According to U.S. Census Bureau estimates, the average American household pays roughly $3,200 annually into real estate property taxes, with figures in higher-tax states easily climbing past $4,000 to $9,000.

The good news? You might not have to foot the full bill. State and local governments offer targeted property tax relief, particularly for homeowners aged 65 and older. For example, some older adult residents can stack local senior discounts on the Florida homestead exemption, removing up to $100,000 or more in taxable value from a home.

However, tax breaks like these are rarely automatic. You usually have to apply by local filing deadlines, and remember that programs vary by location.

To help you get started, here are five frequently overlooked property tax breaks worth exploring in 2026 — some of which might just offer a financial umbrella.

Property tax relief for seniors

Before diving into specific tax breaks, it helps to understand how senior property tax relief works.

Because real estate taxes are administered at state, county, and municipal levels, availability and eligibility requirements vary significantly based on where you live. Generally, these programs are available to homeowners, but in some states renters might qualify for property tax savings as well.

Most programs set baseline criteria around primary residency, household income, and/or age (often at 65, though some start earlier). But all older adult property tax relief programs generally require an application. So check your local tax assessor or state Department of Revenue website to see what you are eligible for in your area.

1. Circuit breaker tax credits

Just as an electrical circuit breaker prevents a power overload, an income-based tax credit stops rising property taxes from overloading your annual bill.

States offering circuit breaker programs generally cap property taxes at a specific percentage of your total household income. When the annual amount exceeds that threshold, the state issues a refund or credits the excess back to your property tax bill.

For example: The Massachusetts Senior Circuit Breaker Tax Credit allows eligible residents aged 65 and older to claim a refundable tax credit worth up to $2,820. This tax break triggers if a homeowner's property tax (plus half of their water and sewer bills) exceeds 10% of their total income.

Typically, circuit breaker programs are tailored to low- and moderate-income households. Once more, rules can be complex and often require adding back items that may be nontaxable in your state, like Social Security benefits.

So, if you don't qualify or your state's Department of Revenue or Taxation doesn't offer this program, don't worry; next, we'll take a look at a property tax break most states offer to seniors.

2. Senior property tax exemptions and freezes

Both property tax exemptions and freezes can give seniors relief in 2026. Although closely related in the benefits they provide, these two differ in how they reduce your property tax bill:

• Exemptions. Reduce your home's taxable value by subtracting a flat dollar amount or percentage before the local tax rate is applied. For example, Colorado's Senior Property Tax Exemption grants eligible homeowners 65 and older a 50% exemption on the first $200,000 of their home's actual value, reducing their home's taxable basis by up to $100,000.
• Freezes. Lock in either your home's assessed value or the final dollar amount of your property tax bill once you reach a qualifying age. For instance, New Jersey's "Senior Freeze" program establishes a base year when you enroll; the state then reimburses you via check for any future tax increases above that baseline.

Unlike circuit-breaker credits, exemptions and freezes don't always require low income levels (though higher incomes may limit total savings). But some jurisdictions restrict them further to veterans or people with disabilities. Review your local municipal assessor's office for application information.

3. Bundled municipal fee waivers

Your annual property tax bill may not just cover land and buildings — some localities also bundle flat municipal fees for local services like trash pickup, recycling, and sewer maintenance.

Through a bundled fee waiver, eligible seniors can opt out of or significantly discount these specific line items on their property taxes.

For example: The city of Fontana, California, offers a Senior Citizen Discount Program for residents aged 60 and older through Burrtec Waste Industries. Qualifying seniors can reduce their trash and recycling charges from the standard residential rate of $37.63 down to $30.10.

Because these programs are authorized at the state level but administered locally, eligibility, availability, and tax savings vary widely by jurisdiction. Like property tax circuit breakers, municipal fee waivers are usually income-tested and depend heavily on county or city regulations.

If a program is available in your area, you can check your local tax assessor’s office or municipal utility department for specific information on how to apply.

4. Partial land exclusions

Partial land exclusions divide your land into taxable and non-taxable portions.

So instead of assessing your entire parcel at a uniform value, the tax assessor removes part of your land's physical footprint or appraised value from the tax calculations. While the state authorizes land exclusions in its constitution, county officials implement them according to local tax rules.

For example: Guilford County, North Carolina, applies an Elderly or Disabled Homestead Exclusion that excludes the greater of $25,000 or 50% of the home's appraised value from taxes. This includes a land exclusion capped at up to one acre of contiguous property. Any remaining acres are taxed at the standard rate.

Partial land exclusions may help seniors age in place by shielding acreage from full taxation. However, because these tax relief programs can be tied to local income caps, passive revenue spikes like capital gains tax could count toward your household total and can disallow eligibility.

See your local tax assessor or county's website for your area's specific income thresholds and rules.

5. Property tax deferrals

A property tax deferral is technically a financing option. But it acts like a property tax "discount" by allowing cash-poor, equity-rich seniors to postpone paying their property taxes entirely.

Here's how it works:

• The state or local government pays your property tax bill directly to the municipality and places a low-interest tax lien on your home.
• The accumulated principal and interest become due only after you pass away, sell the property, or move out permanently.

For example: The Oregon Department of Revenue loans qualifying seniors the funds to pay their property taxes, anchoring the balance to a 6% simple (non-compounding) annual interest rate.

Although deferrals preserve immediate cash flow, any outstanding tax lien reduces the ultimate equity passed to your heirs. Also, strict age, income, and residency requirements generally apply. So it's best to consult a qualified tax professional before taking on any new liens on a property.

Read More

• Bill Proposes $10,000 Home Upgrade Tax Credit for Seniors
• 6 Steps to Appeal Your Property Tax Bill
• Most-Overlooked Tax Breaks for Retirees
• Property Tax Changes For Homeowners 65 and Older

Abbott has placed property-tax relief at the center of his campaign agenda, while his Democratic challenger, state Rep. Gina Hinojosa, is offering a different approach: a one-time $1,500 payment to every Texas household, funded with $17 billion from the state's "Rainy Day Fund."

Although Texas is a no-income-tax state, the proposals come as Texans contend with higher costs across major household expenses. Over the past decade, energy prices in Texas have reportedly gone up 65%, housing costs 44%, and food prices 41%, according to an analysis by The Texas Tribune.

Abbott and Hinojosa have responded with competing proposals to put money back in Texans' pockets.

Their plans, however, take different approaches: Abbott wants to reduce an ongoing tax burden for homeowners, while Hinojosa wants to make a one-time payment to Texas households. Here's more to know.

Texas Gov. Abbott property tax plan

Gov. Abbott has proposed eliminating school property taxes for homeowners and placing additional limits on property-tax growth.

His five-point property-tax plan calls for limits on local government spending, two-thirds voter approval for property-tax increases, and greater authority for voters to roll back taxes.

He also wants changes to property-appraisal rules and a lower annual cap on homestead appraisal growth from 10% to 3%. His plan would also extend appraisal limits to additional property types.

Abbott's campaign says its broader affordability agenda could reduce property taxes by up to 50% and save the average homeowner roughly $3,000 a year.

(Those figures are campaign estimates. The amount an individual homeowner would save would depend on the property and the legislation ultimately enacted.)

The proposal follows property-tax changes enacted during Abbott's current term.

• Last year, as Kiplinger reported, Texas increased the general homestead exemption to $140,000, with a $200,000 exemption for seniors and disabled homeowners. (Those changes took effect for tax assessments impacting the 2025–2026 tax cycles.)
• State officials also said the 2025 changes would significantly reduce school property taxes for homeowners.

It's worth noting that eliminating school property taxes would affect how Texas finances public education since school districts currently receive substantial revenue from property taxes.

• The Tax Policy Center recently reported that Texas school districts collected about $42 billion in property taxes in 2024, with roughly 45% to 50% coming from homesteads.
• The center estimated that eliminating school property taxes on homesteads could create an annual revenue gap approaching $20 billion, depending on how the policy is structured.

That estimate is one reason the proposal is about more than the property-tax bills homeowners pay. Such a measure would also raise important questions about how the Lone Star State would replace the revenue.

