.

However, here's the uncomfortable math: Shaving another 0.10% off an already-cheap portfolio might save you a few hundred dollars a year. A poorly timed Roth conversion, a missed tax-loss harvesting opportunity or a Medicare premium surcharge you didn't see coming can cost you thousands in a single year, and the damage can compound for the rest of your retirement.

Most investors have optimized fees about as far as they can go. Few have done the same with taxes. That gap is where a lot of your wealth is quietly leaking out, and unlike a fund's expense ratio, nobody sends you a clear, itemized bill for it.

Why fees got all the attention

Fees became the focus because they're easy to see and easy to act on. Pull up two funds, compare the expense ratio, pick the cheaper one. Index funds and ETFs have pushed costs for diversified portfolios down to a few basis points, and that progress is real.

Taxes don't work that way. The cost is spread across decisions made in different years, different accounts and sometimes different tax codes entirely. There's no ticker symbol for "the Roth conversion you should have done in 2024." That makes tax inefficiency much easier to ignore, even though it's often the bigger number.

Here are eight places where that money tends to disappear, and what you can do about each one.

1. Your asset location may be backward

Asset allocation (how much you hold in stocks versus bonds) gets all the attention. Asset location (which accounts hold those assets) usually gets none.

Say you hold $200,000 in taxable bonds throwing off 5% interest, or $10,000 a year, inside a regular brokerage account taxed at your 24% tax bracket. That's $2,400 a year in tax you wouldn't owe if those bonds sat in your IRA instead.

Meanwhile, the tax-efficient index fund sitting in that IRA would have cost you almost nothing in a taxable account.

Swap the two and you keep that $2,400 every year going forward. That's usually a one-time fix you can make in an afternoon with your statements in front of you.

2. You're skipping your cheapest years to do Roth conversions

If you retired before claiming Social Security and your required minimum distributions (RMDs) haven't kicked in, you may be living through the lowest-tax years of your entire retirement, often sitting comfortably in the 12% or 22% bracket.

That window typically closes once RMDs begin, sometimes pushing you into a higher bracket for the rest of your life.

Converting traditional IRA assets to a Roth during these lower-income years, even in modest annual amounts, can lock in today's tax rate instead of tomorrow's higher one. Run the numbers with your tax preparer before year-end, since this window doesn't reopen.

3. Your mutual fund just sent you a tax bill for a year it lost money

If you've ever opened a 1099 and found a capital gains distribution on a fund that actually dropped in value that year, you've felt this one. It happens because the fund manager sold winning positions inside the fund, and the tax bill gets passed to everyone holding shares, regardless of when they bought in.

Let's say you have a $150,000 position in an actively managed fund and it distributes a 6% capital gain, which is a fairly ordinary distribution in an up market. That's $9,000 in gains landing on your return and, at a 15% capital gains rate, a $1,350 tax bill on a fund that may have actually lost value during your holding period.

ETFs are structured to largely avoid this. If you're holding actively managed mutual funds in a taxable account, check whether the same strategy is available in ETF form, or move that holding into your IRA where the distribution doesn't matter.

4. You're pulling money from the wrong account first

Most retirees draw down whichever account feels easiest to tap rather than the one that's most tax-efficient.

Spend down a $500,000 taxable account too fast in your 60s, for instance, and you may enter your 70s relying heavily on traditional IRA withdrawals just as RMDs force even more income out at the same time, pushing what could have been a 22% bracket year into the 24% bracket.

Leave your Roth untouched until you don't need it and you waste years of tax-free growth it could have provided.

The right order depends on your brackets, balances and timeline, but it's worth building a multi-year withdrawal plan rather than deciding year by year.

5. You're not harvesting losses when the market gives you the chance

Tax-loss harvesting means selling an investment at a loss to offset gains elsewhere in your portfolio, or up to $3,000 of ordinary income each year, then reinvesting in something similar so you stay in the market.

If a market downturn leaves one holding down $8,000, selling that loss to offset $8,000 of gains elsewhere saves you roughly $1,200 to $1,920 in tax, depending on whether it offsets short-term or long-term gains.

It costs nothing but attention, and most taxable investors never bother unless their adviser automates it.

6. Medicare could quietly double your premium

The income-related monthly adjustment amount (IRMAA) adds a surcharge to your Medicare Part B and Part D premiums once income crosses certain thresholds, based on your tax return from two years earlier.

In 2026, that surcharge kicks in above $109,000 for single filers and $218,000 for joint filers, pushing your total Part B premium as high as $689.90 a month, with Part D adding up to $91 more.

Because of the two-year lookback, a large Roth conversion, a property sale or a big capital gains year can trigger a surcharge you won't see until the notice arrives. What's more, crossing a threshold by even a dollar triggers the full surcharge for that tier.

If you're approaching Medicare age or planning a big income event, model the IRMAA impact two years out before you pull the trigger.

7. Your estate plan may be built for rules that no longer apply

If you did your estate planning in the past few years, you likely did it under the assumption that the federal estate tax exemption was about to be cut roughly in half. That didn't happen.

The One Big Beautiful Bill Act (OBBBA), signed in July 2025, permanently raised the federal exemption to $15 million per individual, or $30 million for married couples using portability.

For most families, that removes federal estate tax as a concern entirely. However, several states, including New York, Massachusetts and Oregon, still tax estates at thresholds far below the federal level, so you can owe a state estate tax with an estate nowhere near large enough to trigger the federal one.

If your plan hasn't been reviewed since the law changed, it's worth a checkup, both to avoid over-optimizing for a tax you no longer owe and to catch a state tax you still do.

8. Your retirement move may cost more than you think

If moving to a new state is in your retirement plan, the tax bill deserves the same scrutiny as the cost of the house. In addition to income tax, different states tax Social Security, pensions and retirement assets differently.

As of 2026, just eight states still tax Social Security at all: Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah and Vermont. The other 42, plus Washington, D.C., don't touch it.

Take a retired couple collecting $40,000 a year in Social Security and $30,000 from a 401(k). In a no-tax state such as Florida or Tennessee, none of that income is taxed at the state level.

In Colorado, retirees 65 and older can deduct all their federally taxed Social Security, so that part is sheltered, but the $30,000 in 401(k) withdrawals is still taxed at Colorado's flat 4.4% rate, about $1,320 a year.

In a state without that deduction, a meaningful share of the Social Security itself could also be taxed, adding hundreds more.

Picking a state based on weather or family without running the numbers first can mean paying more, or less, than expected, often by more than any fee you've ever paid on your portfolio.

The bottom line

It's important to keep an eye on your fees, but that work is mostly done. However, if you haven't reviewed your asset location, your Roth conversion timeline, your withdrawal order, your loss-harvesting opportunities, your Medicare exposure, your estate plan and your state tax footprint in the past year or two, that's almost certainly where your next real savings are sitting.

Unlike fees, tax efficiency isn't a one-time fix. The rules change, your income changes and your balances shift every year, which is exactly why this gets neglected.

Set aside one afternoon a year, ideally with your adviser and tax preparer in the same conversation, to go through this list. It will likely do more for your bottom line than any fund swap you make this year.

Related Content

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• 11 Truths That All Investors Must Accept
• Are You Ready to Retire? Find Out With This 10-Item Checklist

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Retirement has a lot of moving parts, and planning for them can be overwhelming.

Taxes, investments, Social Security, estate planning, healthcare and income strategies all compete for attention, and many retirees end up postponing important decisions because they aren't sure where to start.

As a CERTIFIED FINANCIAL PLANNER® and CEO of Peak Retirement Planning, I can tell you that the good news is that not every improvement requires a complete overhaul of your financial plan.

In fact, some of the most impactful retirement moves can be implemented relatively quickly.

While no single strategy is a silver bullet, taking action on a handful of key areas today could improve tax efficiency, simplify your finances and create more flexibility later in retirement.

Below are 10 retirement fixes worth considering.

1. Review whether Roth conversions make sense

For many retirees and pre-retirees, Roth conversions remain one of the most powerful tax-planning opportunities available (I talk about Roth conversions more in depth in my bestselling book I Hate Taxes, which you can request for free here).

The basic Roth conversion concept is straightforward: Move money from a traditional IRA into a Roth IRA, pay taxes on the converted amount today and enjoy tax-free withdrawals in the future.

This strategy can be especially attractive for retirees who expect a higher future taxable income from pensions, required minimum distributions (RMDs) and Social Security. By paying taxes now, while rates remain historically low, you could reduce future tax burdens and create greater flexibility later.

That said, Roth conversions are rarely as simple as they appear. They can affect Medicare premiums, Social Security taxation and other aspects of your tax return.

Before making a move, it's important to run the numbers and look at them carefully.

2. Take advantage of available charitable tax benefits

Many retirees are charitable by nature, yet they often miss opportunities to maximize the tax benefits of their giving. Recent tax law changes have expanded charitable deduction opportunities for some taxpayers, even those who don't itemize deductions.

A little organization today could result in significant tax savings when it's time to file.

3. Improve your tax location strategy

Most investors focus heavily on asset allocation. Far fewer pay attention to asset location.

Asset allocation determines what you own, but asset location determines where you own it.

For example, growth-oriented investments might be more valuable inside Roth accounts because future appreciation could be tax-free.

Meanwhile, more conservative holdings could be appropriate inside tax-deferred retirement accounts.

Two investors can own identical portfolios yet experience very different tax outcomes depending on how their investments are positioned across account types.

Reviewing account placement might not require changing your investments at all, but it can have a meaningful impact over time.

4. Maximize retirement account contributions

Many workers increase their salaries over time but forget to increase their retirement contributions. If you're still employed, review your current contribution levels to workplace plans, IRAs and health savings accounts (HSAs).

Contribution limits often increase, and individuals age 50 and older may qualify for additional catch-up contributions.

A small adjustment to your payroll deductions today could translate into thousands of additional dollars for retirement down the road.

5. Reevaluate where excess cash is sitting

Many retirees and near-retirees accumulate large balances in savings accounts or taxable brokerage accounts while underutilizing tax-advantaged retirement vehicles.

If you have excess cash and are eligible to contribute to retirement accounts, consider whether those dollars could be working harder in a Roth IRA, Roth 401(k), traditional IRA or HSA.

In many cases, repositioning existing assets can improve long-term tax efficiency without changing your overall investment strategy.

6. Become more tax-efficient in taxable accounts

For investors with substantial brokerage accounts, tax management can be just as important as investment management.

One opportunity many people overlook is tax-loss harvesting, which involves realizing investment losses to offset gains or reducing taxable income. Over time, these tax savings can add up significantly.

Investors with larger taxable portfolios could also benefit from strategies such as direct indexing, which can provide additional opportunities to harvest losses while maintaining market exposure.

Even modest improvements in tax efficiency can create significant long-term value.

7. Audit your mutual funds

Many investors continue to hold mutual funds purchased years ago without reviewing whether those holdings remain appropriate. Some mutual funds carry higher internal expenses than comparable ETFs or index funds, and others may generate taxable distributions that create unexpected consequences in brokerage accounts.

Conducting a mutual fund audit doesn't necessarily mean replacing every holding.

However, reviewing expenses, tax efficiency and performance relative to alternatives can help identify opportunities for improvement.

8. Update your estate planning documents

This might be the least exciting item on the list, but it could be among the most important.

Wills, trusts, powers of attorney and healthcare directives are foundational components of a retirement plan, and yet, most Americans either don't have these documents or haven't reviewed them in years.

Life changes. Laws change. Family circumstances change. If your estate plan hasn't been updated recently, now may be the time to revisit it.

Equally important, make sure beneficiary designations on retirement accounts and insurance policies align with your overall plan and goals.

9. Simplify and consolidate accounts

Many retirees accumulate accounts over decades of employment. A former 401(k) here. An IRA there. A brokerage account somewhere else. Before long, keeping track of everything becomes unnecessarily complicated.

Consolidation might not improve investment returns, but it can make your finances easier to track.

It could also simplify tax reporting, improve organization and reduce confusion for spouses or heirs if something happens to you.

Sometimes the greatest benefit isn't financial performance; it's peace of mind.

10. Don't forget to enjoy the money

This final fix may be the most challenging one for diligent savers. Many successful retirees spent 30 or 40 years accumulating wealth and have developed strong saving habits, avoided lifestyle inflation and consistently prioritized financial security.

The challenge is that those same habits can make it difficult to spend money in retirement. Retirees still need a plan to avoid overspending, but many aren't in danger of running out of money; they're in danger of never fully enjoying what they've worked so hard to build.

Whether it's traveling with family, helping children and grandchildren, supporting charitable causes or simply creating memorable experiences, retirement isn't just about preserving assets; it's about using those assets to support the life you want to live.

After all, while running out of money is a legitimate concern, running out of time might be the greater risk.

The most successful retirement plans balance both sides of the equation: They protect your future while giving you permission to enjoy the present.

Related Content

• When Is a Roth Conversion a Bad Idea? 6 Situations Retirees Should Consider Carefully
• This Changes Your Social Security Decision (Especially if You're in the 2% Club)
• Should You Take the Survivor Option on Your Pension?
• Do You Need $1 Million-Plus to Retire if You Have a Pension?
• Many Retirees With a Pension and $1 Million-Plus Do These 7 Things (and Regret It Later)

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Even after paying off a mortgage, rising property taxes can be a significant financial challenge, especially for retirees living on fixed incomes.

Recent data show that property tax bills nationwide average $4,427 annually per single-family home, a more than 3% jump from the previous year.

But…several states are currently considering changes to their property tax systems. As a result, this November, many voters will decide whether to freeze taxable home values, expand homestead exemptions, or cap annual assessment spikes — changes that could provide relief to many homeowners struggling with affordability.

So, if you're an older adult homeowner, or someone helping an aging loved one manage housing costs, here are some key property tax changes to watch this year.

Louisiana property tax exemption for seniors

Voters in Louisiana will decide in November whether to expand property tax relief for some older homeowners through a proposed constitutional amendment created by House Bill 514 (Act 274).

• The measure would allow parishes and municipalities to provide an additional property tax exemption for qualifying homeowners age 65 or older.
• Eligible taxpayers must own and occupy a homestead and qualify for Louisiana’s existing special assessment level program.

How it could affect older homeowners: The proposal wouldn’t eliminate property taxes for older adults statewide. Instead, the measure would give local governments the option to offer this additional benefit.

• If a parish or municipality adopts the exemption, qualifying homeowners age 65 and older could receive an additional reduction in their taxable home value.
• That could, in turn, potentially lower their property tax bills.

Supporters say the tax measure would help older adults stay in their homes as property values rise. It could also provide relief to retirees whose incomes may not keep pace with housing costs.

Note: Louisiana already provides a special assessment level program that protects certain qualifying seniors from increases in the assessed value of their homes. But advocates see the proposed exemption as an additional layer of protection.

Opponents’ concerns focus primarily on the effect on revenue. Property taxes help fund schools and local services, and expanding exemptions could mean less money for local government priorities.

If approved by voters on the November 3, 2026 Louisiana ballot and adopted by local governments, the exemption would apply to tax years beginning January 1, 2028.

Oklahoma property tax cap & senior protection tiering

Oklahoma voters will decide this fall whether to approve State Question 847, a constitutional amendment to slow property valuation growth statewide while restructuring tax protections for older adult homeowners.

For homeowners overall, the measure would reduce the annual cap on homestead property valuation growth from 3% to 1.75% and non-homestead real property from 5% to 4%.

How it could affect older adult homeowners: Unlike general property tax caps, State Question 847 would modify Oklahoma's existing Senior Valuation Limitation (senior freeze) program for homeowners age 65 and older:

• Seniors with low-to-moderate income: Retirees earning at or below their county's HUD median income would retain a 0% freeze on taxable property value increases.
• Seniors with higher income: Currently, seniors earning over the median income receive no valuation protection. Under the proposed measure, senior property valuation increases would be capped between 0.35% and 1.75%, scaled according to household income brackets.

Supporters argue that replacing the "all-or-nothing" income threshold with a sliding scale ensures that older adults with middle incomes on fixed pensions aren't suddenly exposed to full market-value spikes, while keeping baseline caps predictable for all Oklahomans.

Opponents argue that altering senior freeze structures creates uncertainty for local school districts and municipal services that rely heavily on property tax revenues to fund local infrastructure and career centers.

State Question 847 will appear on the November 3, 2026 ballot. If approved, the new valuation caps and senior income tiers would take effect for tax year 2027.

Florida homestead exemption: Amendment 3

Florida voters will decide in November whether to approve a constitutional amendment that would significantly increase the state’s homestead exemption.

The measure, known as Amendment 3, would raise the exemption from $50,000 to $150,000 in 2027 and then to $250,000 in 2028 for qualifying homesteaded properties. The increased exemption wouldn’t apply to school district taxes.

Those who qualify for the homestead exemption would have a larger portion of their home’s value excluded from tax, potentially lowering their property tax bills.

How it could impact older adult homeowners: Unlike the Louisiana proposal, Florida’s measure isn’t limited to those 65 and older. It would apply broadly to homeowners who qualify for Florida’s homestead exemption.

However, the measure could have a significant impact on older homeowners in part because of the state’s large retiree population. The savings could be particularly helpful for Florida retirees with fixed incomes, who are increasingly facing rising insurance, housing, and living expenses.

• Supporters argue that Florida homeowners need relief after years of rising property values and higher housing costs. They say expanding the homestead exemption would allow residents to keep more of their income and make it easier for some of them to remain in their communities.
• Critics argue that the proposal could reduce funding for vital public services or force local governments to find other revenue sources.
• Legal Challenge to Watch: The measure is currently facing legal challenges in state court over its ballot language. Opponents contend the title and summary written by lawmakers are overly promotional rather than objective. While the court challenges don't contest the proposed tax cuts, a new ruling could potentially force revisions to how the measure appears on the November ballot.

Update: On August 5, 2026, a Leon County Circuit Court judge ruled that the ballot wording for the proposed Florida property tax amendment is misleading. The court found it uses promotional language, e.g., describing the measure as "constitutional protections for Florida homeowners," instead of neutrally describing what the measure would do.

As a result, the Florida Attorney General's Office has until August 14 to rewrite the ballot title and summary in more objective terms.

It's important to note that this ruling doesn't remove the amendment from the November ballot. Instead, it requires voters to receive more neutral ballot language before casting their votes.

Amendment 3 would need at least 60% voter approval to pass. If approved, it would represent one of the largest expansions of Florida’s homestead exemption.

Ways to lower a property tax bill

While voters in these and some other states decide on tax changes this November, homeowners across the country don't necessarily have to wait for election day to potentially lower their property tax bills.