Hinojosa $1,500 cash rebate proposal

Rep. Hinojosa, who represents Austin in the Texas House, has proposed sending $1,500 to every Texas household, at an estimated total cost of $17 billion.

Her proposal would use money from the state's Economic Stabilization Fund, known as the Rainy Day Fund. Hinojosa's campaign calls the payment a "corruption tax refund." But the proposal would be a one-time distribution from state reserves, not a refund of a particular previously paid tax.

When Hinojosa announced the proposal earlier this summer, her campaign said the Rainy Day Fund stood at nearly $25 billion and that the $17 billion distribution would leave roughly $10 billion.

• The Comptroller's current 2026-27 revenue estimate projects a $27.43 billion Rainy Day Fund balance for fiscal 2026 and $28.48 billion for fiscal 2027.
• Those figures are projections and assume no additional legislative appropriations from the fund.

Hinojosa's campaign notes on its Money in Your Pocket website that Texas has accumulated enough money in the fund to return some to residents, citing experts who say the Rainy Day Fund needs only about a $10 billion balance to remain fiscally responsible.

However, policy analysts at Rice University's Baker Institute for Public Policy note that pulling $17 billion from the Rainy Day Fund would require a legislative supermajority to clear statutory floor limits, and warn that injecting cash into consumers' hands could temporarily heighten local inflation.

More on affordability in the Texas governor platforms

Both Abbott's and Hinojosa's affordability agendas go beyond taxes.

For example:

• Gov. Abbott has proposed allowing developers to use home designs approved by at least three Texas cities without needing further approvals and enabling homeowners to build property additions.
• He has also suggested a $400 million roof fortification grant program, similar to an Alabama initiative, which his campaign has said could help lower homeowners' insurance costs.

Abbott wants to allow small businesses to offer health plans exempt from certain state insurance mandates, potentially expanding coverage for some uninsured Texans. He also proposes to cap monthly copayments for inhalers and epinephrine at $25 for state-regulated health plans.

Additionally, Abbott's "Keep Texas Affordable" initiative includes expanding competition in the electricity market by allowing consumers in Austin and San Antonio to choose retail electricity providers, which he claims could lower costs.

However, officials from Austin Energy and CPS Energy have reportedly expressed concerns that deregulating city-owned utilities might reduce municipal revenue and not ensure lower rates.

Meanwhile...Rep. Hinojosa has also called for a freeze on residential electricity rates until the state requires data centers and other high-load electricity users to pay for necessary infrastructure.

• Hinojosa proposes eliminating over $1 billion in state tax exemptions granted to data centers. She argues that tech giants should bear the full cost of their grid demands.
• In response to growing pressure over grid demands, Gov. Abbott recently directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas (ERCOT) to review data center grid connections to ensure companies contribute to the power infrastructure.

Hinojosa also wants to restrict private-equity purchases of single-family homes. During the 2025 session, she introduced state legislation that would have prevented institutional investors from buying more than 10 single-family homes during a housing shortage.

On the high cost of groceries, Hinojosa has proposed banning so-called predatory surveillance pricing. The measure would prohibit retailers from using consumer data and algorithms to charge different prices based on what they know about customers.

Regarding healthcare, Hinojosa's campaign notes on its website that "Texas has the highest uninsured rate and the highest number of uninsured children in the country."

As a result, Hinojosa has proposed banning what she describes as bad-faith insurance denials and strengthening the state's rural hospital system.

Texas governor race: Bottom line

It's important to note that neither the property tax nor the cash rebate proposal is currently law, and Texans won't vote directly on Abbott's property-tax changes or Hinojosa's $1,500 payments on the November ballot.

So, the election results alone won't determine whether either tax measure eventually becomes a reality.

Instead, Texas voters will choose which candidate gets to champion these and other measures from the Governor's mansion for at least four years. Stay tuned.

Related

• No-Income-Tax States Ranked by 2026 Cost of Living
• Texas Tax Guide
• Polls Show People Hate Data Centers: Billions in Tax Breaks Are One Reason Why
• The 10 Cheapest Places to Live in Texas

The culprit is a lack of awareness around net unrealized appreciation (NUA), a little-known IRS provision that can convert a chunk of ordinary income tax into much cheaper long-term capital gains tax.

If you or your executives hold concentrated employer stock in a 401(k), profit-sharing plan or employee stock ownership plan (ESOP), understanding NUA could mean the difference between a seven-figure tax bill and meaningful savings.

What is NUA?

NUA is simply the growth in your company stock's value while it sat inside your retirement plan. To put it another way, it's the gap between what you (or your employer, via matches or stock bonuses) paid for the shares and what they're worth today.

Consider an executive who accumulated employer stock over a 20-year career with a cost basis of $200,000 and whose position is now worth $4.2 million. The $4 million difference is the NUA.

Under normal 401(k) rules, every dollar you eventually withdraw, including all that appreciation, gets taxed as ordinary income, which can run as high as 37% for top earners. On a $4 million distribution taxed entirely as ordinary income, that's roughly $1.5 million owed to the IRS.

NUA treatment changes that equation by letting you split the stock into two tax buckets: The $200,000 cost basis, taxed as ordinary income now, and the $4 million appreciation, taxed later at long-term capital gains rates (currently capped at 20% federally) whenever the shares are sold.

Why NUA is a big deal for executives

This distinction matters most for executives and long-tenured employees as they're the ones most likely to hold large, highly appreciated positions in employer stock after years of matches, ESOP allocations or stock bonus programs.

In this scenario, using NUA could shift roughly $4 million from a 37% ordinary income bracket down to a 20% capital gains bracket, a potential difference of more than $600,000 in taxes owed, simply by handling the distribution correctly.

There's an added bonus: The NUA portion, along with any gains after distribution, escapes the 10% early withdrawal penalty regardless of the employee's age, and it's exempt from the 3.8% Net Investment Income Tax as well.

The rules you can't skip

NUA isn't automatic. It only applies if very specific IRS requirements are met, and missing even one disqualifies the entire strategy. Use this checklist if you are considering it:

• A "triggering event" must occur first: Separation from the employer, reaching age 59½, disability or death.
• The entire vested balance across all of that employer's qualified plans must be distributed within a single calendar year, with no partial distributions carried into the next year.
• The company stock must be distributed "in-kind" as actual shares into a taxable brokerage account, never sold for cash first.
• If required minimum distributions were already taken in a prior year, NUA eligibility is lost. Taking only the current year's RMD is still allowed as long as the account is zeroed out by year-end.
• The stock must currently sit in a tax-deferred account, such as a traditional 401(k). It can't be in a Roth 401(k) or Roth IRA.

How the process actually works

Once eligibility is confirmed, the mechanics are straightforward but require careful sequencing.

• The employer stock gets distributed in-kind directly into a non-qualified brokerage account, triggering an immediate ordinary income tax bill on the $200,000 cost basis only.
• Meanwhile, any remaining 401(k) assets, such as mutual funds, cash or other holdings, can be rolled over tax-free into a traditional IRA or a new employer plan.
• From there, the $4 million NUA portion sits untaxed until the shares are actually sold, at which point it's taxed at long-term capital gains rates no matter how briefly the shares were held after distribution.
• Any additional appreciation that occurs after the distribution date is taxed separately, following normal short- or long-term capital gains rules based on the new holding period.

Common mistakes to avoid

The biggest and most irreversible mistake is rolling employer stock into an IRA by default, as this permanently forfeits NUA treatment on that entire $4 million gain. This is a common outcome when executives don't flag their intent in advance.

Other frequent missteps include taking RMDs in a prior year without realizing it disqualifies future NUA eligibility, selling shares inside the plan before distribution (converting NUA to cash disqualifies it), and failing to distribute the full account balance within one tax year.

Making the decision

NUA isn't right for everyone, but for an executive with a large basis-to-value gap, the math is compelling. It works best when the stock is highly appreciated relative to its basis, when the executive doesn't need immediate liquidity to cover the upfront ordinary income tax on the basis, and when long-term capital gains rates offer a real advantage over the executive's ordinary income bracket.

For those under 59½, the trade-off between the 10% early withdrawal penalty on the cost basis and the long-term tax savings on the multimillion-dollar gain needs careful modeling.

Given how irreversible and rules-driven this strategy is, any executive sitting on a concentrated, highly appreciated position of employer stock inside a 401(k) — especially those approaching retirement or a job change — should run the numbers with a financial adviser or tax professional well before their triggering event happens, not after.

Once the account is rolled into an IRA, the opportunity to save hundreds of thousands (or more) is gone for good.

Related Content

• Got Company Stock in Your 401(k)? You Should Know about NUD
• 4 Reasons to Roll Over Your 401(k) Into an IRA (And 4 Reasons Not To)
• How to Unlock the Value of Your Employee Stock Options (and Help Avoid Taking a Financial Hit)
• Yay! You've Been Awarded Stock! Boo, the Tax Hit Is Massive: How to Avoid the Mistakes High Earners Make Before They Even Realize It
• The Big Three IPOs: What Retirees Need to Know Now

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.

Thankfully, selling an underperforming investment can not only free up cash to put elsewhere but also offer a tax benefit.

When you sell an investment for less than you paid, the loss can offset capital gains from other investments, reducing the amount of profits subject to tax. And if your losses exceed your gains, federal tax rules allow you to use some of those losses to reduce your other taxable income. The key number to know? $3,000.

Knowing how the IRS nets your gains and losses before December 31 — and how unused losses can carry forward to future years — can potentially make a difference in your tax bill. Here's more to know about the capital loss deduction.

How the $3,000 capital loss carryover works

If your capital losses exceed your capital gains for the year, under IRS rules, you generally may deduct the lesser of your net capital loss or $3,000 against other income on your federal income tax return. For taxpayers who are married filing separately, the annual limit is generally $1,500.

Capital losses first offset capital gains, without the $3,000 limit.

For example, if you realize $10,000 of capital gains and $7,000 of capital losses in 2026, the losses generally offset $7,000 of the gains, leaving a $3,000 net capital gain.

If you instead have $10,000 of capital losses and $4,000 of capital gains, you have a $6,000 net capital loss. You can generally use $3,000 of that net loss to reduce other income on your 2026 federal return, and carry the remaining $3,000 forward.

*This is a fictional, simplified example for educational purposes only.

Unused capital losses generally carry forward indefinitely. In future years, they offset capital gains first; if losses still exceed gains, you can generally deduct up to $3,000 per year against other income ($1,500 if married filing separately) until the carryforward is used.

The carryover must be reported on future returns and is subject to the IRS’s netting and carryover rules.

The loss must be realized

It's important to note that an investment that has fallen in value isn't necessarily a tax loss yet.

Suppose you paid $20,000 for an investment and it is now worth $12,000. As long as you continue to hold that investment, you generally cannot claim the $8,000 decline as a capital loss on your tax return. The loss generally becomes realized when you sell the investment.

This is a fictional, simplified example solely for educational purposes.

That's the principle behind tax-loss harvesting. Investors may sell investments that have declined in value and use those realized losses to offset gains from other investments.

Whether to sell, however, is both an investment and a tax decision. A potential tax deduction doesn't necessarily make selling an otherwise appropriate investment worthwhile.

Selling at a loss doesn't always mean you can claim the loss

The IRS wash sale rule can affect investors who sell an investment at a loss and then buy a substantially identical security.

• Generally, if you sell a security for a loss and acquire substantially identical securities within the 30-day period before or after the sale, the loss may be disallowed for current tax purposes.
• That 30-day window on either side of the sale matters at year-end. Selling an investment at a loss in December and buying it back in January can still result in a wash sale.

The rules can also become more complicated when purchases are made across different accounts or through certain investment plans.

For more information, see our report: The Wash Sale Rule: 6 Things to Know.

Capital loss deduction: What to check before Dec. 31

If you've sold investments during 2026, look at the gains and losses you've realized before the year ends. From a tax perspective, the investments currently showing a gain or loss in your account aren't necessarily the same as the ones that appear on your federal return.

The key is to look at the full picture — not just the investment that is up or down, but what you've already realized this year and how a potential sale might affect your tax strategy.

Also, of course, always be sure to follow applicable IRS rules.

Note: Since this information is provided solely for educational purposes and everyone's financial situation is different, consult a trusted tax professional or financial advisor who can help with your specific circumstances.

Related

• State-by-State Capital Gains Tax Rates
• The Capital Gains Tax Exclusion for Homeowners
• Cut Your Losses With Tax Loss Harvesting in 2026
• Federal Capital Gains Tax Rates for 2026: What to Know

When you think about working with a CPA, you probably think about your tax return. And that makes sense — tax professionals help calculate what you owe, identify available deductions and credits and make sure your return is filed correctly.

But there is a big difference between preparing your taxes and planning your taxes. Tax preparation looks backward. Tax planning looks forward (I wrote a book on this called I Hate Taxes — request a free copy here).

That distinction becomes particularly important for retirees with pensions, substantial savings and multiple sources of retirement income. A pension can provide valuable lifetime income, but it also creates a tax-planning challenge that many retirees don't anticipate: Your retirement income could be higher than it was during some of your working years.

As the founder and CEO of Peak Retirement Planning and a CFP® Professional, I recommend that retirees look beyond their federal income tax bracket and consider how decisions affect Social Security taxation, Medicare premiums, capital gains, Roth accounts and estate planning.

Here are eight retirement tax strategies worth discussing with your financial planning team.

1. Don't automatically dismiss Roth conversions

A Roth conversion involves moving money from a traditional IRA or other tax-deferred account into a Roth IRA and paying income taxes on the converted amount today.

In exchange, qualified Roth withdrawals in retirement are generally tax-free, and Roth IRAs aren't subject to lifetime required minimum distributions (RMDs) for the original owner.

The conventional wisdom around taxes is often simple: Defer taxes as long as possible. But that isn't necessarily the best strategy for every retiree.

Consider someone who has a pension, Social Security and several million dollars in traditional retirement accounts. Their future taxable income could be substantial, as RMDs will eventually force money out of tax-deferred accounts, and pension and Social Security income continues arriving regardless of whether the retiree needs additional cash.

This can create a very different tax picture than the one they had while working. A Roth conversion could make sense when the tax cost today is lower than the expected lifetime tax cost of leaving the money in a traditional account.

However, the calculation should include more than the federal income tax bracket. Social Security taxation, Medicare's income-related monthly adjustment amount (IRMAA), state taxes, future RMDs and estate planning goals all affect the result.

The goal isn't necessarily to pay the lowest tax rate this year; it's to pay the lowest lifetime tax bill.

2. Put charitable giving on your tax-planning calendar

If charitable giving is part of your retirement plan, don't wait until tax season to think about it. Beginning in 2026, a new above-the-line charitable deduction allows eligible taxpayers who take the standard deduction to deduct up to $1,000 of qualifying charitable contributions for single filers and $2,000 for married couples filing jointly.

This creates another planning opportunity for retirees who don't itemize deductions.

But retirees with larger retirement accounts have another important tool: Qualified charitable distributions (QCDs). Once you reach age 70½, a QCD allows you to make a charitable contribution directly from an IRA.

The distribution may satisfy part or all of an RMD, subject to applicable limits, while generally keeping the transferred amount out of adjusted gross income.

That distinction matters. For a retiree with a pension, keeping taxable income under control could have ripple effects beyond the income tax return, as it can influence Medicare premiums and the taxation of Social Security.

Charitable retirees therefore shouldn't simply ask, "How much can I deduct?" They should ask, "Which account should the charitable gift come from, and when should I make it?"

3. Stop treating tax preparation as tax planning

Your CPA might prepare an excellent tax return, but that doesn't necessarily mean you're receiving comprehensive retirement tax planning.

Tax preparation is largely reactive — the tax year has ended, your income and transactions are known, and your professional calculates the resulting liability.

Tax planning is proactive. It asks questions such as:

• Should you make a Roth conversion this year?
• How much should you convert?
• Which account should fund your next withdrawal?
• How will an RMD affect your tax bracket?
• Could a large capital gain increase your Medicare premiums?
• Should you delay Social Security?
• How will your tax strategy change after one spouse dies?
• Where should assets be held for tax efficiency?