Check whether your state, county or local government offers property tax exemptions, freezes or deferral programs for older homeowners.

Keep in mind that eligibility rules vary, and some programs require homeowners to apply each year.

It also could be worth reviewing your property assessment.

If your home’s assessed value appears too high compared with similar properties in your area, you may be able to appeal the assessment and potentially lower your taxable value.

For more information, see our report: How to Lower Your Property Tax.

This article has been updated to include a new ruling on the Florida property tax amendment.

Related

• Florida Voters to Decide on Major Property Tax Changes
• States With the Lowest Property Tax Rates
• New Bill Proposes $1 Million Capital Gains Tax Exclusion for Those 65 and Older
• College Towns Are Becoming Retirement Destinations: How Does the Tax Math Add Up for Retirees?

One of the most enjoyable aspects of retirement for married couples is finally having more time to spend together and the financial freedom to maximize those years.

That's possible because during their working years and into retirement, they've had a unified financial structure that's worked well — filing taxes jointly and budgeting based on their combined income.

But eventually, they must plan for the time when one of them is alone and make sure the survivor will be as financially protected as possible. Most married couples do not plan for that clearly enough.

When a spouse dies, the surviving spouse may still need much of the same income for the usual expenses — the house, property taxes, utilities, insurance, medical costs, family support and lifestyle.

But their tax structure changes, and they may be subject to the "widow's penalty" when their tax filing status changes from married filing jointly to single. Suddenly, tax brackets compress, the standard deduction changes and income that once fit comfortably inside a married tax structure may become more heavily taxed.

Picture a surviving spouse sitting at the kitchen table, looking at the same accounts, needing the same dignity but having less tax room to work with. No one wants to think about that. This is where many retirement plans fail emotionally, not just mathematically. They may protect the portfolio, but they do not protect the person who is left behind.

A new tax world for a surviving spouse — and its cascading effects

I remember when this issue first became real to me. It was years ago, when a longtime client — widowed a little more than a year — came into my office with her tax return and asked a question that seemed simple: "Why did my tax bill go up after my husband died?"

Her household income had gone down. Her husband's Social Security check was gone. Certain expenses had changed. Emotionally, she was still trying to adjust to life alone.

But financially, something did not add up. She had less income than before, yet her tax situation felt worse.

That is the widow's penalty. And once you understand it, you begin seeing it everywhere.

After one spouse dies, the surviving spouse often moves into a very different tax world. The tax code treats married couples filing jointly more generously than single filers.

• The brackets are wider
• The standard deduction is larger
• Medicare income thresholds are higher
• Long-term capital gains thresholds can be more favorable
• The net investment income tax (NIIT) threshold is also higher

For the 2026 tax year, a married couple filing jointly does not enter the 24% marginal income tax bracket until their taxable income exceeds $211,401 (the ceiling for that bracket is $403,550). But the single threshold is roughly half the joint threshold. A single filer for 2026 reaches the 24% bracket once taxable income exceeds $105,700 (up to $201,775).

The standard deduction compresses, too. For 2026, the standard deduction is $32,200 for married couples filing jointly and $16,100 for single filers. The surviving spouse may still have the same expenses and lifestyle needs they did when their spouse was alive, but has less tax room to absorb the income that funds them.

A surviving spouse may lose one Social Security check but typically keeps the larger of the two benefits. Pensions with survivor elections may continue. Required minimum distributions may continue. Portfolio income may continue. Rental income, annuity income and investment distributions may continue.

The survivor may end up retaining 70%, 80% or even 90% of the household income but lose the joint tax structure entirely.

For example, a couple with $140,000 of taxable retirement income may sit comfortably in the 22% bracket, but a surviving spouse with $115,000 of taxable income — less income than the couple had together — can suddenly be pushed into the 24% bracket. Over 15 or 20 years, the lifetime cost can become substantial.

Medicare adds another layer. For 2026, Medicare Part B IRMAA surcharges begin when modified adjusted gross income exceeds $109,000 for an individual, versus $218,000 for a married couple filing jointly. The premium is simply higher because income now lands on the single-filer scale.

That is where many widows and widowers get blindsided. They expected grief, paperwork and adjustment. They did not expect the tax code and Medicare rules to make retirement feel financially tighter at the exact moment life became harder.

How to use a Roth conversion efficiently

If you are already widowed and reading this, the situation is not hopeless. Meaningful planning may still be available. Roth conversions during widowhood can still make sense in some cases, even inside single tax brackets, if the alternative is allowing a large traditional IRA to compound into larger future RMDs.

Qualified charitable distributions (QCDs) can become powerful after age 70½. Asset-location changes, tax-efficient withdrawal sequencing and Medicare-income management can still reduce future drag.

But if you are still married, the best planning window may be before widowhood.

For many couples, the richest tax-planning window occurs after retirement but before RMDs begin. That may be five to 10 years, or sometimes less.

The core strategy often involves multiyear Roth conversion planning while both spouses are alive and still filing jointly. The goal is not to convert blindly but to use available joint brackets intentionally, reduce future tax-deferred concentration and give the surviving spouse more tax-free flexibility later.

The math requires discipline. Each year, evaluate how much traditional IRA money can be converted without creating unnecessary tax damage. You pay tax at known joint rates today to potentially reduce larger future taxable distributions later.

Repeat the analysis annually and stop when the math no longer supports it. Document the plan clearly so the surviving spouse is not left guessing.

The long-term care effect

Long-term care can destroy the planning runway.

Consider this scenario. One spouse becomes ill. The healthy spouse becomes the caregiver. Assets may be spent faster than expected. IRA withdrawals may increase. Roth conversion planning gets delayed. Tax planning gets pushed aside because the family is dealing with doctors, facilities, medications, stress and exhaustion.

Then, after months or years of care, the healthy spouse becomes the surviving spouse and may inherit a weaker financial structure with fewer clean choices.

Wade Pfau, author of the Retirement Planning Guidebook and a professor at The American College of Financial Services, has described long-term care as one of retirement's most unpredictable risks.

The cost data explains why. CareScout's 2025 Cost of Care Survey reported national median annual costs of $74,400 for assisted living, in excess of $114,000 for a semi-private nursing home room and more than $129,000 for a private nursing home room.

Those are not just care costs; they are tax-planning costs. If the money comes from an IRA, the withdrawal may create taxable income. If that income pushes the household across Medicare thresholds, the cost can compound.

If the healthier spouse is left with fewer assets and less flexibility afterward, the widow's penalty becomes more painful.

IRAs and 401(k)s: A structural blind spot in retirement planning

IRA guru Ed Slott, founder of IRAHelp.com, has spent years warning that tax-deferred retirement money is not tax-free money. That warning becomes especially relevant here. The surviving spouse may inherit the same IRA or 401(k) balance, but under compressed single-filer brackets.

The mistake is not having an IRA or 401(k). The mistake is assuming they behave the same way after the first spouse is gone. They do not.

If you are wondering why this may not already be in your plan, the answer is not necessarily that anyone has been negligent. For three primary reasons, the widow's penalty sits in a structural blind spot across much of retirement planning.

• Many plans focus heavily on the retirement date, not the surviving-spouse phase.
• Most people do not enjoy a planning conversation that says, "Pay taxes voluntarily today to potentially reduce a larger tax problem later." Not having the conversion often feels better in April. It may feel much worse 10 years later.
• Many reviews are organized around investments, not the household tax structure after the first death.

Understand the potential stakes. The table below is only a simplified illustration. It assumes the surviving spouse retains a high percentage of joint retirement income, which can happen when income is driven by pensions, RMDs and portfolio distributions rather than mostly by Social Security.

These estimates may include federal income tax and Medicare surcharge effects. They do not include state income taxes, the net investment income tax or other household-specific factors. The point is not that every household will match the table but that the annual cost can become a six-figure lifetime issue if it persists for 10, 15 or 20 years.

A surviving-spouse tax map

Married couples with meaningful IRA balances, pensions, taxable investment income, deferred compensation or future RMD exposure should not guess. The next practical step is specific: Ask for a surviving-spouse tax map.

That map should show, in dollars, what happens to income, taxes, Medicare premiums, IRA withdrawals and cash flow after the first spouse dies.

A useful version of that analysis can often start with last year's joint 1040. Run the same income through the single-filer tax structure, compare the result and then project the difference over 10 to 20 years with RMDs, Medicare thresholds and Roth conversion options included.

If the exposure is small, you should know that. If it is large, you should know that, too, while both spouses are still here, while both can still make decisions together and while the cleanest planning years may still be available.

The window closes a little further with every tax year that passes. You should at least know what is inside it.

Dan Dunkin contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

Related Content

• Avoiding the Widows' Penalty Tax Trap After a Spouse Passes
• The Financial Effects of Losing a Spouse
• Three Ways to Help Create Financial Stability for a Widow
• Six Ways to Prepare for Widowhood and Protect the Surviving Spouse
• Your Retirement Plan Looks Watertight, But Have You Checked for Tax Leaks?

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

"John" called me on a Tuesday. He had just accepted an offer on a strip center he had owned for 26 years. He was happy about the price and miserable about everything else.

He did not want to find another building. He did not want to sign another lease, chase another tenant or fix another roof. What he wanted, in his words, was to never get another midnight phone call about a toilet.

Somebody had told him about a Delaware Statutory Trust (DST). He did not know what it was. He only knew it was supposed to make his problem disappear. By the end of our call, I told him a DST might be exactly right for him. I also told him that if one detail had been different, it would have been exactly wrong.

That is the honest truth about DSTs. They are a wonderful tool for the right person and a poor fit for the wrong one. The trouble is that most of the people selling them only describe the right person. So before you exchange a dime, sit with these five questions.

1. Are you actually done being a landlord?

Not tired. Done.

There is a difference. Tired is Saturday morning after a bad week. Done is a decision. You give up control completely. The sponsor makes every decision about the building, the financing, the tenants and the eventual sale. You collect monthly distributions and you wait. You cannot vote on a roof. You cannot fire the manager. You cannot decide to sell next spring because you found something better.

For the man with the strip center, that loss of control was the entire point. He had been the manager for 26 years and he was finished. For the next person, that same loss of control is a cage. If part of you still loves the hunt, the negotiation, the ownership, a DST will frustrate you. Be honest about which person you are.

2. Do you meet the DST accredited investor requirements?

Most DSTs are offered through private placements generally limited to accredited investors. The current thresholds are a net worth above $1 million not counting your home, or income above $200,000 a year as an individual, or $300,000 jointly with your spouse, in each of the last two years with the expectation of the same this year.

Most people selling an appreciated property clear this bar without thinking about it. But you have to actually meet it and be able to document it. If you cannot, the door does not open and no adviser can open it for you.

3. Is your money big enough to spread out, but not so big you should buy a building?

Most DSTs set a minimum investment between $25,000 and $100,000, depending on the offering. The properties themselves are large, often $30 million to $100 million, which is how a single investor ends up owning a sliver of an apartment complex or a distribution center they could never buy alone.

Here is the sweet spot. If your 1031 exchange proceeds are large enough to split across several DSTs, you get something a single replacement building can never give you: Diversification.

You can own a piece of an apartment community in one state, a medical building in another and an industrial property in a third, all inside one tax-deferred exchange. One bad tenant no longer ruins your year.

But there is a ceiling to the logic. If you are exchanging a very large sum and you genuinely enjoy ownership, buying your own replacement property may still be the better answer.

A DST trades control for convenience. The more capital you have, the more that trade is worth examining rather than assuming.

4. Do you understand DST illiquidity and are you at peace with it?

This is the question people skip and the one that causes the most regret.

A DST is not a stock. You cannot sell it next Tuesday because you changed your mind or because you need the cash. There is no real secondary market to speak of.

Your money is committed until the sponsor sells the underlying property, which typically happens somewhere between five and 10 years out, on a timeline you do not control.

If everything you are putting into the DST is money you will need to touch in the next few years, stop. This is the wrong vehicle. A DST is for capital you can leave alone.

Before anyone exchanges, I want to see that the rest of their financial life is liquid enough that locking up this piece does not keep them awake at night.

5. How does this fit your estate plan?

This question matters because the answer can change the whole calculation, and most people never get to it.

If the goal is income and simplicity for the rest of your own life, a DST can deliver both. But think one step further. Under current law, when you die, your heirs generally receive a basis adjustment that can eliminate the deferred capital gain for income tax purposes.

The gain you carried for years does not have to pass to them as a tax bill. The DST interest transfers at its value on the day you die, and the embedded gain can be wiped clean.

That single feature changes the math for a lot of families. A property you might have been afraid to sell because of the tax can be exchanged into a passive, diversified DST, held for income while you are alive, and then handed to your heirs without that gain following them.

If your spouse or children are part of the plan, a DST is not just an exit. It is part of an estate strategy worth discussing with your adviser and your estate attorney before you commit.

A word on DST investment risks

DSTs draw their tax treatment from IRS Revenue Ruling 2004-86, which lets you exchange real property for an interest in a DST without recognizing gain under Section 1031, provided the other 1031 requirements are met.

That treatment comes with a set of strict requirements, also known as the Seven Deadly Sins, and one of them matters most to you: Once the offering closes, the sponsor generally cannot raise new money or restructure the financing. If the property runs into trouble, the trust's hands are largely tied.

That puts enormous weight on one thing: Who the sponsor is. A DST is only as sound as the company managing it and the building underneath it. Distributions are not guaranteed. Real estate values can fall. Some sponsors have run into serious trouble, and their investors had little recourse.

Anyone who tells you a DST is safe is selling, not advising. The right question is not whether DSTs are safe. It is whether this specific property, run by this specific sponsor, at this specific price, is worth your money.

So, is a DST right for you?

Go back to John, the man with the strip center. He was done being a landlord, he was accredited, his proceeds were large enough to spread across three properties, he had plenty of liquidity elsewhere and he wanted what was left to pass cleanly to his daughter. Five for five.

For him, the decision to invest in a DST was close to perfect, and that is exactly what we did.

If you answered those five questions the way he did, a DST may be one of the best decisions you make in retirement.

If you stumbled on even one of them, that is not a reason to give up. It is a reason to slow down and look harder, because the wrong DST is far more expensive than no DST at all. The vehicle rarely fails those investors. The question they skipped does.

Related Content

• What Is Capital Gains Tax Deferral?
• Don't Defer Retirement if You're a Landlord, Defer Taxes Instead
• DST Inventory Just Hit a Record $3.9 Billion: What 1031 Exchange Investors Should Do Next
• Why Your Next 1031 Exchange Decision Might Not Be About Taxes (It Could Be About Life)
• A 1031 Exchange May Look Great for You on Paper, But It's Not Just About Taxes

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

When planning for retirement, state taxes on your 401(k), pension, and Social Security benefits should be part of your strategy.

Yet while some states offer no retirement taxes on any of these sources, a zero-percent tax rate can lose its shine if you can't get a doctor's appointment when you need one.

After all, an average 65-year-old retiring in 2026 can reportedly expect to spend $185,500 on healthcare and medical expenses throughout retirement. And living comfortably on a fixed income requires balancing healthcare costs with other top retiree concerns, like housing and daily living expenses.

To help you navigate this balancing act, we cross-referenced states that don't tax retirement income against property tax data, cost-of-living metrics, and senior healthcare rankings. The final list highlights the five most tax-friendly states for retirees, ranked by the quality and accessibility of their older-adult healthcare.

How we ranked these retirement states

Our list draws from Kiplinger's analysis of states that do not tax retirement income. Among the 13 states meeting that baseline, we filtered for the ten with the lowest median property taxes paid on mortgage homes (using PropertyShark data referenced from the latest U.S. Census Bureau data points).

Cost-of-living data was drawn from the Missouri Economic Research and Information Center (MERIC) index, where a score of 100 represents the national average.

Then, states were ranked using the United Health Foundation's "America's Health Rankings Senior Report," specifically focusing on "Clinical Care for Seniors." This metric evaluates:

• Healthcare access: Including availability of dedicated primary care providers, home health aides, and care affordability.
• Clinical services: Including rates of routine cancer screenings, avoided care rates due to high costs, and flu and pneumonia vaccinations.
• Quality of care: Including hospice care usage, nursing home quality ratings, and preventable hospitalization stays (per Medicare beneficiaries aged 65 to 74).

Scores range around a national benchmark of 0.00. Positive scores indicate above-average healthcare performance, while negative scores reflect below-average metrics. However, it's important to note that these scores are statewide averages and are not indicative of any one area within a specific state.

This list evaluates state income tax only. Federal income taxes still apply. Consult with a qualified tax professional when necessary.

1. Washington: Outstanding healthcare, higher cost of living

Senior healthcare ranking: +0.528 (Top 10 nationwide)

Median property taxes paid: $4,556

Cost-of-living score: 114.6 (14.6% above national average)

Washington takes the top spot on our list. The Evergreen State exempts all retirement income from state tax, meaning your Social Security, pensions, 401(k)s, and IRAs remain untouched by local authorities.

Another retiree benefit is its healthcare system. With a score of +0.528, per the Clinical Care report, Washington's medical care for older adults is above average, placing it in the top 20% of all states nationwide, just behind Colorado.

Yet everyday affordability remains an issue.

• Washington's median annual property tax bill exceeds $4,500, and overall living expenses — like groceries and housing costs — run roughly 14.6% higher than the national average.
• Plus, Washington recently approved an increased capital gains tax structure ranging from 7% to 9.9% on certain high-value investments, which can make the state more expensive for higher-wealth individuals.

But if you're retired and can comfortably afford the often higher price tag of Pacific Northwest living, Washington delivers an ideal combination of state retirement tax income exemptions and top-tier healthcare.

Related: 10 Cheapest Places to Live in Washington

2. Pennsylvania: Strong healthcare and moderate living costs

Senior healthcare ranking: +0.320 (#16 nationwide)

Median property taxes paid: $3,311

Cost-of-living score: 96.2 (3.8% below national average)

Pennsylvania slides into second on our list. The Keystone State exempts retirement income from state tax, including Social Security, pension payouts, and 401(k) or IRA distributions.

Senior healthcare access also remains strong here. With a score of +0.320, older adults may expect high-quality medical care, placing the state in the top 32% nationwide, according to data from the United Health Foundation. Plus, the average cost of living sits nearly 4% below the national average.

• But while retirement income is exempt from state taxes, all other income sources (like interest and dividends) are subject to a flat 3.07% state income tax.
• Additionally, the median property tax bill, while lower than Washington, remains 11% above the national average according to data from PropertyShark.

For retirees, Pennsylvania may offer a more balanced financial profile than higher-tax northeastern neighbors, like New York. However, elevated property tax bills can be difficult on a fixed income.