These decisions often need to happen months or years before the tax return is prepared.

Retirees shouldn't necessarily expect one professional to handle every aspect of the process. Instead, the CPA and financial adviser should communicate so that investment and tax decisions work together rather than operating in silos.

That collaboration can be especially valuable for retirees with pensions, because the interaction between guaranteed income, retirement accounts and government benefits can add a lot of complexity to your plan.

4. Build tax diversification into your retirement portfolio

Most investors understand investment diversification: Don't put all your money in one stock or one asset class.

The same concept applies to taxes. Retirees may potentially benefit from having assets spread among three different tax "buckets":

• Tax-deferred. Traditional IRAs, 401(k)s, 403(b)s and similar accounts
• Tax-free. Roth IRAs and other qualifying Roth assets
• Taxable. Brokerage and other non-retirement accounts

Having everything in tax-deferred accounts could create a problem later. When you need money, you have limited flexibility — withdrawals generally create taxable income, and RMDs will eventually force distributions whether you need the money or not. A Roth account provides another option.

Suppose tax rates are relatively high in a particular year. You could draw more heavily from Roth assets, assuming the withdrawals are qualified, rather than adding more taxable income.

In another year, when your taxable income is lower, drawing from a traditional IRA could be more attractive.

Tax diversification gives retirees choices, and in a retirement that could last 20 or 30 years, flexibility has real value.

5. Pay attention to the "three-legged stool" of retirement income

Pension retirees often have three major sources of income:

• A pension
• Social Security
• Withdrawals from retirement accounts

Individually, each might be beneficial, but together they can create a surprisingly large stream of taxable income. A retiree with a $70,000 pension, $50,000 of Social Security and significant IRA withdrawals could have considerably more taxable income than they expected when they first retired. The consequences extend beyond ordinary income taxes.

This increased income could cause up to 85% of Social Security benefits to be taxable and can also push long-term capital gains into higher brackets, eliminating opportunities to realize gains at the 0% rate.

Medicare Part B and Part D premiums increase through IRMAA, when income exceeds certain thresholds. That means an additional dollar of taxable income isn't necessarily just another dollar subject to income tax. It could also contribute to higher Medicare premiums.

For pension holders, this is one reason tax planning needs to look beyond the tax return.

6. Don't overlook the tax implications of pension decisions

Choosing between pension options is primarily an income-planning decision, but taxes deserve a seat at the table.

For example, someone might be deciding between a monthly pension benefit and a lump-sum distribution. The choice involves numerous factors, including longevity, investment risk, survivor benefits, liquidity and spending needs.

Taxes are only one piece of that decision, but they influence the long-term outcome. Survivor benefits deserve particular attention, as while you may be able to file jointly now and enjoy the more favorable tax brackets, one spouse passing away could result in a severe increase in your tax and IRMAA situation. Not to mention the potential to lose a Social Security benefit.

That combination creates what is commonly called the widow's penalty. A pension strategy that looks perfectly reasonable while both spouses are alive could create a very different tax picture for the surviving spouse.

In some situations, Roth conversions during the couple's joint-filing years could help reduce the future tax burden. The key is to model the decision before making an irrevocable pension election.

7. Make your investment strategy tax-efficient, not just return-efficient

Retirement investing isn't only about selecting investments that you believe will perform well. It's also about deciding where those investments should live.

For example, highly appreciated assets held in a taxable brokerage account create capital gains when sold. Meanwhile, mutual funds often distribute taxable capital gains even when you didn't sell the fund yourself, creating "phantom gains."

Those distributions might make tax planning more difficult because you don't necessarily control when the taxable income occurs. Tax-loss harvesting is another strategy worth considering. Selling an investment that has declined in value generates a capital loss that offsets capital gains, subject to applicable tax rules.

The proceeds could then potentially be reinvested in another investment while maintaining a similar overall portfolio strategy, provided you follow the wash-sale rules.

Asset location matters, too. Growth-oriented investments could be particularly attractive inside a Roth account because future qualified growth can be tax-free.

More conservative investments could potentially fit better in traditional accounts, while certain investments in taxable accounts often benefit from favorable capital gains treatment.

The best location depends on the entire portfolio, not simply the investment itself.

8. Don't let your pension create a retirement tax trap

Here's the overarching issue pension holders need to understand: A guaranteed income stream could make retirement taxes more complicated, not less.

Many retirees have relatively little taxable income, so they remain within the standard deduction or lower tax brackets. Pensioners with significant savings can have a different experience.

Their pension continues producing income. Social Security then becomes partially or largely taxable. Their retirement accounts continue growing. Eventually, RMDs begin. If they don't need those RMDs for living expenses, they often reinvest the money in a taxable account, creating another layer of potential capital gains and taxable investment income.

The result is a cycle in which one source of income affects another. That's why retirees with pensions and substantial assets should look at taxes as a long-term planning issue rather than an annual filing exercise.

The objective isn't to eliminate taxes. Instead, the goal is to coordinate the different pieces of a retirement plan so that you aren't unnecessarily creating taxable income, Medicare surcharges or avoidable tax bills later in life.

The bottom line

Retirement tax planning isn't about finding one magic strategy; it's about understanding how today's decisions affect the next 10, 20 or even 30 years.

• A Roth conversion could be beneficial in one situation and counterproductive in another
• A charitable gift could comprise cash, appreciated investments or an IRA, with different tax consequences
• A pension election could affect the surviving spouse's future tax burden
• And the way investments are allocated among taxable, tax-deferred and Roth accounts may influence how much flexibility you have later

Perhaps most importantly, tax preparation and tax planning should not be confused. Your tax return tells you what happened. A comprehensive retirement tax plan asks what you can do about what happens next.

For retirees with pensions and significant savings, that distinction could be one of the most valuable parts of their retirement strategy.

Now, for those who have a financial planner who says, "I am not a tax professional, go talk to your tax preparer": It may be time to find a new adviser. We believe retirees should work with what we call a "one-stop shop," where the CPA and financial planners work in the same office to ensure the above strategies get implemented.

Related Content

• Why a Roth Conversion Is Wrong for Most People But Often Right for Pension Holders
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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.

Let me paint the picture.

• Oil is above $80 a barrel and volatile
• Gas is hovering around $4 a gallon nationwide (and above $6 in parts of California)
• The Strait of Hormuz, through which roughly 20% of the world's oil supply normally flows, has been contested and largely closed since early March — the International Energy Agency has called it the largest supply disruption in the history of the global oil market
• Moody's recession model is sitting at 49%
• Mortgage rates have climbed back above 6%

If your instinct right now is to freeze, to sit on your hands and wait for the smoke to clear, I understand the impulse. But I'd also argue that's exactly the wrong move.

Because buried inside this chaos is one of the most compelling arguments for tax-advantaged real estate investing that I've seen in my career.

Let me explain what I mean.

When everything else gets expensive, real estate gets interesting

Inflation is the silent killer of stock market portfolios. When oil prices spike, the cost of everything follows: Food, shipping, manufacturing and consumer goods. Corporate margins shrink. Consumer spending contracts. Stocks, which are priced on future earnings expectations, take the hit.

Real estate, on the other hand, has a fundamentally different relationship with inflation. Rental income tends to rise with inflation, because landlords adjust rents as costs increase. Property values tend to hold or appreciate because the replacement cost of building new construction rises with materials and energy prices. And the debt on the property, which is typically fixed-rate, becomes cheaper in real terms as the dollar loses purchasing power.

In other words, inflation erodes the value of what you owe while increasing the value of what you own. That's not a bad deal.

This dynamic doesn't guarantee positive returns in every scenario, of course. Rising mortgage rates can suppress transaction volume and put downward pressure on prices. But for investors who already own real estate, or who are exchanging into it using tax-advantaged strategies, the inflationary environment actually strengthens the fundamental case for staying in the game.

One crisis, three investors, three strategies

Let's look at how this energy crisis is affecting three very different investors and how each one is using the current environment to their advantage.

Nadia is a 58-year-old landlord who owns a small strip center in suburban Houston. She's been thinking about selling for years, but the capital gains tax bill has always stopped her cold. Now, with commercial property values still holding steady in her market but stock portfolios getting hammered, she's fielding calls from buyers who want to move money out of equities and into something tangible. Her property is suddenly more attractive to a wider pool of buyers than it has been in years.

Nadia's move: Sell now while buyer demand is strong, execute a 1031 exchange and roll the proceeds into a portfolio of Delaware statutory trusts. She defers the entire capital gains tax, exits active management and picks up monthly passive income from institutional-grade real estate, the kind of property that weathers inflationary storms better than a strip center with two vacant units.

She also captures bonus depreciation through DSTs that have undergone cost-segregation studies, creating paper losses that offset her passive income and reduce her current tax bill.

David is a 44-year-old software executive who sold $2 million in company stock when his restricted stock units (RSUs) vested in January. He was already sitting on a significant capital gain. Then the market cratered, and now he's watching his remaining portfolio shrink while staring at a six-figure tax bill on the shares he already sold.

David's move: Invest the capital gains from his stock sale into a Qualified Opportunity Fund within his 180-day window. He defers the tax on those gains through the end of 2026 and, more importantly, starts the 10-year clock toward completely tax-free appreciation on any growth within the QOZ investment.

His money moves from the stock market — which is at the mercy of oil prices, geopolitics and Federal Reserve press conferences — into tangible real estate in communities poised for long-term growth.

Ten years from now, if all goes well, the IRS doesn't see a dime of the new appreciation.

Patricia and Ray are both 67, and they're done. Done with tenants, done with maintenance, done with the stress of checking their brokerage account every morning to see what the latest Strait of Hormuz headline did to their retirement savings overnight. They own a rental duplex worth $800,000 and a stock portfolio that lost 15% of its value earlier in the year. They want simplicity, stability and income they can count on.

Their move: Sell the duplex via a 1031 exchange into DSTs for the real estate side, eliminating landlord duties while deferring the capital gains. For the stock portfolio, they harvest losses on their worst-performing positions to offset gains elsewhere and redirect a portion of any remaining gains into a QOZ fund.

The combination gives them passive income from the DSTs, tax-loss harvesting from the stock sell-off and a long-term growth vehicle in the QOZ. They've turned a crisis into a retirement plan.

Why timing matters more than usual

There are three reasons why this particular moment demands attention.

First, the Opportunity Zone clock is ticking. Deferred gains from earlier QOZ investments come due on December 31, 2026. If you're making a new QOZ investment today, you're still under the OZ 1.0 rules, which means the 10-year tax-free appreciation benefit is fully intact.

And with the OZ 2.0 maps being drawn, which began on July 1, investors who understand both programs will have a significant edge over those who don't.

Second, bonus depreciation is back at 100%, permanently, thanks to the One Big Beautiful Bill Act. For high earners investing in DSTs with cost-segregation studies, this creates the opportunity to offset passive income with accelerated first-year depreciation deductions. In an inflationary environment where every dollar of tax savings matters more, this benefit is amplified.

Third, the energy crisis itself is creating urgency among sellers and opportunity among buyers. Landlords who are spooked by rising costs and uncertain economic conditions are motivated to sell. Investors fleeing the stock market are looking for stable, income-producing alternatives.

The result is a marketplace where well-advised buyers using 1031 exchanges, DSTs and QOZ strategies can acquire quality assets at attractive valuations while deferring or eliminating taxes in the process.

The bigger picture

Every major economic disruption in modern history — the 1973 oil crisis, the 2008 financial collapse, the 2020 pandemic — has reshaped how investors think about risk, tangibility and tax efficiency. The 2026 energy crisis will be no different.

When the dust settles, the investors who moved toward real estate and deployed tax-advantaged strategies during the turbulence will have built portfolios that are more resilient, more diversified and more tax-efficient than those who waited for calm seas that may be years away or may never come.

The tools are all on the table: 1031 exchanges for tax-deferred repositioning, DSTs for passive income and bonus depreciation and Qualified Opportunity Zones for tax-free long-term growth.

Each one is powerful on its own. Used together, in the hands of an adviser who understands how the pieces fit, they become something close to a complete playbook for navigating exactly this kind of environment.

The crisis is real. But so is the opportunity. The only question is whether you're positioned to take advantage of it.

Related Content

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• DST Inventory Just Hit a Record $3.9 Billion: What 1031 Exchange Investors Should Do Next
• Your Stock Portfolio Just Got Hammered: Here's a Tax-Smart Way to Recover
• Don't Defer Retirement if You're a Landlord, Defer Taxes Instead
• I'm a Real Estate Investing Pro: This Is How to Use 1031 Exchanges to Scale Up Your Real Estate Empire

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.

Additionally, many people may have heard claims about owing IRS tax bills after an inheritance or intimidating phrases like "death taxes," which can blur the lines between myth and reality. In fact, a new survey conducted by Morning Consult for Kiplinger's Trillion Dollar Talk campaign found that a third of both older adults and adult children are unsure whether heirs will owe taxes on an inheritance, demonstrating the confusion around this topic.

As with all tax rules, knowing the facts is important. So why not test your knowledge with this short quiz to see if you can separate inheritance tax facts from fiction.

More Trillion Dollar Talk

• Estate Tax v. Inheritance Tax: Who Actually Pays?
• States That Won't Tax Your Death
• What Happens With Taxes When You Inherit a House?

A natural disaster has occurred. Do you want to donate to help out?

You're checking out at your local store and get a prompt asking if you want to round up for charity. Do you do it?

While many of us are basking in the hazy days of summer vs the cold reality of the months to come, the warm weather seems to bring a lot of "Giving Tuesdays." The asks for everything from swim teams to summer camps to walk-a-thons begin to add up, leaving me to ponder: "Am I giving enough?"

So, while the end of the year feels a long way away, this time of year is a good time to think about creating a giving plan for the rest of the year and identifying how you want to maximize the tax benefits for your gifts.

There are a few key components to unpack with this process. Some include:

• Is charitable giving important to your core values?
• What capacity do you have to give to charities?
• How much can you give to receive a tax benefit?

The causes

Every one of us, without too much trouble, could find, or be asked, to give to a charity every day. There are plenty of groups that need help (some we've never heard of) and plenty of people (some we've never met) looking to raise cash.

Psychologically, if I give to something in a reactionary way — maybe I got put on the spot to give — I'm most likely going to feel less connected to the outcome, and the feel-good nature of the gift will be fleeting.

So, how do conversations with my clients go? Especially with those who might have a significant capacity to give.

I always advise my clients who are charitably inclined to set an intentional giving plan. This means rather than scattering a few dollars here or there based on various fundraisers, pick one or two core causes that align with your personal values.

Local youth sports? Animal welfare? Your alma mater? A local house of worship? Take the time to see if these fit the legacy you want to leave. After determining the cause, spend the time to do the due diligence on the charitable options presented in that space.

Look at the mission and the impact measurements, as well as the financials of an organization so you feel more confident that your investment is going to be spent in a way that you feel good about and aligns with your own goals and values.

What's your giving capacity?

Once you've determined that you want to give to charity, it's important to look at your personal capacity to give.

Everyone has different demands on their bank account. If someone is in a position where they need to pay off high interest debt, build an emergency fund or saving for a large purchase or a college education, their capacity is going to look differently than someone who doesn't have any of those events looming, is fully funding their retirement plans and is in their peak earning years.

While charitable giving is initially driven by values and purpose, it's OK to also want to maximize the financial advantages associated with giving to nonprofit organizations.

By the numbers

It's important to address upfront that while giving your money to something you believe in can feel good, a dollar-for-dollar tax deduction is not guaranteed.

In truth, a deduction lowers your taxable income, rather than your final tax bill.

The next key thing to know is the level of deduction you are eligible for depends on whether you take the standard deduction or itemize.

The standard deduction for 2026 tax year is $16,100 for single filers and $32,200 for married couples filing jointly — leaving many Americans finding themselves in the standard-deduction camp.

For a long time, this meant that you wouldn't get any deduction for giving to charity. But, as a result of the One Big Beautiful Bill Act, passed on July 4, 2025, taxpayers utilizing the standard deduction will now be able to receive a deduction for charitable gifts up to $1,000 for single filers and $2,000 for married couples filing jointly.