3. Iowa: Affordable living with above-average care

Senior healthcare ranking: +0.185 (#21 nationwide)

Median property taxes paid: $2,897

Cost-of-living score: 88.6 (11.4% below national average)

Iowa may be a true hidden gem for budget-conscious retirees. The state exempts retirement income from state taxes for residents aged 55 and older, meaning you don't have to wait long before you get state income tax relief.

On top of that tax exemption, Iowa boasts the lowest property tax bill among our top three states on this list, at just under $2,900. This is right below the national average, according to the U.S. Census Bureau, and the savings don't stop there. The Hawkeye State's cost of living is more than 11% below the national average, according to MERIC.

And perhaps more importantly, low cost doesn't automatically mean low healthcare quality, either. Iowa's senior healthcare ranking sits in the top 42% of the nation (ranking 21st overall in the Clinical Care United Health report), supported by lower rates of preventable hospitalizations.

• While Iowa ranks high nationally for average senior clinical care, its rural geography can create more care disparities for some areas than in, say, Washington or Pennsylvania.
• Plus, if you're used to a top #20 state for prime medical care, Iowa falls just short of that in the Clinical Care report.

Yet for fixed-income retirees seeking a balance of affordability and dependable healthcare (at least in more urban areas), Iowa may be considered a standout choice among tax-friendly states.

4. Florida: Low taxes, but rising costs and healthcare strain

Senior healthcare ranking: -0.103 (#31 nationwide)

Median property taxes paid: $2,730

Cost-of-living score: 100.7 (0.7% above national average)

Florida remains a classic choice for retirement because it levies no state income tax at all, protecting not just retirement distributions but also interest and dividends (and who doesn't love the weather?).

However, the Sunshine State's significant influx of retirees in recent years has created new friction points.

• Rapid population growth stretches the doctor-to-patient ratio, lowering Florida's senior healthcare access score to slightly below the national benchmark, according to the United Health Foundation.
• Additionally, rising housing expenses and skyrocketing home insurance rates have pushed Florida's overall cost of living slightly above the national average, according to MERIC.

So while Florida remains viable, a 2026 retirement plan in the Sunshine State might mean preparing for higher everyday expenses and longer waits for medical specialists than in previous decades.

Related: 10 Cheapest Places to Live in Florida

5. South Dakota: Maximum tax relief, lower healthcare access

Senior healthcare ranking: -0.263 (#35 nationwide)

Median property taxes paid: $2,724

Cost-of-living score: 94.1 (5.9% below national average)

Like Florida, South Dakota levies no state income tax on personal income (though its cold weather stands in sharp contrast to the Sunshine State).

South Dakota also has the lowest median property tax bill on this list, per U.S. Census Bureau data, and a cost of living roughly 6% below the national average.

One drawback for seniors requiring medical care in the Mount Rushmore State is medical availability, per the Clinical Care report.

• South Dakota ranks 35th in older adult clinical care, with a score below the national average.
• Rural geography and fewer medical centers mean accessing specialized care can require travel.

But if your primary goal in retirement is stretching your dollars as far as possible and you are comfortable with traveling for specialty care, South Dakota may offer your retirement nest egg significant financial benefits.

Read More

• How All 50 States Tax Retirement
• States That Won't Tax Your Death
• 5 Retirement Tax Traps to Watch in 2026
• How to Prepare Your Retirement Taxes for a Longer Life

Each April, Americans, or someone they hire, work through income tax forms, fill in totals from their financial records and send the results to the IRS.

The goal is usually simple: Pay as little to the federal government as legally possible so you can keep more of your hard-earned money.

But what if paying more in taxes today could leave you with more money tomorrow? What if voluntarily paying additional taxes now could reduce the amount you and your family pay over your lifetime?

Opportunities like these are rarely discovered while filling out tax forms in April. Effective tax planning must be part of a broader retirement strategy that considers income sources, future tax rates, healthcare costs, estate planning goals and the rules governing retirement accounts.

Many people use Roth conversions to reduce their lifetime tax burden. While the objective is often to pay less tax over the long run, the process often results in paying more tax in the short run, but that may be exactly what your long-term financial plan needs.

In other words, you intentionally elect to pay more tax today in exchange for the potential of a smaller tax bill later.

When implemented correctly, a Roth conversion allows you to pay taxes on your terms, at a rate you find acceptable, rather than taking a chance on future tax laws and rates at a time of the IRS' choosing. If implemented incorrectly, however, it may cost you more than you expected.

The silent partner

Imagine going into a business partnership where you provide all the capital, do all the work, take all the risk and spend years building something valuable. Then, when the time finally comes to enjoy the rewards, your partner suddenly appears and tells you how much of the business belongs to them.

No rational person would willingly enter into that kind of arrangement. Yet people all across America do something very similar through tax-deferred retirement accounts.

They contribute the money. They assume the investment risk. They watch their balance climb over decades and mentally count that balance as part of their retirement nest egg. The problem is that they don't know how much belongs to them until they begin taking withdrawals. At that moment, the IRS steps in and determines how much it gets to keep.

This is where a Roth account comes into the picture. Money placed in a Roth account grows tax-free, and qualified withdrawals in retirement are generally free from federal income tax because the taxes were paid before the money entered the account.

Many investors consider converting a portion of their tax-deferred accounts into a Roth account. The process is relatively straightforward: Money is transferred from a tax-deferred account into a Roth account.

However, when you make the conversion, you must pay income tax on the amount being converted.

At first glance, that may sound counterproductive. Why would anyone voluntarily create a larger tax bill? The answer is simple: You may be exchanging a known tax bill today for a potentially larger and less predictable tax bill in the future.

Roth assets can also create meaningful tax advantages for beneficiaries who may inherit those accounts.

When should you convert?

While Roth conversions may benefit many people preparing for retirement, it is not always advisable to convert all of the funds held in tax-deferred accounts. Maintaining tax diversification can be just as important as maintaining a diversified investment portfolio, yet it is often overlooked in traditional retirement planning.

Using the tax code efficiently later in life may require a blend of income sources, including taxable income, long-term capital gains, dividend income and Roth income.

I have seen situations where aggressively converting every available dollar to a Roth account has cost a retired couple nearly as much as if they had never converted at all. They lost opportunities to strategically fill lower tax brackets later in retirement and paid substantially more than necessary.

This highlights an important point: A Roth conversion is not the goal. The goal is to create the most efficient retirement income strategy possible. The rules surrounding Roth conversions can be complex, but the decision should be evaluated within the context of your overall retirement strategy.

At R.D. Smothers (RDS) Wealth, we encourage clients to begin by estimating their expected income for the year and determining how much room they have available within their current tax bracket.

Lower-income years can present some of the best opportunities for Roth conversions because they allow you to convert more assets while potentially remaining in a favorable tax bracket.

Taxes are only one piece of the equation. A well-designed Roth conversion strategy should also account for Medicare premium surcharges, commonly known as IRMAA, future healthcare expenses, estate planning objectives and the income needs of both you and your beneficiaries.

How much should you convert? Understanding the tax fountain and your 'Opportunity Zone'

This brings me to an important point about understanding your own unique relationship with the tax code. After all, the tax code is how your silent partner ultimately determines how much of your money you get to keep and how much they get to take.

Many retirees spend decades building wealth without fully understanding how that partnership works. Failing to understand the tax code will likely cost you at some point in retirement, whether through unnecessary taxes, Medicare surcharges, inefficient withdrawals or missed planning opportunities.

What makes this even more challenging is that the tax code you retire under may not be the same tax code you die under. I often tell clients that the tax code is written in pencil, not ink. Congress can change it, modify it or rewrite portions of it at any time. That's why successful tax planning requires ongoing adjustments as your circumstances and the tax laws evolve.

If you want to use Roth conversions to help manage your future tax burden, understanding tax brackets is essential. Before you can determine whether a Roth conversion makes sense, you need to understand how much of a conversion may be appropriate.

At RDS Wealth, we often refer to this as identifying your "Opportunity Zone." This is the portion of the tax code where additional income can potentially be recognized at rates that may be favorable relative to what you might pay in the future.

The U.S. tax code contains seven federal income tax brackets, ranging from 10% to 37%. Many people assume that if they fall into the 22% tax bracket, all of their income is taxed at 22%. That's not the case. Each bracket applies only to a specific portion of your income.

For example, in 2026, a married couple filing jointly receives a standard deduction of $32,200. Let's say the same couple has a gross income of $165,000 and no other deductions or credits. Their taxable income would be $132,800. They are squarely in the 22% tax bracket, but they will not pay 22% federal income tax on all of their money.

They will pay 22% federal income tax on only about $32,000 of their taxable income. When we look at this through the lens of Roth conversion planning, something interesting begins to emerge.

One way to grasp how the brackets work is to imagine them as a multitiered fountain. Each year, you pour all of your income into the top of the fountain.

The first tier to fill is the deduction bucket. No tax is paid on any income that lands in this bucket. Once that bucket is full, income spills into the 10% tier. Every dollar that lands there is taxed at 10%. The water then overflows into the 12% tier, then the 22% tier and eventually into higher tiers as more income is added.

In the example of the married couple earning $165,000, their income fills the lower tiers and then partially fills the 22% tier. Because they have not yet reached the top of that bracket, a portion of the 22% tier remains empty.

The empty space remaining in that tier is what we call the Opportunity Zone. It's the amount of income you may be able to recognize before spilling over into the next tax bracket.

In this example, the Opportunity Zone represents more than $78,000 of available space. That doesn't mean this couple should convert the entire amount, but it does mean they have room available to recognize additional income at a known tax rate rather than waiting until later when tax rates may be higher.

This is where Roth conversion planning becomes so powerful. If appropriate for your situation, you may be able to convert enough money to fill the remainder of that tier without spilling into the next bracket.

In doing so, you knowingly pay tax on those dollars today, move them into a Roth account and potentially allow future growth to occur in a tax-free environment.

The fact that you paid tax on the conversion means your tax bill may be higher this year than it otherwise would have been. However, if executed properly, that higher tax bill today may result in substantially lower taxes over the lifetime of the account.

Again, the goal of a Roth conversion is to pay a known and acceptable rate of tax while strategically reducing the future claim your silent partner has on your retirement assets.

The goal is not to eliminate taxes. The goal is to choose when you pay them. The families who often benefit most from Roth conversions are those who proactively manage their tax brackets rather than allowing future tax laws and required distributions to blindly manage it for them.

Ronnie Blair contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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• We've All Heard the Buzz About Roth Conversions, But Not Everyone Will Like the Reality
• 8 Factors to Consider When Considering a Roth Conversion
• A Wealth Adviser Explains: 4 Times I'd Give the Green Light for a Roth Conversion (and 4 Times I'd Say It's a No-Go)
• Risk On, Risk Off: The Mr. Miyagi Approach to Retirement Planning

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Retirement is supposed to be the reward for decades of disciplined saving. But for many retirees, a hidden tax problem quietly erodes what they've worked so hard to build — not through fraud or negligence, but through a lack of coordination between their income sources and their tax exposure.

Most retirees don't realize they're overpaying until after the damage is done. In retirement, the biggest tax triggers aren't wages — they're the benefits and accounts you spent a lifetime accumulating.

Understanding how they interact is what separates a tax-efficient retirement from an expensive one.

How IRA withdrawals can make Social Security taxable and Medicare cost more

Your income in retirement flows from multiple sources: Social Security, IRA withdrawals, investment income, sometimes a pension.

Each is governed by its own rules. The problem is that these streams don't exist in isolation. They stack on top of one another, and the IRS adds them together when determining what you owe.

A retiree who pulls $40,000 from an IRA to cover living expenses may not realize that withdrawal just made more of their Social Security taxable, bumped their Medicare premiums, and pushed them into a higher tax bracket.

None of those outcomes required earning a dollar more. They were triggered purely by the order and size of withdrawals from accounts they'd already paid into for decades.

Social Security: How much of your benefit is taxable

Whether your Social Security benefit is taxed depends on your provisional income: Adjusted gross income, plus tax-exempt interest, plus half of your Social Security benefit.

For individuals, once provisional income exceeds $25,000, up to 50% of benefits become taxable. Above $34,000, that rises to 85%. For married couples filing jointly, those thresholds are $32,000 and $44,000, respectively.

These thresholds have not been adjusted for inflation since they were established in the 1980s and 1990s. That means a retiree in 2026 with a modest lifestyle can easily find that 85% of their Social Security is taxable, not because they're wealthy, but because the brackets never kept pace with rising benefit amounts and retirement account balances.

RMDs: The income you're forced to take whether you need it or not

Required minimum distributions begin at age 73 (under the SECURE 2.0 Act, the starting age for RMDs will increase to age 75 for individuals born in 1960 or later). The IRS requires a calculated percentage of your tax-deferred accounts to be withdrawn each year, regardless of whether you need the money.

On a $1 million IRA, the first RMD is roughly $36,000 to $40,000. That amount grows as a percentage of the account each year.

Because RMDs count as ordinary income, they don't just generate their own tax bill. They push provisional income higher, which makes more of your Social Security taxable.

They can move you from the 12% bracket to the 22% bracket. They can trigger IRMAA surcharges on Medicare premiums that won't show up until two years later.

For retirees who spent decades deferring taxes to build a larger account, the RMD is often when the full bill arrives, on the IRS's schedule, not yours.

IRMAA: The Medicare surcharge most retirees don't see coming

The standard Medicare Part B premium in 2026 is $202.90 a month. But that is only what lower-income beneficiaries pay. Once your modified adjusted gross income crosses certain thresholds, you pay significantly more through IRMAA surcharges, and the lookback period means the income that triggers those surcharges was reported two years earlier.

For a married couple filing jointly, crossing into the first IRMAA tier costs $2,297 a year. Moving from Tier 1 to Tier 2 adds another $3,475, bringing the couple's total annual surcharge to $5,772. At the top tier, the combined Part B and Part D surcharges reach $13,872 a year for a couple on Medicare together.

The cliff structure matters: Exceeding a threshold by even one dollar triggers the full surcharge for that tier. A retiree who crosses an IRMAA threshold owing to a one-time Roth conversion or asset sale will pay elevated premiums for the entire following year, regardless of whether income normalized.

What to do about it

This is where most retirement plans fall short. Knowing these rules exist is not the same as having a strategy around them. Here is what proactive planning looks like in practice.

1. Use the pre-RMD window for Roth conversions.

The years between retirement and age 73 are often the most underused planning opportunity retirees have. During this window, income is typically lower, brackets are more favorable and there are no required distributions yet.

Converting portions of a traditional IRA to a Roth account during this period means paying taxes at today's rates on a smaller balance, reducing the size of future RMDs, lowering provisional income in later years, and shrinking the Social Security tax exposure and IRMAA risk that come with large mandatory withdrawals.

The right conversion amount each year is the one that fills your current bracket without crossing into the next one or triggering an IRMAA tier.

2. Sequence withdrawals with the bracket in mind.

The order in which you draw down accounts determines your tax rate each year. A common approach is to spend from taxable brokerage accounts first, then tax-deferred IRAs, then Roth accounts last.

But the more useful framework is to think about filling your current bracket each year deliberately: Taking enough from tax-deferred accounts to use the lower brackets fully, while leaving Roth assets intact to avoid pushing income higher when you don't need to.

3. Map your IRMAA exposure two years out.

Because IRMAA is based on income from two years prior, you need to be thinking about Medicare premiums before you're on Medicare.

A retiree who does a large Roth conversion at 63 needs to understand the Medicare premium implications at 65. The specific IRMAA thresholds for 2026 for married couples filing jointly start at $218,000 in MAGI.

Staying below a threshold is worth real money, and in many cases a modest adjustment to a conversion amount or the timing of an asset sale is enough to avoid crossing a tier entirely.

4. Use qualified charitable distributions (QCDs) to satisfy RMDs tax-free.

Retirees who are 70½ or older and charitably inclined can distribute up to $111,000 a year directly from an IRA to a qualifying charity. That amount counts toward the RMD requirement but does not appear as taxable income.

For a retiree who gives regularly, routing those gifts through a QCD rather than writing a check from a bank account eliminates a dollar of ordinary income for every dollar donated, which reduces provisional income, protects Social Security taxation rates and can keep MAGI below an IRMAA threshold.

The bottom line

Overpaying taxes in retirement is rarely the result of one bad decision. It is the result of income sources that interact in ways most retirees never planned for, because no one mapped those interactions before distributions began.

The strategies above are not complicated, but they require lead time, comprehensive financial planning and strategic coordination. Roth conversions done at 67 change what your RMDs look like at 73. Income decisions made at 63 affect your Medicare premiums at 65.

The retirees who pay the least in taxes are not the ones who earned the least. They are the ones who planned specifically for the way retirement income actually works, before the compounding consequences had already arrived.

Related Content

• 3 Ways to Potentially Avoid Falling Into a Tax Trap in Retirement, From a Financial Adviser
• 7 Tax Blunders to Avoid in Your First Year of Retirement, From a Seasoned Financial Planner
• Will Taxes Shred Your 401(k) or IRA During Your Retirement? It's Very Likely
• Will Your Retirement Income Trigger the IRMAA This Year? (Plus, 6 Ways to Avoid it in the Future)
• When Estate Plans Don't Include Tax Plans, All Bets Are Off: 2 Financial Advisers Explain Why

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at four tax questions from readers on the taxation of I bonds in various situations. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Buying and owning I bonds

Question: I am thinking about buying I bonds for the first time. I heard that holders of I bonds get generous tax breaks. What are the tax consequences of owning these bonds?

Joy Taylor: I bond buyers have a choice when they acquire the savings bonds. They can pay federal income tax each year on the interest earned or defer the tax bill to the end. Most people choose the latter. They report the interest income on their Form 1040 for the year the bonds mature (generally, 30 years) or when they're cashed in, whichever comes first.

Deferring tax on the full amount of accrued interest for up to 30 years may sound like a great idea until you get the tax bill for three decades' worth of interest. Also, taking the tax hit all at once can push you into a higher federal income tax bracket, making the tax bill even more expensive than it needed to be.

Interest earned on I bonds is exempt from state and local taxation.

2. Gifting an I bond you own

Question: I own about 50 I bonds that will begin to mature in 2030. I elected to defer taxation of the bonds' accrued interest until maturity. I am considering giving some of the I bonds to my grandchildren before they mature. If I do this, can I avoid paying federal income tax on the deferred interest?

Joy Taylor: Nope, this will not work taxwise. Making a gift of an I bond before maturity will accelerate taxation of the interest income. Giving away bonds you already own to someone else doesn't get you off the hook with the federal government for owing tax on previously untaxed interest. Even if the bonds are reissued in the gift recipient's name, you're still taxed on all that interest in the year of the gift.