For individuals who itemize, there is a new floor for deductions. The amount given to charity that is equivalent to the first 0.5% of adjusted gross income (AGI) is not deductible, and for taxpayers in the top tax bracket, the tax benefit of the charitable deductions is capped at 35% rather than 37%.

Meaning if you have $500,000 AGI and charitable contributions of $20,000, then the first $2,500 (0.5% of $500,000) is not deductible, but the remaining $17,500 is. But, because you're in the highest bracket, the benefit is capped at 35%. In this example, the gift produces about $6,125 of federal income tax savings.

For individuals who want to get more of a tax benefit, but don't give enough in a single year to make the most of these limits, there is an idea called "bunching." Instead of giving a small amount every year, they can bunch two or three years of giving into a single year.

As a reminder, in order for you to receive a charitable deduction for your donation, the charity you choose must be a registered 501(c)(3) organization. So, while giving money to a friend's GoFundMe page after they experience misfortune is kind, it's not tax-deductible.

Additionally, for gifts of $250 or more, taxpayers must receive a formal acknowledgment letter from the charity confirming the donation and making it clear that they didn't receive any goods or services in return for their largesse.

So, should you be giving more to charity? Well, many of us could probably give more.

But a better question — and one I always ask my clients — might be: Are you giving in a way that reflects your values and maximizes the impact you want to have?

When charitable giving is approached with intention rather than obligation, it becomes more than a tax deduction or a response to the latest fundraising appeal.

It becomes an expression of purpose, a reflection of personal values and an opportunity to create meaningful change for the causes and communities we care about most.

Having a plan in place for your charities and your taxes makes great sense — especially as peak giving season approaches.

Related Content

• Donating Complex Assets Doesn't Have to Be Complicated
• Give More But Pay Less: An Essential Guide to Tax-Smart Charitable Giving in 2026
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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.

According to a new survey conducted by Morning Consult on behalf of Kiplinger, only about 56% of parents admitted to having a conversation with their children about inheritance. That number drops to just 39% when you ask adult children whether they have had a discussion about family plans for passing on money and assets.

The lack of engagement and understanding is also stark when it comes to estate taxes, according to the survey. Roughly 40% of both children and parents say they are "not sure" whether taxes will apply to any inheritance plans.

Considering the U.S. is already in the beginning stages of the Great Wealth Transfer, where members of the massive baby boomer demographic reach the end of their lives, this kind of procrastination with estate planning comes with a real cost. By some estimates, the collective fortune that will be passed down to younger generations tops well over $100 trillion in value.

Naturally, you want to ensure that your financial legacy stays in the hands of your loved ones, and doesn't get consumed by the Internal Revenue Service. Perhaps you're making arrangements for your own estate. Maybe you're overdue for such a plan and don't know where to start.

Whatever your case may be, take a few minutes for an introduction to the most tax-efficient ways to leave investments to your children.

1. Hold appreciated investments until death

A lot of research shows that the best strategy for investing is to buy and hold stocks for very long periods of time rather than actively trading in and out of fads. And when it comes to tax planning, one of the best strategies for those stocks that have appreciated over the long-term is to hold them until the day you die.

According to IRS rules, heirs are frequently eligible for a "step-up" in cost basis to the asset's fair market value at the date of death. That has the potential to entirely eliminate capital gains taxes on a stock's appreciation over the original owner's lifetime.

Considering long-term capital gains can be 15% or more of the profits on a stock sale, this strategy of handing down the stock itself can result in significant cost savings.

If you've invested wisely and have big winners, one of the most tax-efficient ways to leave investments to your children is to not liquidate shares or to pass on the stock as a gift while you're still alive. Just let your heirs inherit the stock and do the selling directly.

2. Make your 401(k) and IRA beneficiaries your heirs

For many families, one of the biggest legacies they will leave is the retirement funds left in a tax-deferred retirement account like a 401(k). As the term implies, the taxes on this money were deferred when originally invested. So, when withdrawals are made, the IRS is due its share.

The challenge is that withdrawals from such an account are taxed as "ordinary income," so a big one-time windfall results in a big tax bill. For example, current tax brackets include a 24% tax rate on anything above $105,701 – and a hefty 32% rate on anything above $201,776.

Remember, because this ordinary income category includes an employer's paycheck, an heir who makes a decent living may find themselves in a steep tax bracket even if the distribution from your estate is relatively modest.

This is where adding heirs directly to your account can help. The IRS generally allows 10 years for non-spouse beneficiaries to liquidate an account like a 401(k). As such, they can withdraw the money in smaller chunks on their own terms to maximize tax savings.

While there's no way to avoid taxes entirely on an inherited 401(k) or traditional IRA, this longer runway allows heirs to avoid a big one-time tax hit from a single distribution.

3. Regular gifts under the tax threshold

If you want the warm feeling of delivering some cash into your child's hands so you can watch them enjoy it, there are also ways to pass on assets now without running afoul of the tax man. Parents can gradually transfer investments during their lifetime using the federal annual gift tax exclusion.

The maximum annual tax-free gift as of 2026 IRS rules is $19,000. That's a nice chunk of change by itself, but you can also continue to provide that gift annually – and to as many different individuals as you see fit – to transfer significant wealth over time.

What's more, making annual gifts in this manner may actually reduce the size of a taxable estate after death.

As long as you don't cross the threshold in a given year, your heirs won't have to claim the cash on their tax returns. They also can put that money to immediate use to take a trip, put a down payment on a house or anything else – while you have the benefit of seeing them put your gift in action.

4. Irrevocable trusts

It's worth noting that most families won't face significant tax burdens by deploying the strategies above. However, if your estate is particularly large, then a comprehensive irrevocable trust may be in order.

Irrevocable trusts are commonly used by higher-net-worth families to remove future appreciation from a taxable estate by permanently giving ownership of assets to a trust. That trust then manages those assets for the benefit of other people and can deliver the cash according to the grantor's instructions.

This is the big artillery when it comes to the most tax-efficient ways to leave investments to your children.

Trusts have numerous benefits, including protecting assets from creditors or lawsuits as well as taxes and allowing you a measure of control on how your heirs spend their inheritance long after you've passed away.

However, the word "irrevocable" is not to be taken lightly. Many estate planners call such a trust a one-way street where you can't change your mind to get the money back or change your mind about your directions.

That said, these trusts can sometimes span multiple generations and efficiently protect a hard-earned fortune from eroding thanks to mismanagement or heavy taxes.

5. Financial planning is personal, so talk about it

The Morning Consult survey conducted for Kiplinger found that almost a third of all U.S. parents say they have no formal estate plan at all – including failing to document arrangements in a will. There are many reasons for this, of course, including the fact that some families don't have significant assets to pass on.

But it's also simply a matter of avoiding the topic.

Estate planning begins by taking stock of what you want to leave behind when you're gone. These financial goals will naturally be personal, based on your specific portfolio as well as your family situation and your final wishes.

You have a sense of your situation; consider talking with a good estate planning attorney or tax adviser next. These professionals can be well worth their fees by providing tailor-made solutions where various investing and tax strategies can be used in complementary ways.

And most importantly, share your plans clearly with your heirs before it's too late.

Nobody likes to dwell on death or taxes, but they are realities for all of us. If you're confused about how to arrange your estate, the simplest way to begin is by talking about it.

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Asset protection is a layered strategy — a financial fortress built one wall at a time — and the right combination of tools depends on your needs, your risk profile and your circumstances.

Understanding what asset protection is — and is not — is essential: Done properly, it is not about hiding assets or evading legitimate debts, but it is entirely lawful and transparent.

The goal is to structure your affairs so that reaching your assets becomes difficult, slow and expensive for a creditor — changing the economics of a dispute so a claimant is motivated to settle for a fraction of the claim, if anything at all.

While the objective is not mere concealment, legitimate steps such as holding real property in an anonymous LLC can keep your ownership out of public view, since title to real property is a matter of public record.

Protection layer No. 1: The right business entity

The foundation of most plans is to operate any active trade or business through a properly formed and maintained entity, most commonly a C corporation, an S corporation or an LLC.