3. I bonds used for education

Question: I have owned I bonds for many years. I heard that if I cash in the bonds and use the bond proceeds for higher education for my children, then I won’t have to pay tax on the interest when I cash them in. Is this true?

Joy Taylor: It depends on whether you meet all of the rules. One way to avoid paying federal income tax on accrued I bond interest is to cash in the bonds on or before the maturity date and use the proceeds to help pay for college or other higher education expenses for you, your spouse or your dependent. Note that there are lots of hurdles to jump over to be able to take advantage of this tax perk. Here are some of them:

• You must have purchased the bonds after 1989 when you were at least 24 years old.
• The bonds must be in your name only.
• The bonds must be redeemed to pay for undergraduate, graduate or vocational school tuition and fees for you, your spouse, or your dependent (grandparents cannot use this tax break to help pay for their grandchild’s college tuition unless the grandparents can, on their Form 1040, claim the grandkid as a dependent).
• Room-and-board costs aren’t eligible for the exclusion.
• The exclusion is subject to strict income limits. For 2026, it begins to phase out at modified adjusted gross income (MAGI) of more than $152,650 for joint filers and completely phases out at MAGI of $182,650. For all other filers, the phase-out range for 2026 is $101,800 - $116,800. These figures are adjusted for inflation each year, so they would be higher for 2027 and so forth. MAGI for this purpose starts with the AGI on line 11 of your Form 1040 (figured without taking into account any I-bond interest exclusion). Then you add back any tax breaks from working abroad, the exclusion for employer-provided adoption assistance and any deductions for student loan interest.

If the proceeds from all I bonds cashed in during the year exceed the qualified education expenses that you pay for the year, the amount of I bond interest you can exclude is reduced proportionally. You would use IRS Form 8815 to compute your MAGI and the amount of any I-bond interest exclusion that you would be entitled to.

4. Inherited I bonds

Question: I inherited I bonds this year from my father, who recently passed away. It is my understanding that my dad elected to defer being taxed each year on the I bonds during his lifetime. Do I have to report all the accrued, deferred interest on my federal tax return?

Joy Taylor: It depends. The executor of a decedent's estate can choose to include all pre-death interest earned on the bonds on the decedent's final income tax return. If this is done, the beneficiary reports only postdeath interest on Form 1040 for the year the bonds mature or are redeemed, whichever comes first.

If the executor doesn't include the interest income on the deceased owner's final federal income tax return, the beneficiary will owe taxes on all pre-death and post-death interest once the bond matures or is redeemed, whichever is earlier.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not, and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

More Reader Questions Answered

• All Ask the Editor Q&As
• Ask the Editor: Will I be Audited by the IRS?
• Ask the Editor: Tax Basis in Inherited Property
• Ask the Editor: Estimated Tax Payments and Withholding
• Ask the Editor: 10-Year Rule for Inherited IRAs
• Ask the Editor: Tax Questions on Roth IRA Conversions
• Ask the Editor: Tax Rules for Landlords

The financial professionals who contribute to Kiplinger's Adviser Intel are always here to share expert insights on wealth building and preservation.

They've recently written about the lessons in Belle Burden’s New York Times bestseller, Strangers: A Memoir of Marriage, and what can happen when a wife blindly trusts her spouse with the family finances.

This quiz is designed to test how much you know. (And don't worry if you miss an answer: You can follow the links below the quiz to brush up on your knowledge.)

Please note that this quiz has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or financial advice.

Read More

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Investors with large, highly appreciated stock positions can face a challenge: how to diversify those holdings without triggering a large capital gains tax bill.

Enter Section 351 exchanges.

Instead of selling an already diversified basket of appreciated securities, qualifying investors can contribute those holdings to seed a newly created ETF and receive ETF shares in return, deferring capital gains taxes.

Not surprisingly, the strategy has attracted interest from some wealth managers, ETF sponsors, and investors. But as the transactions become more popular, they are also attracting federal government attention.

U.S. Treasury Department officials have recently identified Section 351 transactions as one of several tax-focused investment strategies under review.

So how does this exchange work, and why has it become a closely watched approach?

What is an IRS Section 351 exchange?

This ETF exchange strategy gets its name from Section 351 of the Internal Revenue Code, which generally allows investors to transfer property to a corporation without immediately recognizing gain if certain strict requirements are met.

In a Section 351 ETF transaction, investors contribute appreciated securities during the initial launch phase of a new exchange-traded fund.

Note: Because IRS rules require the initial contributor (or group of contributors) to own at least 80% of the new ETF's total shares immediately after the exchange, this strategy cannot be used with existing, established ETFs. It is an opportunity that only occurs during the launch/seeding phase of a new fund.

• Instead of selling their holdings and receiving cash, which could trigger capital gains taxes in the year of the sale, investors receive shares of the ETF.
• If the transaction qualifies under Section 351, investors generally don't recognize the involved capital gains at the time of the exchange.

It's important to note that the tax benefit is a deferral, not a permanent elimination of tax. Investors' built-in gain generally carries over to the ETF shares and may become taxable when those shares are sold.

For example: Consider an investor who holds a broad, diversified portfolio of 30 different stocks worth $1 million, with an original purchase price of $200,000 — meaning there is an $800,000 unrealized capital gain.

No single stock makes up more than 25% of the portfolio.

Selling all 30 stocks to buy a traditional ETF would trigger an immediate tax bill on the $800,000 gain. So, the investor contributes their entire diversified stock portfolio as part of the launch of a new ETF, following all applicable IRS rules.

In exchange, they receive shares of the ETF. Because the contributed portfolio was already diversified before the transfer, the investor generally defers the $800,000 gain via the qualifying Section 351 exchange.

Note: The above is a highly simplified example. Every investor's situation is different, and you should consult a trusted tax advisor for guidance tailored to your financial circumstances.

Why some investors are turning to 351 ETFs

For some, the appeal of a 351 exchange is fairly straightforward: diversification without an immediate capital gains tax bill.

• Large stock positions can develop for many reasons, including years of investing, executive compensation, business ownership, or inherited assets.
• As mentioned, for investors with substantial unrealized gains, selling a position that has appreciated significantly can create a major tax liability.

Some supporters of the strategy argue that Section 351 exchanges represent legitimate tax planning within existing rules. They emphasize that investors aren't eliminating tax liability for the gains; they are merely changing the timing of when those gains are recognized.

The table below highlights some key differences between selling appreciated assets, in this case, stock, and a qualifying 351 ETF transaction.

Selling Stock vs. Using a Qualifying 351 ETF Exchange

Why Treasury is taking a closer look

Meanwhile, Treasury Department officials’ recent comments highlight growing attention toward investment strategies designed around tax deferral.

Officials at a Wall Street Tax Association seminar reportedly said the agency is reviewing several tax-focused transactions, including Section 351 ETF structures, to determine whether certain arrangements could lead to abusive tax outcomes.

According to Bloomberg News, Kevin Salinger, Treasury's deputy assistant secretary for tax policy, said: "We’re not here to be over-broad or disruptive, but we are also not prepared to turn the blind eye to aggressive planning."

The concern is not necessarily that every Section 351 ETF transaction is improper. Rather, Treasury seems to be considering whether some structures achieve results that Congress didn't intend when it created the underlying tax legislation.

351 exchange ETFs: What happens next?

Keep in mind: Treasury has not announced that Section 351 ETF transactions are prohibited, nor has it issued guidance, new restrictions, or enforcement actions regarding the tax treatment of qualifying exchanges.

So, for now, the strategy remains available for investors who meet the IRS requirements.

Still, the debate over 351 ETFs reflects a broader question in tax policy: How far can investors go in using existing rules to reduce or postpone tax bills before regulators decide the strategy has gone too far? Stay tuned.

Related

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• Capital Gains Tax Rates for 2026: What to Know Now

If you’ve ever wondered whether your family could face a tax bill after inheriting money or property, you’re not alone.

While estate tax and inheritance tax both involve assets passed on after death, they differ in who pays them, when they’re paid, and when they apply. Understanding the distinction can help you better navigate estate planning and inheritance decisions.

The good news? According to the Center on Budget and Policy Priorities, fewer than 1 in 1,000 estates owe federal estate tax.

Inheritance taxes are even more limited.

So, what does this mean for you? Here’s more of what you need to know.

How an estate tax works

An estate tax is a tax on the transfer of a person’s assets after death.

Rather than taxing each beneficiary individually, the tax is calculated based on the total value of the deceased person’s estate before assets are distributed.

The estate’s executor or personal representative generally pays any estate tax owed before beneficiaries receive their inheritances.

According to the IRS, an estate may include:

• Cash and investment accounts
• Real estate
• Business interests
• Life insurance proceeds (in certain situations)
• Trust interests
• Retirement accounts
• Personal property and other assets

Because the federal estate tax exemption is $15 million per person in 2026 (indexed for inflation in future years), only a relatively small percentage of estates owe federal estate tax.

Some states impose their own estate taxes, often with exemption amounts much lower than the federal threshold. For example, Massachusetts has a $2 million estate tax exemption, so an estate could owe state estate tax even if it doesn’t owe federal estate tax.

How an inheritance tax impacts heirs

Unlike an estate tax, an inheritance tax is assessed after assets are distributed. If inheritance tax applies, the beneficiary, not the estate, is responsible for paying it.

Even then, many surviving spouses are exempt, and children and other close relatives may qualify for reduced tax rates or exemptions depending on state law.

Whether you owe inheritance tax largely depends on state law, your relationship to the deceased, and any available exemptions.

Who actually pays estate tax vs. inheritance tax?

The biggest differences are who pays the tax, when it’s paid, and when it applies.

Whether estate tax or inheritance tax applies depends on three primary factors:

• The size of the estate
• Where the deceased was domiciled at the time of death (and, in some cases, where certain property is located)
• The beneficiary’s relationship to the deceased (for inheritance tax purposes)

Estate vs Inheritance Tax

How it works

Note: This is a simplifed example. Keep in mind that everyone's financial situation is different and you should consult a trusted tax or estate planning advisor for guidance on your individual circumstances.

Imagine finding out you’ve inherited part of a loved one’s $5 million estate. Before mentally earmarking those assets to pay off debt, boost your retirement savings, or help fund a child’s college education, one question is likely to come to mind: "Will I owe taxes?"

For most families, the answer is no.

Federal estate tax applies only to very large estates, and only a handful of states impose an inheritance tax. If taxes do apply, who pays depends on whether it is an estate tax or an inheritance tax.

Why the difference matters

Estate tax and inheritance tax often get conflated, but the distinction matters. Understanding who pays each tax and when it applies can help you avoid costly misconceptions.

Although most families won’t owe either tax, understanding the rules can help you navigate an inheritance or plan your own estate with greater confidence.

If your estate could approach federal or state exemption thresholds, advanced planning strategies, like lifetime gifting, charitable giving, or trust planning, may help reduce future tax exposure.

Frequently asked questions

Can you owe both estate tax and inheritance tax?

Yes, although it’s relatively uncommon.

A large estate could owe estate tax, while a beneficiary in a state that imposes an inheritance tax could also owe inheritance tax on the same transfer.

Because different laws govern estate and inheritance taxes, both taxes can apply in certain situations.

Which states impose an inheritance tax?

As of 2026, only five states impose an inheritance tax:

• Kentucky
• Maryland
• Nebraska
• New Jersey
• Pennsylvania

Whether you owe inheritance tax largely depends on state law, your relationship to the deceased, and any available exemptions.

In many cases, surviving spouses are exempt, while children and other close relatives may qualify for reduced tax rates or exemptions.

Who pays estate tax?

Estate tax is generally paid by the estate before assets are distributed to beneficiaries.

The estate’s executor or personal representative is responsible for filing any required estate tax returns and paying any tax due from estate assets.

Who pays inheritance tax?

The beneficiary, not the estate, is responsible for paying any inheritance tax that applies.

How long do you have to pay estate or inheritance tax?

Estate tax: Federal estate tax is generally due nine months after the date of death. The IRS may grant an extension to file, although any tax owed may still need to be paid by the original due date to avoid interest and penalties.

Inheritance tax: Payment deadlines vary by state because inheritance taxes are imposed at the state level. Beneficiaries should check their state’s requirements, as filing and payment deadlines differ.

Do most people have to pay estate tax or inheritance tax?

No. Most Americans won’t owe either tax.

The federal estate tax applies only to estates that exceed the applicable federal estate tax exemption amount, and only a handful of states impose an inheritance tax.

Whether taxes are owed depends on the size of the estate, applicable state law, and, for inheritance tax purposes, the beneficiary’s relationship to the deceased.

Estate tax planning: Bottom line

Whether you’re planning your own estate or navigating an inheritance after the loss of a loved one, a qualified estate planning attorney or tax professional can help you understand how federal and state tax laws apply to your situation.

Though every individual's financial situation is different, if you're engaging in estate planning, you may want to assess whether your total net worth puts you close to any state-level tax thresholds. And if you think you're receiving an inheritance, you may want to consider how your relationship to the deceased impacts your state tax exemptions, or if the estate covers the bill.

Overall, remember this simple rule: If the estate writes the check, it’s an estate tax. If the beneficiary writes the check, it’s an inheritance tax.

Related

• Gift Tax Exclusion: How Much You Can Give Tax‑Free This Year
• The Estate Tax Exemption Amount for 2026
• States That Won't Tax Your Death

You probably know how much you pay in taxes each year when you file your annual return and either (1) aren't happy about how much you owe the IRS or (2) find yourself looking forward to a tax refund. But have you ever wondered about how all of those yearly payments add up over time?

A new analysis takes that long view, estimating that the average U.S. taxpayer will pay hundreds of thousands of dollars in federal, state, and local taxes over the course of their lives. The high six-figure total includes income taxes, property taxes, sales taxes, and vehicle-related taxes.

And depending on where you live, your lifetime tax bill could be hundreds of thousands of dollars higher, according to the study from fintech company Self Financial.

These tax burden findings arrive amid rising frustration in the U.S. over high prices and lack of affordability, and as lawmakers in several states and Congress debate eliminating or reducing income taxes and, in some cases, property taxes.

Here's more to know.

How much tax people pay in the U.S.

According to a recent analysis by Self Financial, the average American will pay an estimated $762,272 in total taxes over their lifetime. (Notably, that represents a roughly 45% increase from the 2024 estimate of $524,625 in lifetime taxes.)

The study adds up various taxes Americans pay throughout life across several major categories:

• Federal and state income taxes
• Property taxes
• Sales taxes
• Vehicle-related taxes

As you might expect, income taxes make up the largest share of the lifetime tax burden. (The analysis estimates that the average U.S. taxpayer pays about $532,910 in federal and state income taxes over a lifetime.)

Property taxes add roughly more than $145,000 over a lifetime, according to the study.

• Then there are the taxes we often pay without thinking much about them: Sales taxes at the register and taxes tied to car ownership.
• For example, the study data show that "owning the most popular car (i.e., a Ford F-Series) will cost an additional $31,817 in tax payments."

While these taxes might seem relatively small in any given transaction, over a lifetime, the average U.S. taxpayer will pay an estimated 33.6% of their earnings in taxes, according to the study.

Which states have the highest taxes

Where someone lives can impact their tax payments. However, when it comes to lifetime tax burden, the latest analysis reveals significant differences due to income levels, housing costs, tax structures, and spending patterns.

For example, residents of New Jersey face the highest estimated lifetime tax burden. The study projects Garden State residents will pay roughly $1.35 million in taxes over their lifetimes.

Other states with high lifetime tax burdens:

At the other end of the ranking, Florida residents have the lowest estimated lifetime tax burden, at about $508,000, according to the study. The difference between the highest- and lowest-tax states exceeds $800,000 over a lifetime.

Note: The analysis estimated lifetime taxes by combining federal, state, local, property, sales, and vehicle-related taxes using median earnings, consumer spending, housing, and vehicle ownership data. Researchers assumed a typical working life from ages 22 to 67 and applied current tax rates and spending patterns over an average lifespan of 79.6 years.

Proposals to eliminate state income tax and property tax

This tax burden analysis comes as lawmakers nationwide advance tax cut proposals.

Several states have recently lowered income tax rates or adopted flat-tax systems, while others are debating further cuts to attract residents and businesses.

For example, in Missouri, voters will decide in August on Amendment 5, a measure that would phase out the state's individual income tax.

• Supporters of eliminating the state's income tax argue it would let residents keep more of their earnings.
• Some opponents warn that Missouri might need to rely more on other taxes, e.g., sales taxes, to make up for lost revenue and fund public services.

Property taxes have also become a major target in recent years, particularly in states where rising home values have pushed up tax bills.

As Kiplinger has reported, in Florida, lawmakers are considering a constitutional amendment that would increase the state's homestead exemption for non-school property taxes to $250,000 in 2028 and beyond.

• Supporters of the proposal for November's vote say it would help homeowners and gradually eliminate property taxes on homesteaded properties.
• Critics, however, are concerned about how local governments would replace lost revenue for essential services like public safety and infrastructure.

Several members of Congress have introduced plans to exempt certain income levels from federal income tax.

The Working Americans' Tax Cut Act, proposed by Sen. Chris Van Hollen (D-Md.), would eliminate federal income taxes on the first $46,000 for individuals and $92,000 for couples while imposing a surtax on higher-income households.

Sen.Cory Booker's (D-N.J.) "Keep Your Pay Act" would increase the standard deduction to effectively eliminate federal income taxes on the first $75,000 of earnings. However, neither has gained traction in Congress

For his part, President Donald Trump has floated eliminating income taxes (initially to be replaced with tariffs, many of which have since been struck down by the U.S. Supreme Court).

Also worth noting: Some users across social media platforms like Reddit, X, and TikTok have shared posts expressing support for tax resistance or a "tax strike" to stop paying taxes.

How to lower your taxes

To reduce your tax liability, it can help to plan for taxes that you can influence to some degree. However, each financial situation is unique, so consult a trusted tax advisor or financial planner for guidance.

Review your property tax bill.

Property taxes can be a major expense for homeowners. Review your assessments and apply for any eligible exemptions, homestead exemptions, and property tax breaks.

Pay attention to other state and local taxes.

No-income tax states aren't always the ones with the lowest overall tax burden. Sales taxes, gas taxes, vehicle fees, and other costs can sometimes offset income tax savings. So take all of these factors into consideration when deciding where to live.

Use available federal tax breaks.

You can lower taxable income by taking advantage of tax deductions and credits you're eligible for, along with leveraging tax-advantaged accounts like HSAs and retirement savings accounts.