The purpose is liability containment: A shareholder or member is generally not personally liable for the entity's debts, so long as corporate formalities — separate bank accounts, adequate capitalization, documented governance and arm's-length dealings — are respected. However, the extent of the protection depends on the nature of the claim, the creditor and all the circumstances.

For example, a corporation or LLC is formed for liability protection, but the business owner fails to pay the employees' share of payroll taxes. Most states and the IRS provide for personal liability of not only the corporate or company officers but anyone with control over the business accounts.

The benefits of the limited liability entity were lost for failure to pay the employees' share of the payroll tax liability.

Ignoring those formalities invites veil-piercing or alter-ego claims that reach the owner personally. The choice among entities is driven mainly by taxation:

• A C corporation is a separate taxpayer subject to double taxation
• An S corporation is a pass-through but is limited to 100 eligible shareholders and a single class of stock
• An LLC is the most flexible, offering pass-through taxation by default with the option to elect other treatment

Protection layer No. 2: Foundational estate planning

Before layering on advanced tools, everyone should have a foundational estate plan, because incapacity or death can itself expose assets and because the advanced structures are built on these documents.

The core documents are:

• A revocable living trust, to avoid probate and manage assets on incapacity
• A pour-over will, to name an executor and guardians and catch assets left outside the trust
• Durable powers of attorney for financial and healthcare decisions
• An advance healthcare directive
• A HIPAA authorization

Key considerations include properly funding the trust, coordinating beneficiary designations on retirement accounts and life insurance and using discretionary and spendthrift provisions so that what you leave to children is shielded from their future creditors and divorcing spouses.

A revocable trust avoids probate, but, because you retain control, it does not protect your assets from your own creditors during life; a blind trust — which can even be a revocable trust whose name does not identify you — can hold title to real property without revealing your name in public filings.

Protection layer No. 3: Statutory exemptions

State and federal law already shield specified assets without any special structuring, so careful planning means identifying and maximizing the exemptions available where you live.

The homestead exemption protects equity in a primary residence, but the amount varies enormously by state — from a few thousand dollars to a capped figure (California ties its exemption to countywide median home prices), to the effectively unlimited exemptions in Florida and Texas.

Retirement assets receive some of the strongest protection: ERISA-governed plans such as 401(k)s enjoy a federal anti-alienation shield, and IRAs are protected in bankruptcy up to an inflation-adjusted cap.

Most states also exempt some combination of life insurance cash value and annuities, a motor vehicle up to a set value, household goods, tools of the trade, a portion of wages, public benefits such as Social Security and workers' compensation, college savings accounts and a "wildcard" amount — and some protect property held as tenancy by the entirety from the creditors of only one spouse.

A well-known illustration is the O.J. Simpson matter: After a roughly $33.5 million wrongful death judgment for the Goldman and Brown families, little was collected, in part because his NFL pension and other retirement assets were beyond creditors' reach, and he'd moved to Florida, where the homestead exemption is essentially unlimited in value.

Protection layer No. 4: Limited liability entities

Holding investment assets and real estate in limited liability entities such as LLCs and limited partnerships adds a layer of separation and changes the remedies available to a creditor.

Their signature feature is the charging order, which in many states limits a creditor to a lien on distributions rather than the entity's assets — and where the charging order is the exclusive remedy, the creditor cannot foreclose on the interest or force a distribution, improving settlement posture.

The strength of this protection varies by state: Nevada makes the charging order the exclusive remedy even for single-member LLCs, one of the strongest positions in the country, while single-member LLCs are weaker elsewhere (Florida's Olmstead decision is the well-known example, since addressed by statute).

Holding real property in an anonymous LLC also keeps ownership off the public record, though this is privacy, not concealment, and transfers into an entity remain subject to fraudulent transfer law.

Protection layer No. 5: Marital planning

For married couples, careful planning can shift lower-risk assets to the spouse less exposed to liability. The mechanics depend on the marital property regime:

• In community property states, community property is generally reachable for the debts of either spouse, so planning may involve a written transmutation or partition agreement converting it to the separate property of the lower-risk spouse
• In common-law states, titling — and, where available, tenancy by the entirety — controls ownership.

Premarital (prenuptial) and postmarital (postnuptial) agreements are central tools, characterizing assets as one spouse's separate property and defining how future earnings are owned — generally enforceable only with full financial disclosure, independent counsel for each spouse and the absence of duress.

This planning must be proactive: A transfer to a spouse made after a claim arises can be unwound as a fraudulent transfer, and it carries divorce-related risk that should be weighed separately.

Protection layer No. 6: Domestic asset protection trusts

A domestic asset protection trust (DAPT) is a self-settled spendthrift trust that, contrary to the traditional rule, lets you remain a discretionary beneficiary while shielding trust assets from many creditors after a seasoning period.

DAPTs are authorized or permitted in 20 states, which include Alaska, Delaware, Nevada, South Dakota, Tennessee and Wyoming. Nevada is often favored for its lack of a state income tax, short two-year seasoning period and absence of statutory exception creditors.

A DAPT can also enhance privacy, since assets titled in the trust's name are not held in your own name.

Residents of states hostile to self-settled trusts — California, in particular — should plan carefully, often using a third-party trust (for the benefit of a spouse, child or parent) rather than a self-settled DAPT.

Protection layer No. 7: Foreign and hybrid trusts

A fully foreign trust is often considered the highest level of protection because it places assets beyond the easy reach of U.S. courts, but it carries the heaviest U.S. tax compliance from the outset, including foreign trust and foreign account reporting (Forms 3520 and 3520-A and FBAR filings).

The hybrid trust captures the benefit while deferring that cost: It begins as a DAPT and stays domestic until a defined threat arises, at which point the U.S. trustee resigns, and a predesignated foreign trustee takes over.

Because a trust is generally governed by the law of the jurisdiction where the trustee sits, that change shifts the trust into an offshore regime such as the Cook Islands, Nevis or the Cayman Islands — where U.S. judgments are not recognized, registries are private, and, in the Cook Islands, a creditor must prove its case beyond a reasonable doubt with no contingency fees allowed.

Even greater protection comes from also moving the underlying assets offshore, and the heavier reporting is triggered only if the trust actually goes foreign.

One important caution: If you remain within reach of the U.S. courts while your assets sit offshore, a court can order you to repatriate them and hold you in civil contempt — even jailing you until you comply, as happened in FTC v. Affordable Media, LLC and in Re Lawrence.

In both cases, though, the debtor retained control or acted in bad faith; a trust settled in calm weather is harder for a court to reach, but the personal risk of contempt is real.

Critical limitations

The most important rule is timing: Planning must be completed before the events that give rise to the liability.

Every state has a fraudulent transfer statute — the Uniform Fraudulent Transfer Act or its successor, the Uniform Voidable Transactions Act — allowing a creditor to unwind two kinds of transfers:

• Actual fraud, made with intent to hinder, delay or defraud, inferred from "badges of fraud" such as transfers to insiders or after being sued
• Constructive fraud, made without reasonably equivalent value while insolvent, regardless of intent

A voidable transfer can be set aside and clawed back from the transferee.

In asset protection, once a claim is on the horizon, the most effective tools are largely off the table, so implement any plan well in advance and with experienced counsel.

The same principle applies to exemptions, which are powerful but not absolute: In bankruptcy, the homestead exemption is reduced to the extent its value derives from property disposed of within the prior 10 years with intent to defraud a creditor, so last-minute conversions of nonexempt assets into exempt ones can be challenged.

In conclusion

Asset protection works best when it is proactive, layered and tailored to your circumstances.

Beginning with the right operating entity and a sound foundational estate plan, then adding statutory exemptions, limited liability entities, marital planning and — where appropriate — domestic, hybrid or foreign trusts, you can build a financial fortress that stands up to future challenges.

Because the rules vary significantly by state, interact with federal tax and bankruptcy law and turn heavily on timing, this planning should always be done well before any claim arises and with the guidance of qualified counsel.

This article is provided for general informational purposes and does not constitute legal advice. Consult a qualified attorney regarding your specific circumstances.