Plan for retirement taxes

Taxes don't necessarily end in retirement due to income from required minimum distributions (RMDs), pensions, Social Security benefits, etc. Planning the timing of withdrawals and other income sources can help retirees manage tax burden.

Consider the tax impact of major financial decisions.

Remember that major life changes and financial decisions, from getting married or divorced to buying a home, changing jobs, having a child, or making certain investment moves, can affect tax liability.

Also, keep an eye on tax law changes.

With the November 2026 midterm elections approaching and special elections taking place across the country, voters in several states could have their say on major tax policy changes. Stay tuned.

Related

• Polls Show Most People Think Their Taxes Are Too High
• More States Have Changed to Flat Tax Rates
• How to Pay the IRS if You Owe Taxes
• Another State Could End Income Tax in 2026

Many people believe their tax bill will drop once they retire, and while that might be the case for some families, it's not a guarantee.

The thinking is logical. If you're no longer earning a paycheck, you should fall into a lower tax bracket, right? Not exactly.

Once they've left the workforce, retirees often start drawing income from multiple sources, such as Social Security, pensions and retirement accounts, all of which can be taxed.

A new set of tax considerations

For many retirees, a large portion of those retirement savings is also held in pretax accounts, which means withdrawals can be taxed as well. This can create a new set of tax considerations many retirees didn't need to deal with in their working years.

Without proper tax planning, or a clear understanding of how these income sources might be taxed, retirees could be surprised when the tax bill comes.

Although no one can predict future tax policy changes, taking time to plan ahead can give you a better understanding of how your income will be taxed under the current law. From there, you can make adjustments before retirement begins.

Estimating future income and understanding which tax bracket you'll likely fall into can help you evaluate strategies that might help reduce lifetime tax liability.

Where to start

Reviewing the balance between pretax, after-tax and tax-free accounts and determining whether certain tax strategies make sense for you is a great place to start.

If you find a majority of your retirement savings is in pretax accounts, future withdrawals might create a larger tax bill.

At the same time, converting everything into tax-free accounts isn't necessarily the right answer either.

The goal is to find the right balance between pretax, after-tax and tax-free assets so that income in retirement can be generated as tax-efficiently as possible.

A strategy that often comes up in retirement tax planning is a Roth conversion. This allows you to move money from a pretax retirement account into a Roth account by paying taxes at the time of the conversion.

Roth conversions aren't always the right decision for everyone. The more important question to consider is whether it makes sense based on your current income, expected retirement income and long-term tax strategy.

Retirement might be the end of your career, but that doesn't mean it's the end of financial planning.

Understanding how different sources of retirement income are taxed and taking time to develop a tax-efficient plan before you retire can help reduce tax burdens while giving you peace of mind and a sense of preparedness ahead of your next chapter.

Related Content

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• Retirement Taxes: How All 50 States Tax Retirees
• IRA Conversion to Roth: Rules to Convert an IRA or 401(k) to a Roth IRA
• Millions of People Are Aging Alone: What Living Single Means for Retirement Taxes
• 3 Ways to Potentially Avoid Falling Into a Tax Trap in Retirement, From a Financial Adviser

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Fear of an IRS audit is incredibly common, even if the actual odds of one are much lower than you think. After all, the federal tax agency audits only about one in 250 individual files (roughly .4%) each year.

However, getting selected isn't entirely random. Common red flags like disproportionate deductions, omitted income, or simple reporting mismatches can increase your chances of a manual review.

Think you can spot the warning signs? Take our quick five-question quiz to test your knowledge of IRS audit red flags.

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• These Popular Tax Breaks Are Gone for Good in 2026

Managing healthcare costs is one of the biggest financial hurdles in retirement. According to AARP, the average Medicare beneficiary spends roughly $7,295 annually on out-of-pocket medical care. But there may be ways to save.

One way is through your federal tax return. By utilizing the medical expense deduction, you can deduct qualifying, unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI). While this strategy requires electing to itemize rather than claiming the standard deduction, heavy medical bills might justify the extra paperwork.

Plus, more than just standard doctor visits or hospital stays may qualify for the deduction. For instance, you might be able to deduct the cost of your weight-loss program or service animal on your federal return.

But because the IRS heavily scrutinizes unconventional claims, navigating these deductions requires ample preparation. So carefully consider whether or not you are eligible for these five unusual write-offs before claiming them on your 2026 federal return.

This list focuses exclusively on federal tax deductions. You may qualify for other tax breaks on your state income taxes. Also, the article does not constitute legal or financial advice. Always consult a qualified tax professional before filing.

The medical expense deduction: Ground rules

To be eligible to claim any of the medical tax deductions listed below, you must first meet the specific criteria for the medical expense deduction. This includes:

1. Itemizing your deductions on Schedule A (Form 1040) instead of claiming the standard deduction.
2. Filing your itemized deductions under the medical expense deduction (which is technically available to taxpayers of any age, but is heavily utilized by older adults).
3. Exceeding the adjusted gross income (AGI) threshold. You can only deduct the portion of your total qualifying medical expenses that exceeds 7.5% of your AGI. (For example, if your AGI is $100,000, the first $7,500 of your medical expenses won't count; only the amounts above that are deductible.)

Also, you can't deduct an expense on your federal return if it was already covered by your insurance, health savings account (HSA), or flexible spending account (FSA).

Additionally, the IRS recommends that you maintain all applicable tax records for qualifying medical expenses for at least three years (though most tax experts advise six or more years). This covers the IRS's tax audit period.

1. Home modifications for medical care

If you have a home improvement project planned to accommodate a medical condition or physical disability, the net cost may qualify for a medical expense deduction. These are the requirements:

• What qualifies. The modification must directly treat or accommodate a diagnosed condition. A formal letter of medical necessity from a doctor is typically necessary.
• Documentation needed. Keep your doctor's letter, a home appraisal from before and after the project (to document changes in property value), all itemized contractor receipts, and any other applicable tax records.
• Value calculation. You can only deduct the amount by which the cost of the improvement exceeds the increase in your home's market value.

The last bullet point might sound confusing. But here's an example:

• Say you install a home elevator for $35,000 to accommodate a mobility issue.
• A licensed appraiser determines that it increases your home's total property value by $25,000.
• Thus, your potentially deductible medical expense is the difference between the two: $10,000.

(Note: If an upgrade increases your home's value by more than it costs to build, the potential deduction drops to $0).

The IRS also explicitly states in its Medical and Dental Expenses Guide that certain standard accessibility modifications are presumed not to increase a home's market value, and are thus 100% potentially deductible. These include adding ramps, widening doorways, modifying stairways, etc.

For more information, check out Kiplinger's report, Tax-Deductible Home Improvements for Retirement.

2. Guide dogs and service animals

Service animals trained to assist with physical disabilities (like visual impairments or mobility limitations) or medical alerts may qualify for the medical expense deduction. Typical qualifying expenses include the total cost of purchasing, training, and maintaining the animal.

• What qualifies. The animal must be individually trained to perform tasks for a person with a disability. Emotional support animals (ESAs) or general family pets are not tax-deductible and do not qualify.
• Documentation needed. You must retain training invoices, veterinary bills, grocery/supply receipts, and other applicable tax records.
• Value calculation. You may write off the vet care, grooming, food, and specialized training supplies associated with your service animal.

3. Prescribed swimming pools

This is a highly scrutinized deduction by the IRS, but it may be medically necessary under special circumstances.

If a doctor explicitly prescribes hydrotherapy to treat a severe, specific medical condition (like advanced arthritis), the cost of installing and operating a home pool might be eligible for a medical expense deduction.

• What qualifies. You can deduct not only the qualifying home pool installation fees but also the ongoing operational costs — like heating, chemicals, and electricity — only for the portion of the year the pool is used strictly for medical treatment.
• Documentation needed. You will need a letter of medical necessity, appraisal documents, and utility bills to prove your operation costs.
• Value calculation. Like home modifications, the installation cost is deductible only to the extent it exceeds the value the pool adds to your real estate. So, if a pool costs $50,000 to build but adds $20,000 to your home's equity, you can potentially claim only $30,000 as a medical expense.

Special note: Because the IRS looks closely at pool deductions, it is very rare to claim this home improvement as a tax deduction. However, if a pool is medically necessary, you can consult with a tax professional to see if it would qualify for a potential write-off.

4. Prescription weight-loss programs

If you're enrolled in a weight-loss program to manage or mitigate a specific diagnosed health condition — like type 2 diabetes, heart disease, or severe hypertension — the enrollment and attendance fees may be tax-deductible as a medical expense deduction.

• What qualifies. Only fees related to your prescribed diagnosis. The IRS strictly prohibits deductions for programs designed for general health, well-being, or cosmetic appearance.
• Documentation needed. A written diagnosis from your physician stating the specific disease being treated, along with itemized monthly statement receipts from the program.
• Value calculation. You generally cannot deduct the cost of specialty diet foods, nutritional supplements, or standard gym memberships. All qualifying healthcare expenses related to your program are potentially deductible under the medical expense deduction.

5. Oral and facial physical therapy

In a landmark IRS ruling, a parent successfully argued that clarinet lessons for their child were deductible because an orthodontist formally prescribed them to correct a severe overbite.

For older adults, the equivalent is specialized physical therapy for the mouth and jaw muscles, like treatment for Temporomandibular Joint (TMJ) disorders or myofunctional therapy.

• What qualifies. As with other qualifying expenses on this list, you can only claim out-of-pocket expenses that were not otherwise covered or reimbursed by your insurance, HSA, or FSA.
• Documentation needed. A formal referral and script from a dentist, orthodontist, or primary physician, alongside detailed treatment logs specifying the dates of service and itemized payment receipts.
• Value calculation. Any qualifying medical expenses above the 7.5% AGI limit may be potentially deductible under this federal tax deduction.

For more information on what qualifies as AGI, check out Kiplinger's report, How to Calculate Your Adjusted Gross Income — and What It Means.

Explore More

• Most-Overlooked Tax Breaks for People Over 65
• New $6,000 'Senior Bonus' Deduction: What It Means for Taxpayers
• The Extra Standard Deduction for People Age 65 and Older
• States With No Retirement Tax Ranked by Medical Care

Remember the days of blinking in-store coupon dispensers and thick, mailbox-clogging booklets full of grocery discounts? Depending on where you live, that might still be your weekly reality.

But those days are fading fast, as rising print costs and falling newspaper circulations push glossy inserts into history. Yet the need to save on food costs is stronger than ever — especially since strategic couponing can still slash roughly 17% off the average grocery run.

That's where the grocery store surprise bags come in.

If you're familiar with the mystery liquidation bundles at flea markets or online auctions, you might already know how it works: stores sell a grab bag of goods, and you reap the discounts.

Now, traditional grocery stores are getting in on the action — cutting retail prices by 50% to 75% on leftover inventory through smartphone apps.

But there's a catch: What you save in cash, you pay for in scarcity, variety, and relative value. To see if the tradeoffs are worth it, I bought a grocery store surprise bag on a popular app so you don't have to navigate these "surprise taxes" alone. Here's what I found.

This article is not a sponsorship or an endorsement of any particular product. Information is provided for educational purposes only.

What are grocery store surprise bags?

At their core, grocery surprise bags are mystery bundles of surplus produce, baked goods, and canned or boxed items sold at steep discounts. The premise is simple. You buy leftover inventory to avoid paying premium prices, and the stores successfully curb their food waste.

Here's how the process works:

1. Download the app. You install a surplus food app on your smartphone.
2. Find nearby stores. You enter your location to view nearby participating grocery stores, bakeries, and markets. I was surprised (pun intended) to find major national chains like Whole Foods and The Fresh Market alongside local independent shops.
3. Reserve and pay. When you spot an available surprise bag in your area, you reserve and pay for it directly through the app.
4. Pick up. Each store has a dedicated pickup window. You simply arrive during that timeframe, show the clerk your digital receipt, and claim your bag.

For my experiment, I chose Too Good To Go, the app that popularized the term "Surprise Bag" for grocery mystery bundles and has over 120 million registered users worldwide. The app's website also states that its bag prices are "roughly a third of the original price," which I was eager to test firsthand.

My experience buying a grocery store surprise bag

With traditional coupons, you know exactly what you're buying. With a surprise bag, you surrender all control over the contents, condition, and variety of the food.

So when I purchased a surprise grocery bag for the first time, I was somewhat skeptical about whether it would be truly "worth it."

Would I get a random collection of unusable items? Would the food be stale, expired, or overvalued by the app?

To find out, I purchased a "Bakery Surprise Bag" from The Fresh Market (one of two major grocers in the area on the Too Good To Go app). The bag promised $30 worth of food for just $10 (plus sales tax).

Then I went for pickup. I arrived during the designated 10 a.m. to 6 p.m. pickup period and showed my order to the store manager, who verified my bag type and retrieved my haul from the back.

After that, I managed a quick Q&A to see how the system worked on their end. This is roughly how the conversation went:

Me: When are the bags put together?
Store manager: Every morning. They sell out fast, usually between 7 am and 8 am (I had purchased my bag at 8:30 am that morning).

Me: How much are they worth?
Store manager: They're worth a lot. I think it's $35.

Did you catch that? The bag was supposed to be worth $30, not $35. Apparently, I was already receiving a more valuable bag than anticipated, which probably explains why the store had a 4.8-star rating (out of 5) on the app.

But, to my disappointment, the store manager couldn't tell me exactly when the items were baked. For that, I needed to inspect the items thoroughly (oh, darn…taste test time).

Here's what I got

List of what I received (from left to right):

• Peach Creme Challah
• Rustic Italian Bread
• Sweet Hawaiian Dinner Rolls (12-count)
• Blueberry Muffins (4-count)

A quick inspection at home revealed that everything was stamped with that exact day's sell-by date.

Fortunately, because baked goods don't spoil immediately, this still gave my family a comfortable two- to five-day window to enjoy the breads and pastries. Nothing was stale, and everyone agreed the selection was delicious — especially the blueberry muffins (seriously, they were incredibly moist).

In the end, the items tasted nice (and we could eat them comfortably before they expired), but questions about the value remained. What was the true worth of all these items?

Are the surprise bags worth it? The value of what you get

To verify the app's claims of $10 for $30 (or the manager's $35), I tallied up the standard retail pricing of the items I received according to their printed labels.

The verdict? The value is absolutely there. For a family of four, this bundle was perfect for quick breakfasts, easy dinner sides, and fun snacks in between meals. I also think a bag like this would work well for larger families, weekend brunches, or busy parents looking to feed their kids after school.

And because baked goods freeze well, slicing and individually packing these items for a solo saver or seniors on a budget can stretch this $10 mystery bag into weeks of high-quality baked goods. Therefore, from a strict dollar-value standpoint, the deal is bound to save shoppers money.

Why I won't do it again: The 'surprise tax'

Even though I loved the quality and value of my haul, first-time users should be aware of a few hidden logistical "taxes" — what I call the "surprise tax" of a grocery surprise bag.

These are the factors that sap time and energy, ultimately souring the deal for some shoppers (including me).

1. The scarcity tax

Grocery bundles sell out fast — like really fast. At least, that's how it went on the app that I used. If you don't happen to be looking at your phone the exact time a bag is "dropped," you might find nothing but "sold out" banners when you finally click in. This happened to me multiple times the first night I tried to snag a bag. Shoppers on Reddit have also expressed this deep frustration over missing out on bags, leading some to give up entirely.

2. The variety tax

Because you can't choose the inventory, you risk getting repetitive items. I only bought one bag, but other shoppers have reported receiving the same items multiple times in a row or even products past their expiration date. The app can also be discouraging if you have a food allergy, since few places on the app in my area offered allergy-friendly "Surprise Bags."

3. The relative value tax

The "savings" may be lower than your local grocer's prices. For example, if you're used to buying your blueberry muffins from Walmart, a 4-count might cost around $4.98. That's about $2 cheaper than the retail price of the muffins I received, and I didn't get to choose my flavor or check the expiration date. Plus, some grocery app users have reported receiving bags filled with items that were already marked down on clearance shelves, making the actual "retail value" lower than advertised.

The bottom line

Would I get it again? No.

Although grocery surplus apps are wildly popular, the industry is still growing. Even Too Good to Go, regarded as the market leader, doesn't quite have the coverage it needs yet in many suburban and rural areas.

For example, my closest participating grocery store chain was about a 25-minute drive away (mind you, there were several participating restaurants, however). Spending almost an hour by car burned gas and time, which quickly ate away at the $25 savings margin on my groceries. Combined with the "surprise tax," that tradeoff just isn't worth it to me at this time.

However, if you live in an area with closer shops and find it easier to snag a grocery surprise bag, there are definite savings.

After all, average weekly savings through couponing reaps $5 to $10 (per the Credit Union report), but if you buy multiple surprise bags, you could save $25 to $75 per week.

Either way, the next time you see a shopper flash their phone at a grocery counter and walk away with a bag, know that they aren't just picking up takeout. They could be buying a basket full of groceries very similar to your own — but at a mere fraction of the price.

Read More

• The 'Food Tax': Which States Still Tax Groceries?
• 10 States with the Lowest Sales Tax in 2026
• Places Where State Sales Taxes Are The Highest

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at four tax questions from readers on the Obamacare premium tax credit. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Changes to the premium tax credit

Question: For the past few years, I purchased my health insurance online through the government marketplace. The generous subsidies I qualified for reduced my monthly premiums. When I bought my 2026 health insurance plan, I saw my monthly premiums were much higher than in prior years and my subsidies were lower. I can't afford this cost, and I ended up dropping the coverage. Why are the premiums so much higher?

Joy Taylor: I am guessing that in prior years you qualified for the premium tax credit (PTC), the Obamacare subsidy available to eligible individuals who buy health insurance through the marketplace. Temporary enhancements to this the PTC ended after 2025, so fewer individuals now qualify for it, and the credit is lower.

Before 2021, the PTC was available to people with modified adjusted gross income (AGI) ranging from 100% to 400% of the poverty level. For 2021-25, some people with higher modified AGIs also qualified, and the credit was higher for many. Congress chose not to act on extending the enhancements, so the rules reverted to those that were in pace for pre-2021 years, beginning with 2026 plans purchased through the marketplace.

This is impacting people, such as yourself, who enrolled in coverage late last year for 2026. It's causing their monthly health insurance premiums to rise dramatically, compared with 2025. Most people who qualify for the PTC generally have the credit paid in advance to the health insurance company to lower their monthly premium payment. They elect this when they go to the marketplace to buy insurance. Many people who enrolled in 2026 coverage are experiencing sticker shock and can't pay, or don't want to pay, the higher premiums.

This has led so far to about 3 million people who have bought health insurance through an Affordable Care Act marketplace, such as healthcare.gov, during open enrollment last year to drop their coverage. Insurers and health policy experts warned that millions would end up uninsured if the temporary PTC easings weren't renewed, and the numbers are proving them right.

2. Forecasting what Congress will do

Question: I bought health insurance through a government marketplace for 2026, and my monthly premiums are much higher than last year because I qualify for a lower PTC. Will Congress act before year-end to make this better for me?

Joy Taylor: It's hard to say what Congress will do. Many Democrats want the 2021-25 expansions to the PTC made permanent. That's one of the reasons last fall's federal government shutdown lasted as long as it did (43 days). But last year's deal to reopen the government did not renew the expiring PTC easings. It only included a promise that the Senate would vote on the PTC by the end of 2025. That did not happen.

Federal lawmakers are now dragging their feet on this issue. Democrats want the pre-2026 easings cleanly extended. Republicans want to narrow the scope of the PTC. The parties appeared close to an agreement earlier this year, but talks have stalled.

Expect rising health care premiums to play a role in November's midterm elections. If Democrats win big, look for expanding Obamacare subsidies to be a legislative priority for them in Congress.

3. Paying back excess PTC

Question: For the first time, I bought health insurance through a government marketplace for 2026, and based on my estimated 2026 income, I qualified for the PTC that reduces my monthly health care premiums. What happens if my actual income for 2026 is higher than my estimated income? Will I have to repay the subsidy?

Joy Taylor: Individuals who opt to have their PTC paid in advance to health insurance companies must file Form 1040 and attach Form 8962 to reconcile the advance payments and the actual PTC they are entitled to. If the PTC is higher, they can claim the credit due on their Form 1040. If the PTC is less than the advances, starting with 2026 returns filed next year, they must repay the full amount of he excess, regardless of their reported income. This is different from pre-2026 years, in which taxpayers with incomes below 400% of the poverty level had to repay only a portion of their erroneous credit amounts.

If you experience a lifestyle or income change that could affect the PTC, I suggest notifying the marketplace of such a change. This could include changes in family size, household income and other circumstances, such as starting a job with an employer that provides health coverage to employees. For example, if you lost a job, the exchange will hike the subsidy for future months. It will lower the subsidy amount if you let it know you expect higher income in 2026.

4. The PTC is an IRS audit red flag

Question: I bought health insurance through the marketplace for 2026 and elected to have the premium tax credit reduce my monthly health insurance premiums. My 2026 income will be below the income threshold for filing a tax return. Do I still have to file a 2026 tax return next year?

Joy Taylor: Yes, if you opt to have the PTC paid in advance to your health insurance company to lower your monthly insurance premiums, you must file Form 1040 even though your income is below the normal filing threshold or you expect a refund. And you must complete Form 8962 and attach it to your return.

Note that erroneous PTC reporting is an audit red flag and is easy for the IRS to catch. Its computers flag filed tax returns showing modified AGIs that exceed the limit to take the PTC. So double-check that you qualify for it and that you accurately report it on your 2026 Form 1040.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not, and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

More Reader Questions Answered

• All Ask the Editor Q&As
• Ask the Editor: Will I be Audited by the IRS
• What Medical Expenses are Deductible?
• Ask the Editor: Deductions for Self-Employed Retirees
• Ask the Editor: Tax Breaks for Caregivers
• Ask the Editor: 10-Year Rule for Inherited IRAs
• Ask the Editor: Tax Questions on Roth IRA Conversions

Update: The back-to-school Alabama sales tax holiday has ended.

Alabama shoppers had something to look forward to: Back-to-school savings. Savvy shoppers could purchase school supplies, computers, and clothing free from the state’s sales tax. This was a big deal, since Alabama has one of the highest sales tax rates in the U.S.

And in 2026, the sales tax holiday was bigger than ever.

State lawmakers enacted legislation to raise the qualifying exemption amounts on select clothing, school supplies, computers, books, and more. This meant that you could spend more per item without paying state sales tax.

"The expanded exemption limits make this year’s tax holiday even more valuable for Alabama families," Rick Brown, president of the Alabama Retail Association, stated in a release. "These changes help consumers purchase the items they need for the new school year while also supporting Alabama retailers in their local communities."

Here’s what you needed to know about the Alabama tax-free weekend to make the most of your shopping trip.

When was the sales tax holiday in Alabama?

The annual back-to-school Alabama sales tax holiday ran from 12:01 am on Friday, July 17, until midnight on Sunday, July 19.

During this time, many types of school supplies (including computers and tablets) and clothing were exempt from Alabama’s usual 4% sales tax rate. This saved shoppers $4 for every $100 spent.

What was included (and the price limits)

To qualify for the Alabama sales tax exemption, your purchases must have been under specific categories (like clothing, school supplies, books, electronics, etc.) and stayed beneath certain price thresholds.

In 2026, each category saw an inflation-adjusted pay bump due to a newly enacted state law. These amounts are indexed for inflation and are set to increase every five years.

For instance, qualifying clothing was tax-free during the Alabama sales tax holiday as long as each piece did not exceed $156 (up from $100). Computers and software had a newly raised price threshold of $1,173 per single purchase (up from $750).

Here's a quick-reference table of other qualifying items and their increased price limits during the tax holiday.

Note: For a complete list of what was included in the 2026 Alabama sales tax holiday, check out the state's Division of Revenue website (PDF).

Here's what wasn't included

Not all items in the above categories were fair game. Here are a few examples of items you still had to pay tax on during the Alabama tax-free weekend:

• Athletic gear (shin guards, shoulder pads, roller skates, athletic shoes or sports gloves).
• Jewelry, watches and hair accessories.
• Handbags and briefcases.
• Cosmetics (including makeup).
• Sunglasses, eyeglasses and contacts (prescription or nonprescription).
• Belt buckles, wallets and umbrellas.

Additionally, non-educational video games (those solely for recreation) and computer parts that were sold separately did not qualify.

Items used for "clean room apparel and equipment" were also not tax-free, including cleaning supplies, paper towels, and hand sanitizer.

Rules on online shopping & layaway

Fortunately, you didn't exactly have to brave the store crowds to take advantage of Alabama's tax-free weekend.

• Online purchases. Eligible items purchased online qualified for the tax exemption if they were ordered and paid for during the holiday window, even if the actual delivery occurred after the weekend ended.
• Layaway payments. To qualify for the tax exemption, you must have either completed a new layaway purchase (including final payment and delivery) before the holiday window closed or made the final payment on an existing layaway item during the window.

The local tax catch

While Alabama waived its 4% state sales tax during the holiday, local city and county sales taxes may still have applied. That's because Alabama municipalities weren't required to participate; they must have voted to opt in. Shoppers had to check the Alabama Department of Revenue's list of participating municipalities to see whether their city participated.

Read More

• Five States With No Sales Tax
• Summer Activities That Can Impact Your Taxes
• 11 Summer Travel Essentials That Are Totally HSA-Eligible

Many investors know to expect to pay federal capital gains tax when they sell appreciated stocks, mutual funds, cryptocurrency, investment property, or other assets. But state taxes are often an afterthought, even though those levies can significantly impact your total tax bill.

Most states tax capital gains as ordinary income, while others have special rules, exemptions, or separate capital gains taxes. So, depending on where you live and how much you earn, your gains may escape state tax altogether or be taxed at rates as high as 10% or more.

Here's more to know about state capital gains tax rates and how they could impact your total tax burden for 2026

How capital gains tax works

A capital gain occurs when you sell a capital asset for more than you paid for it. (Common examples include stocks, bonds, mutual funds, exchange-traded funds (ETFs), investment real estate, and certain business interests.)

The amount subject to tax is generally the difference between your purchase price (your cost basis) and the sale price.

Whether you owe tax, and how much, depends in part on how long you owned the asset.

• Short-term capital gains apply to assets held for one year or less and are generally taxed as ordinary income.
• Long-term capital gains apply to assets held for more than one year and typically qualify for lower federal tax rates.

While the federal government provides preferential tax rates for most long-term capital gains, many states don't.

Instead, they generally include capital gains in taxable income and apply the state's regular income tax rates. But…other states have their own rules or exemptions that are important to know.

State capital gains taxes

Bottom line first? Where you live can make a meaningful difference in your overall tax bill.

For example, investors in Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Wyoming, and New Hampshire generally pay no state tax on capital gains because those states don't impose a broad individual income tax.

Missouri also now provides a 100% deduction for qualifying capital gains, effectively eliminating the state tax on those gains.

At the other end of the spectrum, taxpayers in states like California, Hawaii, New York, Oregon, Minnesota, and the District of Columbia may face some of the nation's highest state tax rates on investment gains.

Washington also imposes a separate capital gains tax on certain high-dollar long-term gains rather than a traditional income tax.

Still, as mentioned, in most states, capital gains are taxed as ordinary income. As a result, the rates below generally represent the highest state income tax rate that could apply to capital gains for individuals in 2026.

Also, keep in mind:

• This table is based on the most recent 2026 state tax data from the Tax Foundation and state revenue department publications available as of mid‑2026.
• State tax rates and rules can change with new legislation or inflation adjustments that are filed late or implemented mid‑year.
• Some states have special capital gains deductions, tiered rates, or local taxes that are not captured by a single number or have unique rules or exemptions that may apply.

Capital Gains Tax Rates by State

States with special capital gains rules

Note: Not every state with a special capital gains tax rule is listed here.

Under Arkansas state tax law, 50% of long-term capital gains are tax-exempt. Because Arkansas taxes the remaining half at ordinary income rates, the state's maximum effective capital gains tax rate is 1.85%. Arkansas also has a unique "super-exclusion" where any net capital gains exceeding $10 million in a single tax year are 100% tax-free.

Massachusetts taxes capital gains at a 5% base rate, but high-income investors may pay more. A 4% “millionaire’s surtax” applies to income above $1,107,750 in 2026 and can affect certain gains, pushing the effective rate above 5% for some taxpayers.

Montana’s top ordinary income tax rate is 5.65%, but long-term capital gains are taxed at lower rates ranging from 3.0% to 4.1%.

New Mexico’s capital gains deductions can reduce the effective rate below its 5.9% top ordinary income tax rate.

South Carolina allows a 44% deduction on qualifying long-term capital gains.

As Kiplinger has reported, Washington imposes a separate capital gains tax, with taxable gains taxed at 7% up to $1 million and 9.9% above that threshold after applicable deductions.

Wisconsin offers a 30% exclusion for net long-term capital gains (60% for qualifying farm assets), and up to a 100% exclusion for long-term investments in qualified Wisconsin businesses.

In some states, local taxes can raise the overall burden. Maryland counties impose additional income taxes, while many Ohio residents pay municipal income taxes that can increase the total tax bill. Other jurisdictions, including the District of Columbia, may also impose local taxes.

What about states with no capital gains tax? Nine states do not impose a state capital gains tax: Alaska, Florida, Missouri, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming.

Missouri is a newer exception when it comes to capital gains taxes. As of last year, individuals can subtract 100% of federally reported capital gains from Missouri taxable income, effectively eliminating the state tax on qualifying capital gains.

Federal Capital Gains Tax Rates for 2026

As mentioned, state taxes are only part of the picture when it comes to navigating capital gains taxes. For federal taxes, most long-term capital gains qualify for one of three tax rates:

• 0%
• 15%
• 20%

The rate you pay depends on your taxable income and filing status.

Taxpayers with higher incomes may also owe the 3.8% Net Investment Income Tax (NIIT) on top of their regular capital gains tax.

Short-term capital gains, meanwhile, are generally taxed at ordinary federal income tax rates rather than the preferential long-term rates.

Ways to reduce capital gains tax

While paying some tax on investment profits is often unavoidable, there are strategies you might consider to help reduce or potentially defer capital gains taxes.

Remember that every investor's situation is different, so you may want to consult with a trusted financial planner or tax professional for strategies tailored to your circumstances.

Holding investments for more than one year. Long-term capital gains generally qualify for lower federal tax rates than short-term gains. Depending on your income, that difference can significantly reduce the tax owed on a sale.

Leveraging tax-advantaged accounts. Investments held in traditional IRAs, Roth IRAs, and many employer-sponsored retirement plans generally are not subject to annual capital gains taxes while the money remains in the account. Qualified Roth withdrawals can be taken tax-free.

Offsetting gains with investment losses. If you sell investments at a loss, those losses can be used to offset capital gains. "Tax loss harvesting" can reduce the amount of gain subject to tax and, in some cases, allow taxpayers to deduct up to $3,000 of excess losses against ordinary income each year. But don't forget about the wash sale rule.

Considering the timing of a sale. Selling an asset in December instead of January — or vice versa — can affect which tax year the gain falls into. Taxpayers expecting a significant change in income might benefit from carefully planning when gains are realized.

Related

• Which Capital Gains Are Taxable?
• Federal Capital Gains Tax Rates for 2026
• New Bill Proposes $1M Capital Gains Tax Exclusion
• No-Capital-Gains-Tax States Ranked by Cost of Living

Roth conversions have recently become one of the most popular retirement tax planning strategies. Financial headlines often promote them as a way to create tax-free income, reduce future required minimum distributions (RMDs) and leave a more tax-efficient legacy to heirs.

For many retirees, those benefits are real.

But Roth conversions aren't a one-size-fits-all solution. In fact, as a CERTIFIED FINANCIAL PLANNER® and CEO of Peak Retirement Planning, I can tell you that converting retirement assets at the wrong time can result in paying more taxes than necessary and reduce your long-term wealth.

The key question isn't whether Roth conversions are good or bad; it's whether paying taxes today will save you on taxes in the future (I wrote a bestselling book all about taxes — you can request a free copy here).

Below are six situations where retirees may want to think twice before converting.

1. You don't have a pension

One of the biggest factors in determining whether a Roth conversion makes sense is your expected future tax bracket. For retirees without a pension, their future taxable income is often lower than it was during their working years, as many rely primarily on Social Security and modest withdrawals from retirement accounts.

As a result, they could remain in relatively low tax brackets throughout retirement.

Today's tax code also includes a generous standard deduction (up to $32,200 for 2026). For some retirees, that deduction might shelter most or even all of their taxable income.

If you expect to stay in a lower tax bracket for life, voluntarily accelerating taxes through a Roth conversion might not provide as much benefit.

By contrast, retirees with substantial pensions often face a different reality. Pension income can create a permanent tax floor that follows them throughout retirement, making Roth conversions far more attractive in certain cases.

2. You have less than $500,000 in tax-deferred accounts

Your account size matters. When evaluating Roth conversions, it's important to consider future RMDs. Starting at age 73 (or 75 for many younger retirees), the IRS requires withdrawals from traditional IRAs and other tax-deferred retirement accounts.

However, smaller account balances produce smaller RMDs.

For example, a retiree with $500,000 in a traditional IRA might have an initial RMD of roughly $20,000. Combined with the standard deduction and other available tax benefits, that withdrawal could have little impact on their overall tax situation.

If your retirement savings aren't large enough to create a meaningful future tax burden, converting assets today could mean paying taxes earlier than necessary without generating significant long-term savings.

3. Your tax rate today is higher than it will be in retirement

At its core, a Roth conversion is a tax-rate arbitrage decision. You're choosing to pay taxes now because you believe you'll pay the same or even a higher rate later. This strategy falls apart if the opposite is true.

Consider someone in their peak earning years who is currently in the 32% federal tax bracket. If they have no pension and moderate retirement savings, they may eventually find themselves in the 12%, 22% or even lower brackets after they retire.

In that scenario, converting assets while working could mean prepaying taxes at a significantly higher rate than what would have been owed later.

Before converting, retirees should estimate their likely retirement income rather than assuming their future tax rate will automatically be higher.

4. You're planning to retire early

One reason not to do Roth conversions today is that you could have a better opportunity later. Early retirement often creates what planners call a "tax window": A period after earned income stops but before Social Security, pensions and RMDs begin.

For example, someone retiring at age 58 might have several years when taxable income drops dramatically. During those years, they can often perform Roth conversions in much lower tax brackets than they could while working.

This window can be particularly valuable because it could allow retirees to:

• Convert assets before Social Security becomes taxable
• Avoid increasing Medicare premiums tied to higher income
• Fill lower tax brackets more efficiently
• Reduce future RMDs

Rather than converting aggressively during high-income working years, some retirees may benefit from waiting until these lower-income years arrive.

5. Your children might be in lower tax brackets than you

Many Roth conversion discussions focus on leaving tax-free assets to heirs. This can be an advantageous legacy planning strategy, but it isn't always the right answer.

Today's inherited IRA rules generally require most non-spouse beneficiaries to empty inherited retirement accounts within 10 years. Because of this rule, many parents assume they should convert everything to Roth accounts, but there are considerations to think about.

The better question is: What tax bracket will your children be in when they inherit the money?

If your children have higher incomes than you, significant retirement savings of their own or expect to remain employed during those 10 years, Roth conversions may make more sense because each of these could result in your children paying more taxes down the road than you would have paid.

But if they're likely to be in lower tax brackets than you, allowing them to inherit traditional IRA assets could result in a lower tax bill being paid across generations.

Legacy planning shouldn't focus only on your tax rate, but should also account for the tax situation of the people who will ultimately receive the assets.

6. You're single today but expect to marry

Tax brackets are not static. A single retiree who expects to get married in the near future could gain access to larger tax brackets and a higher standard deduction through married-filing-jointly status.

In some situations, waiting until after marriage to perform Roth conversions can create additional flexibility and allow larger conversions at lower effective tax rates.

This isn't a common planning strategy, but it's one that can be overlooked when evaluating conversion opportunities.

Bonus consideration: You're moving to a lower-tax state

State taxes can significantly influence the math behind a Roth conversion. Someone working in a high-tax state, such as California, may pay an additional 7% to 10% or more in state income taxes on converted dollars.

If that same person plans to retire in Florida, Tennessee or another state with no income tax, waiting would likely generate sizable tax savings.

In some cases, the difference between converting before and after a move can amount to tens of thousands of dollars.

The bottom line

Roth conversions can be an incredibly effective tool, especially for retirees with pensions, large tax-deferred balances and concerns about future taxes. But the goal isn't to convert simply because Roth accounts sound attractive. The goal is to minimize your lifetime taxes.

Related Content

• If You're Converting to a Roth IRA, Don't Do It Like This
• 5 Reasons Roth Conversions and Pensions Work Well Together
• This Changes Your Social Security Decision (Especially if You're in the 2% Club)
• 7 Times to Dip Into Your Roth IRA if You Have a Pension (and When to Leave It Alone)
• 3 Questions to Ask Before Deciding if a Roth Conversion Is Right for You

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Tax planning for executives can look very different from standard financial advice. The reason? Your compensation package likely includes a complex mix of salary, bonuses, company stock and deferred compensation — all of which involve tax considerations.

Last year's One Big Beautiful Bill Act (OBBBA) introduced new "tax traps" specifically targeting the executive suite.

In 2026, a $75,000 bonus could lower your net take-home pay if it triggers the wrong phase-out. At this level, what matters isn't what you earn, but what you keep.

The good news from the OBBBA

The OBBBA resolved much of the uncertainty surrounding the expiration of the Tax Cuts and Jobs Act. For high-income earners, there are a few permanent victories:

• Top-rate stability. The 37% top tax rate is now permanent. Without this legislation, the rate was set to revert to 39.6% in 2026.
• QBI deduction. The 20% qualified business income deduction for pass-through entities (S corps, LLCs, partnerships) no longer has an expiration date.
• Estate exemption. The exemption is $15 million per person ($30 million for married couples) in 2026 and is locked in through 2033.
• Bonus depreciation. 100% first-year bonus depreciation has been restored permanently, allowing for the immediate deduction of business equipment costs.

The tax traps to watch out for

While the wins are significant, several new provisions act as a "stealth tax" on executive income.

1. The SALT phase-out.

The OBBBA raised the state and local tax (SALT) cap to $40,400 for joint filers, but it comes with a catch: It only applies to those with a modified adjusted gross income (MAGI) under $505,000.

Above that, the benefit phases out entirely, reverting to the old $10,000 cap by the time you reach $600,000.

Pro tip: Participation in deferred compensation can reduce current-year taxable income.

2. The 2026 AMT reset.

The alternative minimum tax (AMT) is set to kick in harder this year. For married filers, the exemption resets to $140,000 (down from 2025 levels), and the phase-out rate doubles from 25% to 50%.

If you plan to exercise incentive stock options (ISOs) in 2026, you should run an AMT projection first to avoid an unpleasant tax surprise next April.

3. The charitable "cover charge."

Starting in 2026, charitable contributions face a new floor: You can only deduct gifts that exceed 0.5% of your AGI. On income of $800,000, your first $4,000 in donations provides zero tax benefit.

Strategy: Use bunching. Instead of annual gifts, contribute a larger sum (e.g., $50,000) to a donor-advised fund (DAF) in a single high-income year to clear the floor for a meaningful deduction.

4. The 2/37ths deduction limit.

If you're in the 37% bracket, the OBBBA now caps the value of your itemized deductions at 35 cents on the dollar.

This 2% gap makes above-the-line deductions — such as 401(k) contributions and health savings account (HSA) funding — far more valuable because they reduce your income before this cap is applied.

Equity compensation: Where strategy makes the biggest impact

Company stock is often the largest component of executive pay and the primary source of complexity:

Restricted stock units. RSUs are taxed as ordinary income at vesting. If you have the cash to cover the taxes, holding the shares allows future growth to be taxed at lower long-term capital gains rates.

Stock options. Nonqualified stock options (NQSOs) generate ordinary income at exercise. Incentive stock options (ISOs) offer potential capital gains treatment, but the lower 2026 AMT thresholds make them "riskier" than in years past.

Too often, executives, especially those deemed control persons subject to Section 16 reporting, overconcentrate their wealth in company stock.

In addition, there's often internal pressure from the C-suite for high-level executives of publicly traded companies to retain their stock. This can create difficulties in adequately diversifying one's wealth while still indicating confidence in the company.

Advanced executive moves

To maximize efficiency, executives should look beyond the basic 401(k) limits:

The mega backdoor Roth. If your plan allows for after-tax contributions, you can potentially funnel an additional $47,500 into a Roth 401(k) for 2026 (up to the total $72,000 IRS limit), where it grows tax-free.

The PTET workaround. If you're a small-business owner or have consulting income, the pass-through entity tax (PTET) election allows your business to pay state taxes at the entity level. This bypasses SALT income thresholds and remains a key tax strategy under the OBBB.

Deferred compensation (nonqualified deferred compensation or NQDC). These plans allow you to delay income — and the 37% tax hit — until retirement, when you might be in a lower bracket.

However, they're governed by strict Section 409A rules. One wrong move can trigger a 20% excise tax penalty.

Distribution elections under deferred compensation are critical — it makes sense to consult with an adviser to determine how much to defer and what distribution election is most advantageous.

The bottom line

Most executives leave money on the table because their equity, retirement and charitable strategies aren't managed in concert with one another.

In the OBBBA era, these elements are interconnected. Success requires a coordinated look at how a move in one area changes the math in another.

Related Content

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• Cash Balance Plans: An Expert Guide to the High Earner's Secret Weapon for Retirement
• Should Your Asset Allocation Change When You Retire?
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• This Is How the 'Brady Bunch' Safety Net (aka a QTIP Trust) Protects Your Kids' Inheritance

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Millions of taxpayers who make certain tax filing or payment mistakes could get a break from IRS penalties without having to ask.

Starting this summer, the IRS will automatically review taxpayers for First-Time Abatement relief, a program that can waive certain failure-to-file, failure-to-pay, and failure-to-deposit penalties for taxpayers with a clean compliance history.

The agency estimates the change could eventually help more than 1.5 million taxpayers each year. That’s compared with roughly 220,000 taxpayers who reportedly obtained similar relief under the previous process, which required taxpayers to request a penalty waiver after the IRS assessed a penalty.

The new system will roll out for eligible 2025 individual federal income tax returns and 2026 quarterly returns, with a full transition expected in 2027.

But…While the IRS is changing how taxpayers receive penalty relief, the rules for who qualifies for so-called first-time relief haven't changed. Here’s what you need to know.

New IRS automatic penalty relief

Under the previous first-time penalty abatement program, taxpayers generally had to wait until an IRS penalty was assessed and then request relief from the agency by phone, in writing, or using Form 843

That meant taxpayers had to know that penalty relief existed and then take action to request it.

The problem? Some eligible taxpayers never received relief simply because they were unaware of the program or didn't know they qualified. Others found it challenging to obtain IRS assistance by telephone or to complete the required forms and processes without professional support.

The new Automatic Exemption from Penalty (AEP) process essentially moves the review earlier in the process and automates it.

• Now, during return processing, the IRS will check a taxpayer’s compliance history to determine whether the taxpayer qualifies.
• If the requirements are met, the IRS will automatically suppress the penalty before it is ever officially assessed.
• The taxpayer will receive a written notice explaining the relief.

“By automatically applying penalty relief, the IRS recognizes that taxpayers who historically pay on time should not have to make a formal request for relief that is routinely granted," IRS CEO Frank J. Bisignano stated in a release.

Although the process is just beginning, the new automated system is intended to replace the First-Time Abatement process for eligible returns due on or after Jan. 1, 2027.

To qualify, taxpayers generally must have:

• Filed required returns or requested a valid extension
• Paid any tax due or established an approved payment arrangement with the IRS
• No significant penalties during the previous three years (or 12 consecutive quarters for quarterly filers) on the same type of tax return

Keep in mind that the new automated process doesn't mean all IRS penalties will disappear.

The relief generally applies only to eligible failure-to-file, failure-to-pay, and failure-to-deposit penalties. Additionally, certain returns, including information returns and some estate and gift tax returns, are not included.

Also worth noting: This new AEP process doesn't eliminate the underlying tax owed or the interest that accrues on that tax.

Why the IRS changed the first-time penalty process

The change addresses a long-standing problem with First Time Abatement: Eligible taxpayers often missed out on relief because they did not know the program existed or that they needed to request it. That can be notable for some taxpayers, since a failure-to-file penalty, for example, is 5% of your unpaid taxes for each month the return is late, up to a maximum of 25%.

The Taxpayer Advocate Service (TAS) has argued that penalty relief should not depend on whether taxpayers understand the process, can reach the IRS, or have access to professional tax assistance.

National Taxpayer Advocate Erin Collins highlighted that concern when discussing the new system, writing the following in a blog post:

"For years, too many eligible taxpayers missed out on first-time penalty relief simply because they did not know it was available, did not understand how to request it, could not get through to the IRS, or did not have a tax professional advising them. That is especially true for low-income taxpayers and taxpayers who cannot afford representation. A penalty that may seem modest to some taxpayers can be financially significant for a taxpayer struggling to pay rent, utilities, groceries, transportation, or medical expenses."

Take, for example, a taxpayer who filed and paid their federal income taxes on time for years but accidentally files a return late. Under the previous system, that taxpayer could incur a failure-to-file penalty, wait for the penalty notice to arrive, contact the IRS, and request First-Time Abatement relief.

Under the new process, the IRS can review the taxpayer’s compliance history while processing the return and automatically remove the penalty if the taxpayer qualifies.

The three-year clean history

When the IRS talks about a "clean compliance history," that generally means the taxpayer hasn't had a significant penalty assessed during the three years before the penalty year. For taxpayers who file quarterly returns, the IRS will generally look at the previous 12 consecutive quarters.

• A clean history also doesn't mean a taxpayer has never made a mistake on their income tax return.
• The IRS will look at whether the taxpayer has generally met their tax obligations.
• As mentioned, that generally includes timely filing required returns and paying taxes owed/establishing an approved payment arrangement when needed.

Additionally, the three-year lookback applies to the specific (same) return type being filed. So a penalty on a business partnership return won't disqualify your individual filing from automatic relief.

According to the IRS, the three-year rule also doesn't mean a taxpayer can receive relief only once. If a taxpayer receives automatic relief and then maintains a clean compliance history for the required period, that taxpayer could potentially qualify for relief again in the future.

However, if a taxpayer fails the automated "clean history" check and doesn't receive AEP relief, they aren’t necessarily out of luck. Taxpayers can still manually request a penalty waiver under the traditional IRS "reasonable cause" framework, which evaluates various sound reasons for non-compliance.

What happens if you receive an IRS penalty relief notice?

Under AEP relief, the IRS will issue a notice explaining that the penalty wasn't assessed because the taxpayer met the relief requirements. Taxpayers who receive that notice generally don't need to contact the tax agency or take additional action, according to the agency.

However, during the transition period, the IRS says some qualifying taxpayers may still receive penalty notices for eligible 2025 tax-year returns or 2026 quarterly returns.

• If you receive a penalty notice, it's important to review it carefully.
• If you believe you qualify for first-time penalty relief and the penalty wasn't automatically removed, you may still need to request relief under the existing process during the transition period.
• There should be a 1-800 number on the penalty notice for contacting the IRS.

If you want to track whether a penalty was removed, you can also review your official IRS Online Account.

Records there should show whether a penalty was assessed, whether relief was applied, and when the three-year compliance period begins for potential future eligibility.

As always, however, consult a qualified and trusted tax professional if you have questions or concerns about IRS penalties.

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I picked up Strangers: A Memoir of Marriage by Belle Burden expecting a juicy divorce memoir. What I got was a thoughtful, sometimes uncomfortable look at how a marriage can unravel so gradually that, by the end, the person you've shared your life with feels almost unrecognizable.

Burden's memoir has all the ingredients of a page-turner: Wealth, privilege, beautiful homes, family dynamics, betrayal and a divorce that becomes increasingly contentious.

More than once, I found myself staying up later than I should have, telling myself I'd read just one more chapter.

As a financial adviser, however, I found myself reacting to different parts of the story than most readers probably would.

At one point, I wanted to reach through the pages and yell, "No! Do not take your money out of your separate property trust and put it into a jointly owned home!"

That's what made the book so compelling to me. Beneath the story of a marriage ending was another story unfolding quietly in the background: The financial decisions being made along the way.

The danger of disengaging with your finances

Burden's story reminded me how easy it is for intelligent, capable people to become passive participants in their financial lives. Not because they lack the ability to understand money, but because life is busy.

Careers demand attention. Children need to be raised. Marriages operate on trust. One spouse naturally takes the lead in certain areas, and before long, financial decisions become something that simply happens in the background — often brushed aside with a comment like, "This is all too complicated for you to understand, anyway."

Most of the time, that arrangement works just fine … until circumstances change.

The reality is that many of the financial pitfalls people encounter aren't obvious. Few people wake up worrying about how property is titled, whether inherited assets have been properly protected, whether a prenuptial agreement still reflects their current situation, or whether beneficiary designations are consistent with their wishes.

Yet these are precisely the kinds of issues that can have life-changing consequences.

What makes Strangers particularly powerful is that Burden doesn't portray herself as a victim of circumstance. Near the end of the book, she reflects on a series of decisions involving her prenuptial agreement, property ownership and her level of involvement in the family's financial affairs.

Reading those reflections, I found myself thinking less about the divorce itself and more about the dozens of moments along the way when a different conversation, a second opinion or a deeper understanding of the financial implications might have altered the outcome.

That's a lesson I see play out frequently in my profession.

Many people assume the greatest financial risks they face involve the stock market. They worry about whether they should buy a particular fund, invest in international stocks or wait for a market correction.

In reality, some of the most consequential financial decisions have little to do with investing. They happen when we sign legal documents we don't fully understand, make changes to ownership structures, neglect to update estate plans or assume someone else is paying attention to details that affect our future.

The value of expert financial advice

This is one of the reasons I believe comprehensive financial planning is so valuable. A good financial adviser doesn't simply manage investments. They help clients identify risks they may not even realize exist.

Sometimes the most important question in a planning meeting isn't, "What should I do?" but rather, "What haven't I thought about?"

And yes, you can use AI chatbots to answer questions, but you need to know what to ask them.

An experienced adviser, however, can prompt the questions that haven't yet occurred to you:

• What happens if circumstances change?
• Does this legal agreement still reflect our intentions?
• Have we unintentionally exposed assets we meant to protect?
• Is the financial structure of our lives still aligned with the reality of our lives?

Those aren't questions most people ask regularly. They're certainly not questions people ask when they're in love. Yet they're often the questions that matter most.

The power of staying engaged

That's ultimately the financial lesson I took away from Strangers. Burden's story is deeply personal, and every marriage is different. But her reflections serve as a reminder that financial security isn't created by avoiding difficult conversations. It's created by having them early, revisiting them often and staying engaged in the decisions that shape your future.

By the end of the book, I wasn't thinking about the divorce anymore.

I was thinking about all the people sitting across from me every year who assume nothing will change.

Most of the time, they're right.

The problem is not planning for the possibility that they're wrong.

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• Estate Planning for Women: Married, Single or Divorced

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

One of the most common questions I hear from clients approaching retirement is also one of the most emotionally loaded: "Should I pay off my mortgage before I stop working?"

The honest answer is: Sometimes.

That's not a cop-out. It's the only answer that respects both sides of this decision.

Paying off a mortgage is not just a math problem. It's a cash-flow problem, a tax problem, an investment problem — and, for a lot of people, a peace-of-mind problem.

The mistake is assuming there's one universal rule. There isn't. The right answer for a homeowner carrying a 2.875% mortgage, a solid brokerage account and a reliable pension looks very different from the one facing someone with a 6.5% loan heading into heavy IRA withdrawals.

Two recent changes make the math worth revisiting.

• Freddie Mac's weekly survey puts the average 30-year fixed rate at 6.51% as of late May 2026.
• The SALT deduction cap increased to $40,000 under the One Big Beautiful Bill Act, with phaseouts starting above $500,000 in modified adjusted gross income.

Both shift the calculus for retirees in ways that weren't in play two years ago.

Start with where you are in your mortgage

By the time most clients ask this question, they're in the last quarter or third of their loans. That matters more than people realize.

Early in a mortgage, your payment is mostly interest. Later, it flips — you're paying far more principal than interest. The amount of interest you'd avoid by paying off early is probably smaller than you expect.

Here's a concrete example. Take a married couple with an original $350,000 mortgage at 6.5% and $111,000 still owed at year 26. Their annual payment runs about $26,547, but only $6,767 of that is interest. The total interest remaining in the next four years is roughly $19,670.

Compare that with the cost of paying off the loan by pulling from retirement accounts. Assuming a 24% federal bracket and 5% state tax, they'd need to withdraw approximately $140,845 to net the $111,000 after taxes, generating about $7,042 in state taxes and $33,802 in federal taxes.

That's more than $40,000 in taxes to eliminate $19,670 in interest. The numbers don't hold up.

The SALT change and why your state tax burden matters

For years, the $10,000 SALT cap made itemizing difficult for most homeowners. The new $40,000 limit changes that, particularly in higher-tax states such as Connecticut, New York or California.

At our firm, a large share of clients come from Connecticut, and this is the kind of question in which having accountants on staff pays off. The answer depends on whether you're itemizing, which depends on your full tax picture.

If you can now itemize under the new cap, your mortgage interest carries more federal tax value. That doesn't automatically mean you should keep the mortgage. It means you should compare your mortgage rate with your investment returns on an after-tax basis, not gross.

Don't drain your liquidity to feel debt-free

This is where a spreadsheet can mislead you.

Say you owe $300,000 and have $350,000 in taxable savings. Paying off the loan might feel like the right move. But if it leaves you with $50,000 outside your retirement accounts, you've traded one risk for another.

Retirees need accessible cash for home repairs, health costs, long-term care planning, tax bills, and market downturns. If paying off the mortgage means pulling more aggressively from IRAs later, you could end up with higher taxable income, steeper Medicare premiums and more of your Social Security subject to tax.

A paid-off house is comforting. But you can't spend your kitchen.

A practical framework for making the call

If your mortgage rate is below 4%, you're taking the standard deduction, and your portfolio is diversified, keeping the mortgage often makes more financial sense.

If your rate is above 6%, you get little or no tax benefit from the interest deduction, and if you have enough liquid assets remaining after payoff, paying it down becomes more compelling.

If you're somewhere in between, run four numbers before deciding:

• The after-tax cost of your mortgage (not the stated rate)
• Realistic after-tax portfolio return expectations
• Remaining liquidity after payoff
• The tax bill from withdrawing retirement funds to make the payoff

The best retirement decisions come from coordinating taxes, income and investments together. A mortgage decision is no different.

The real answer isn't "always pay it off" or "always stay invested." It's: Pay it off when the numbers work, your cash reserves stay healthy, and the peace-of-mind benefit is genuinely worth what you might be giving up.

Sometimes it is. And sometimes the spreadsheet makes that clear before your gut does.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Company stock can become one of the largest sources of wealth you'll ever accumulate.

Research from the National Center for Employee Ownership found that employees participating in stock ownership programs accumulated more than double the retirement savings of the average American, underscoring just how powerful equity compensation can be in building long-term wealth and financial independence.

But equity compensation can also quietly become a financial landmine if you don't fully understand how it works.

Without proper planning, you could face massive surprise tax bills, costly alternative minimum tax (AMT) liabilities, underpayment penalties or even pay taxes on wealth that later disappears in a market decline.

You can also become dangerously overconcentrated in your employer's stock, leaving both your paycheck and your investment portfolio exposed to the same company risk.

By the time many employees realize they have a problem, the damage is often already done.

Why equity compensation feels so confusing

You might receive restricted stock units (RSUs), stock options, employee stock purchase plans (ESPPs) or some combination of all three, and many high earners naturally assume they're taxed and managed the same way.

They're not. That confusion can become incredibly expensive.

• RSUs are company shares granted to you over time that become taxable as ordinary income once they vest. When an RSU vests, it means the stock officially becomes yours, and you can keep or sell it.
• Stock options give you the chance to buy company shares later at a price that's locked in today. If the company's stock price goes up, you can buy the shares at the lower locked-in price and potentially profit from the difference. Exercising your options means choosing to buy the shares using that special price.
• ESPPs allow you to buy company stock at a discount, often through payroll deductions.

Each type of equity compensation follows different tax rules, different vesting schedules and different planning opportunities. In some cases, taxes are triggered when shares vest. In others, taxes are triggered when you exercise options or sell stock.

You might not fully realize when those taxable events occur until you're staring at a shocking tax bill.

Once you layer in bonuses, deferred compensation, investment income and potentially multiple state tax filings, it's understandable that confusion can happen.

The tax bill that no one saw coming

One of the biggest mistakes employees make is assuming their company already withheld enough taxes.

In reality, many companies only withhold federal taxes on RSUs and stock option profits at a flat 22% rate, even if your actual tax bracket is 24%, 32%, 35% or 37%. That doesn't include state taxes, city taxes, Medicare taxes, or Social Security taxes.

That gap can quietly snowball into a massive surprise tax bill when April arrives.

Imagine receiving a large vesting event, celebrating what feels like a major financial win, only to later discover you owe the IRS hundreds of thousands of dollars you never planned for.

I recently worked with a senior executive whose RSUs vested during the same year she received a large bonus and significant deferred-compensation payouts. She assumed the taxes had already been handled automatically by her employer. They had not.

When we ran projections before year-end, we discovered she faced a six-figure tax shortfall. Had she waited until tax filing season to discover the problem, she could also have faced underpayment penalties.

The double taxation trap

Another surprisingly common mistake happens after employees sell their company shares.

Many employees don't realize they paid ordinary income taxes on RSUs when the shares vested because that income was already included on their W-2. Later, when the stock is sold, brokerage tax forms can sometimes make it appear that the full value of the sale is taxable all over again.

If your tax return isn't handled properly, you can accidentally pay taxes twice on the same money.

For high earners with large stock grants, this mistake can cost tens or hundreds of thousands of dollars.

When wealth becomes overconcentrated

Taxes aren't the only danger.

One of the biggest risks with company stock is emotional attachment. After years of working at a company, it's natural to feel loyal to the shares that helped build your wealth and career. But that emotional connection is dangerous.

Morgan spent decades building what she believed was a secure financial future through company stock and stock options. Over the years, her holdings grew to nearly $5 million. The shares represented years of hard work, promotions, long nights and professional success.

Like many longtime employees, she genuinely believed the company's best years were still ahead. Then everything started to unravel.

A major product recall triggered lawsuits. Earnings weakened. Headlines became increasingly negative. Employees watched the stock fall day after day while leadership struggled to calm investors.

Shareholders ultimately received only about 6 cents on the dollar in a corporate buyout. Her nearly $5 million position collapsed to roughly $300,000.

In a matter of months, both her career and the wealth she had spent decades building disappeared almost simultaneously.

Turning equity into long-term wealth

RSUs, stock options and ESPPs can either become one of the greatest wealth-building opportunities of your career or one of your biggest financial mistakes.

The employees who handle equity compensation most successfully are usually not the ones obsessing about the next stock surge or trying to perfectly time the market. They're the ones who proactively manage taxes, diversify before risk becomes dangerous and treat company stock as the major financial asset it truly is.

The damage is often already done by the time you realize you have an equity-compensation problem.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

With summer temperatures skyrocketing nationwide and utility bills climbing right along with them, the fresh air and vibrant seasonal climate of Oregon might look better than ever.

Offering a high-quality, outdoorsy lifestyle with an overall lower cost of living than California prices, the Beaver State is known for balancing eclectic urban hubs like Portland with famously green, eco-conscious cities like Eugene and Corvallis.

But Oregon's appeal goes far beyond city limits; the state's tax structure is also friendly in a few ways. For starters, there is no state sales tax, meaning you generally avoid standard add-on taxes at checkout for items like clothing and groceries. Plus, Oregon enforces a state property tax cap that limits the growth of a property's assessed value (though local approvals may still apply).

So if you're ready to live in Oregon without draining your savings, here are the ten cheapest places to look.

Cheapest places to live in Oregon

After ranking property tax bills from highest to lowest per county in Oregon, one thing’s for sure: Rural areas win out. You can generally find more affordable living in the countryside than in the hustle and bustle of a big city.

But if you're ready to visit sweeping mountainscapes, archaeological digs, and relax in natural hot springs (and maybe want to commute for other enjoyments), check out these cheap places to live in Oregon.

Note: Kiplinger used the latest data presented by the Tax Foundation (sourced from the U.S. Census Bureau) to find the cheapest counties in Oregon to live.

Harney County

Median property tax bill: $1,943

Median home price: $242,100

Home prices are relatively affordable in Harney County compared to the rest of the state, with the median sitting just over $242,000. Property tax bills are also comparatively reasonable, sliding in just under $1,950 per year according to the latest data from the Tax Foundation.

Outdoor adventurers enjoy exploring more than 10,000 square miles of Harney, the largest county in Oregon. The area is famous for its rugged, high-desert landscapes, including Steens Mountain — which features a scenic loop that climbs over 9,700 feet above sea level, winding past deep glacial canyons and wild horse pastures.

Residents also enjoy wind sailing, land paddling, or flying kites across the super-flat, cracked earth of the Alvord Desert Playa, or going for a relaxing soak in the natural mineral waters of Crane Hot Springs.

And if you're drawn to unique geology and birdwatching, Harney's Diamond Craters Outstanding Natural Area is one of the most volcanically diverse landscapes in the U.S., packed with distinctly shaped lava cones and craters. The Malheur National Wildlife Refuge also provides plenty of opportunities to spot bald eagles, sandhill cranes, and trumpeter swans.

Come to Harney County for the (more) accessible property tax bill, but stay for the wide-open rural charm of it all.

Gilliam County

Median property tax bill: $1,904

Median home price: $189,300

Gilliam County has the most affordable homes on our list, with a median price sitting around $189,300. Located just under three hours east of Portland, the county's median property taxes are also remarkably low, coming in barely over $1,900 per year according to the U.S. Census Bureau.

If you're looking for uncrowded spaces on a dime in Oregon, Gilliam has you covered. As the third-least populated county in the Beaver State, the area offers an authentic blend of small-town living and outdoor recreation.

Year-round, anglers can cast a line for steelhead and bass fishing on the free-flowing John Day River. Alternatively, water lovers may also head up to the Port of Arlington along the Columbia River for paddleboarding and wind-propelled watersports.

And from May to October, residents can dive into the region's deep frontier roots by visiting the Gilliam County Historical Museum in Condon. This historic site highlights 11 historic buildings, including one original 1884 homestead.

So whether you're looking to protect your wallet from the Pacific Northwest's higher cost of living or want to secure some true peace and quiet away from metro areas, Gilliam might just be the option for your family.

Douglas County

Median property tax bill: $1,895

Median home price: $310,300

Homes in Douglas are priced slightly higher than those in other areas on our list, with a median value over $310,000. However, because the county has an effective property tax rate below the national average, the median property tax bill remains under $1,900, according to 2026 Tax Foundation data.

Beyond the numbers, Douglas County offers a high quality of life for foodies. The Umpqua Valley area, known for its rolling orchards and award-winning vineyards, is a local hotspot. And after enjoying a glass, residents can head over to the Dean Creek Elk Viewing Area to watch Roosevelt elk grazing in the open pastures, or visit the region's natural hot springs for a relaxing soak.

Animal lovers are also in for a treat with the Wildlife Safari in Winston. This drive-through animal park allows you to see ostriches, zebras, and other wildlife from the comfort of your own car.

Stop by Douglas County, Oregon, for the rich culture and conservation efforts, but stay to savor the surprisingly manageable property tax bill.

Wheeler County

Median property tax bill: $1,893

Median home price: $272,400

Wheeler is the least-populated county in Oregon, with just around 1,450 people living within its boundaries, according to the U.S. Census Bureau. Reflecting its quiet, rural footprint, the county features a highly affordable median property tax bill of $1,893. Home prices are similarly affordable in the state, with the median value at $272,400, according to the Tax Foundation.

Promoted as a "geologic wonderland," Wheeler sits atop a treasure trove of prehistoric fossils. The county seat, aptly named Fossil, has a public dig site located right on the grounds of Wheeler High School. For a small donation that supports local school programs, it is one of the few places in the nation where the public can dig up authentic 33-million-year-old plant fossils.

Families also love exploring Painted Hills, where stunning, saturated stripes of red and gold clay make the landscape look like giant canvas paintings. And when you're ready to transition back to the present day, the county still offers a rich collection of pastimes like river fishing, mountain camping, and a summer rodeo event.

Check out Wheeler if you're hunting for a unique family destination — and you might just fall in love with the natural history and budget-friendly lifestyle.

Malheur County

Median property tax bill: $1,860

Median home price: $248,900

Nestled along the Idaho and Nevada borders lies Malheur County, home to a relatively low median property tax bill of around $1,860. Prospective buyers will also find that home prices are highly affordable compared to the rest of Oregon, with the countywide median sitting at about $248,900 according to the U.S. Census Bureau.

Oregon Trail enthusiasts and history buffs might become smitten with the region. The historic city of Vale displays deeply carved, authentic wagon ruts left behind by pioneers during the Great Westward Expansion.

The county's high-desert backyard is also full of natural hot springs, excellent boating and camping opportunities, and the famous "Pillars of Rome" — a series of majestic, 100-foot-tall clay cliffs that tower over the town of Rome.

To top it all off, the county is home to the grand Owyhee Canyonlands. This piece of remote wilderness has volcanic rock spires, red-rock chasms, and whitewater rafting, earning it the nickname "The Grand Canyon of Oregon."

Visit Malheur County to explore the rugged wonders of Oregon's hidden "canyon country," and maybe make a home for the affordable property tax bill.

Curry County

Median property tax bill: $1,841

Median home price: $381,300

Curry County has the highest median home price on our list at over $381,000, according to the latest data from the Tax Foundation. But despite carrying higher real estate prices, the median annual property tax bill sits very low at $1,841. This is because the county boasts the lowest effective property tax rate listed here at only 0.50% — well below the national average of .90%.

Home prices sit higher in Curry County because of its coveted location along the southern Oregon coast. Dramatic ocean cliffs give way to expansive sandy shorelines like Gold Beach, where salmon fishing and river jet boat tours are a regular part of local life.

Residents also enjoy beachcombing and tidepooling at Harris Beach State Park to search for colorful starfish, or hunting for rare sea agates along the shores of Port Orford's Agate Beach.

For the avid seafarer, outdoor adventurer, or anyone who simply dreams of waking up to the Pacific Ocean views, Curry may help you to secure a slice of coastal paradise without being weighed down by a heavy property tax burden.

Klamath County

Median property tax bill: $1,752

Median home price: $280,400

Home prices can be quite low in Klamath County compared to other major regions of Oregon, with a median price tag of only $280,400. Annual property tax bills can also be relatively cheap (about $1,752) according to the latest U.S. Census Bureau data. While it may not be the absolute lowest-priced entry on our list, Klamath has lower property tax bills than most surrounding counties.

Located just an hour and a half east of Medford, Klamath offers plenty to do. One shining feature is Crater Lake National Park — Oregon's only national park, formed by a gigantic, collapsed volcano that now contains the deepest, clearest lake in the U.S.. Residents can drive the spectacular 33-mile Rim Drive, hike the Cleetwood Cove Trail to touch the water (which will reopen in 2029), or zipline through the dense surrounding canopy at Crater Lake Zipline.

Plus, nearby, the Lava Beds National Monument features 800 underground lava tube caves open for exploration. Or, you can head indoors to view a collection of over 100,000 Native American artifacts and historic western art at the Favell Museum.

Not for the faint of heart, Klamath attracts current and future explorers alike for its rough-and-tumble natural landscapes, ancient history, and relatively low property tax bills.

Grant County

Median property tax bill: $1,674

Median home price: $229,700

Sequestered near the heart of the state is Grant County, Oregon, where home prices sit comfortably under $230,000. Property taxes are also quite low, costing a median of only $1,674 per year according to the latest data from the Tax Foundation.

Grant is a forerunner for 1860s gold rush history, pioneering, and the great outdoors stretching for miles in every direction. Residents can actually still explore historic mountain towns like Canyon City and John Day, where early prospectors once panned for gold. A major local highlight is the Kam Wah Chun Chinese State Heritage Site — a 19th-century trading post, dispensary, and cultural center that offers a rare look into the early lives of Chinese immigrants.

Additionally, you can easily connect with the county's deep roots at the John Day Fossil Beds National Monument, or hike up to the dramatic wilderness of high-altitude alpine retreats like Strawberry Lakes.

So, if you're a passionate history buff looking for a relaxed lifestyle away from city congestion, Grant offers a destination that might not strain your finances too much.

Sherman County

Median property tax bill: $1,588

Median home price: $211,800

Sherman County home prices are typically on the low side, with the median value hovering around $211,800. Property tax bills are also cheaper, costing roughly $1,588 per year according to the Tax Foundation. To sweeten the deal, the county offers an annual Resident Incentive Program which pays out roughly $600 per household to those who move in and stay for at least one full year.

Home to fewer than 2,000 residents, Sherman is made for those who dream of a pastoral lifestyle. Golden, undulating wheat fields stretch across the landscape, dotted by modern wind turbines and backdropped by a stunning view of snow-capped volcanic peaks.

Locals can catch these famous canyon breezes via windsurfing and kiteboarding along the Columbia River, or head inland to hike the sun-banked canyon trails at Cottonwood Canyon State Park.

Communal ties also run deep here; every summer, the county hosts the Sherman County Fair and Rodeo, complete with livestock shows and local food trucks. Additionally, the Deschutes River (which borders the county) gives residents endless weekend opportunities for whitewater rafting, kayaking, and bass fishing.

Come to Sherman County, Oregon, for a slice of quiet, but stay for the lower property tax burden.

Lake County

Median property tax bill: $1,563

Median home price: $219,500

Lake County stands out as the most affordable place to live in Oregon, boasting a median property tax bill of only $1,563 and an accessible median home price of roughly $219,500.

Appropriately nicknamed "Oregon's Outback," Lake County is vast, with sprawling cattle ranches, dramatic alkali lakes, and a county seat that sits at an elevation of 4,757 feet. Like other areas of Oregon, the region is known for plenty of rock collecting possibilities; rockhounds can hunt for shiny black volcanic glass at Glass Buttes, or head to the Bureau of Land Management public collection area to dig for sunstones — the state's official state gem.

And for the stargazer in all of us, the county's lack of major urban development means it's home to some of the darkest night skies in the U.S.. Out here, the untamed canopy of stars showcases a clear view of the Milky Way that just might perfectly reflect the quiet, ancient beauty of the rocky desert floor below.

If you're hunting for highly affordable property tax bills with Beaver State living, the cheapest place to live in Oregon might be right for you.

More Cheap Places

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A prospective client told me he had it all done. He had a will in place, did his own stock picking and his wife did the taxes. What more did he need?

I went through my checklist. He had a lot of cash sitting in the bank and CDs — not ideal for high earners, since the interest is taxable. His will had no family trust, causing potential probate issues, and his adult children had no estate plan either. He was giving cash to charity, another tax faux pas. And on we went.

On the surface, financial planning can seem simple, if you are unaware of the possibilities. That is where a professional can help. And thanks to improvements in technology, today I am more excited about the opportunities to help high-income earners than ever in my 25-plus years in the industry.

Here are three examples, depending on individual circumstances, where technology may help in financial planning for high earners.

Tax-aware fixed income

High earners were traditionally advised to invest in tax-free municipal bonds in taxable accounts. Municipal bond interest is generally exempt from federal income taxes, and so high-income investors in a high tax bracket can use municipal bonds to avoid having the interest eaten up by taxes.

However, municipal bonds don't always pay the most interest on an after-tax basis. Some non-municipal bonds, such as corporate bonds and federal agency bonds, can pay more interest even after taxes.

Investment managers today can jump between different types of bonds depending on which yield pays the most after-tax interest for the client. Different bonds move at different speeds or valuations.

Munis might rally and become expensive relative to other bonds, and depending on the client's tax bracket, the manager might take gains from the munis and reposition into taxable bonds. Of course, you must pay attention to credit risk too, as different bonds have different risks.

The key is: Don't think municipal bonds always make sense. That might not be the case, and other bonds may offer different after-tax characteristics worth considering.

Robust tax-loss harvesting

If you are staring at a taxable gain on your Schedule D Tax Form, you probably need a more robust tax-loss harvesting strategy. Tax-loss harvesting — selling stock or bond losses to offset gains elsewhere in a portfolio — has been around for a long time.

However, technology has improved trading capabilities immensely. Today, tax-loss harvesting can be implemented more frequently using these tools.

There are other non-traditional tax-loss harvesting strategies appropriate for certain high-net-worth clients that can also be considered. If your tax-loss harvesting is stuck in the old way of doing it once a year around the end of the year, I encourage you to explore the new platforms that are available.

Advanced scenario planning

Moving to a state with a lower income tax? It can seem like a good idea, but it's best to check with a professional beforehand. Tax software can help show the difference in taxes between the two states, and sometimes the savings is less than expected.

I have client who wanted to see the impact of making additional Roth 401k contributions. The scenario planner showed the tax impact assuming different rates of return and different tax rates in the future. This helped put some context into the client's decision.

The software most planners use today is highly intelligent. Most of these scenarios can be done rather quickly and can lend confidence to decision-making.

My advice to high-income investors is this: If you haven't explored wealth management capabilities recently, much has changed in what a planner can do for you. The technology improvements have significantly improved the advice we can provide, and may be worth exploring.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.