Related Content

• Domestic vs Offshore Asset Protection Trusts: A Basic Guide From an Attorney
• Got Assets? Attorney Explains How to Protect Them From Greedy Lawsuits
• Eight Types of Trusts for Owners of High-Net-Worth Estates
• What Assets Should You Put (or Not Put) in Your Trust?
• Ins and Outs of Domestic Asset Protection Trusts (DAPTs)

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.

According to a Fidelity Investments® study, 72% of Americans expect to retire "on their own terms," with 61% opting to phase out full-time work — embracing what many now call a "soft retirement" by transitioning into part-time consulting, freelancing, or passion-driven roles.

"Retirement is being reframed," said Rita Assaf, Vice President of Retirement Offerings at Fidelity Investments, in the Fidelity study's release. "It's no longer a single date and instead is an adaptable stage."

Yet while stepping down gradually may offer lifestyle benefits, like maintaining a sense of structured routine, blending part-time earnings with long-term tax planning takes precision.

For instance, dropping into a reduced federal income tax bracket can open a prime window for lower-cost Roth IRA conversions, but stacking wages on top of those conversions can limit how much you convert.

Here are the ways to navigate this modern trend and coordinate your income without running into unexpected tax pitfalls in 2026.

What is 'soft retirement'?

"Soft retirement" describes working in a reduced capacity during your traditional retirement years. It often pairs with a sister concept, "soft saving" — prioritizing present-day experiences over more aggressive saving strategies like FIRE (Financial Independence, Retire Early).

"Soft saving is the opposite of a movement like FIRE," Melissa Almuttar, H&R Block Director of Financial Services, told Bankrate. "It's the moment where you've had enough, and you want to do something different."

• Soft saving strategies include micro-saving habits like setting up small automatic transfers of your paycheck (like 5% or 10%) into savings or retirement accounts before spending the rest.
• Soft savers direct their discretionary funds toward meaningful purchases like hobbies or self-care while minimizing spending on less significant items (see also: 3 Creative Ways to Lower Retirement Taxes).
• By setting aside less for retirement, soft savers commit to a "soft retirement" — or working more during their golden years — but in a part-time capacity and with something that brings them joy (like getting a job at the local bookstore, for instance).

According to AARP's "The Push and Pull of Work and Retirement" survey, roughly 7% of retirees return to work after retiring, driven largely by economic need (48%) or a desire to stay active (18%).

Soft retirement embraces that flexibility for those who want (or need) additional income. But it comes with certain financial risks.

How soft income impacts 2026 Roth conversions

A common strategy in any retirement plan is converting traditional IRA funds into a Roth IRA. In essence, you pay ordinary income tax on the converted amount from a 401(k) (or other traditional IRA) today, so the funds can compound and be withdrawn federally tax-free from a Roth account later.

However, executing a Roth conversion strategy during soft retirement creates a balancing act. You have to weigh two competing dynamics:

• On one hand, leaving a high-salaried job for a lower "soft retirement" job may drop you into lower federal marginal tax brackets (like the 10% or 12% brackets). This can allow you to convert pre-tax IRA dollars at significantly lower tax rates than during your peak earning years.
• Conversely, unlike a 100% full retirement — where taxable income starts at $0 — part-time earnings create a baseline income floor. So if you earn $30,000 in consulting income, your Roth conversions start on top of that $30,000. This leaves less "space" in lower tax brackets before you push yourself into a higher tier.

Contributing to a Roth as a part-time retiree in 2026

Working part-time in 2026 also allows you to make direct Roth IRA contributions using cash from your paycheck.

To do this, you must meet two IRS rules: your contribution cannot exceed your actual job earnings, and your modified adjusted gross income (MAGI) must stay below the IRS phase-out limits.

• Annual contribution limits for 2026. $7,500 for workers under 50, or $8,600 for those age 50 and older (which includes a $1,100 catch-up contribution).
• Income phaseout thresholds for 2026. Full contributions are allowed up to a MAGI of $153,000 for single filers ($168,000 upper phaseout limit) and $242,000 for married couples filing jointly ($252,000 upper phaseout limit).

So, depending on when (or if) your "soft retirement" becomes a "full retirement," you might want to prioritize funding a direct Roth IRA alongside smaller, strategically timed conversions to help maximize tax-free growth.

Related: New 2026 Tax Change Could Mean More for Your IRA and 401(k) Savings

Four tax traps to avoid during a soft retirement

By stepping away from a financially lucrative career into a lower-paying one, retirees with a soft retirement strategy may face more tax complexities. For instance:

1. Increased health insurance costs. Leaving employer-sponsored healthcare before age 65 requires buying private health insurance or ACA marketplace coverage, which can offset much of your part-time income.
2. Reduced Social Security benefits. Transitioning from full-time to part-time work may incentivize you to claim Social Security early to offset lower wages. However, claiming Social Security before your full retirement age (FRA) permanently reduces the monthly payment amounts you receive — and could push your taxable income higher (and more of your Social Security benefits may be taxed with a part-time job).
3. Higher IRMAA Medicare surcharges. Some retirees may also find that part-time income combined with investment income pushes their modified adjusted gross income (MAGI) higher, triggering the income-related monthly adjustment amount (IRMAA). For 2026, the IRMAA threshold sits at $109,000 for single filers and $218,000 for joint filers.
4. Added self-employment (SE) Tax. Freelancing or consulting income is subject to a 15.3% self-employment tax (covering 2.9% Medicare and 12.4% Social Security) on top of standard federal and state income taxes. If you've never done freelance or contract work before, this may come as a surprise.

Is a soft retirement right for you?

A soft retirement isn't for everyone. It requires lifestyle changes, shifting your professional identity from a senior role to a part-time position, and sacrificing the complete free time you would get in a "full" retirement.

And then there are the financial shifts required. Balancing your retirement budget as you move from higher to lower paychecks, potentially drawing on savings, and entering into complex tax situations all take discipline.

But the payoff may be worth the sacrifice.

"The heart of the new retirement playbook is keeping things personal and practical," Assaf said in the Fidelity release. "Planning is what turns preference into payoff. With the right plan — built around retirement income, taxes, health care, and consolidation, investors can have the tools in their corner to help define a successful retirement journey."

So whether or not you adopt a soft retirement, sitting down with a tax professional can help ensure your golden years hit the ground running — and not a hard stop when you expect a soft landing.

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

Read More

• How $1 More of Income Can Cost Thousands in Retirement
• When to Convert an IRA to a Roth (and When You Shouldn't)
• Preparing Taxes for a Longer Life in 2026
• 5 Little-Known Senior Tax Deductions

They felt their work stress slip away as they settled into their retired life.

Their morning commute turned into coffee on the porch. The only deadline they had was signing up on time for their pickleball league. And their projection of lower taxes at retirement was spot on.

With Social Security and a pension covering their bills, and their savings account covering "extras" like travel and gifts to the grandkids, their first retirement tax bill was much lower than when they were working.

Life was carefree — until they turned 73 and they got their first notice for required minimum distributions (RMDs).

Thankfully, their retirement money had grown. But now, more than $3.2 million in their traditional retirement accounts was subject to RMDs.

They were required to take out more than $120,000 in taxable income each year, and their RMDs were projected to grow even higher in the future.

When they retired, Bob and Sue figured their RMDs would push them into a higher tax bracket, but they didn't think it would be that bad.

But when they got there, they wished they had done something about the RMD problem sooner.

Sadly, Bob and Sue — and far too many others in their 70s — had missed what I call their "golden tax planning window." In their 60s, they could have chosen how much of their retirement income would be taxable, instead of being required to take a minimum taxable amount when they hit RMD age.

They thought they had their taxes set in their 60s because they had a lower tax bill each year than when they were working.

Yet they were unknowingly making a huge tax mistake each year by failing to use tax planning strategies that would help them avoid nasty tax surprises in their 70s.

Here are the three biggest mistakes I believe retirees can make during the golden tax planning window.

Mistake No. 1: Missing the best years for Roth conversions

Bob and Sue were actually enjoying tax season in the early part of retirement. They were in a lower tax bracket than when they were working and they really weren't worried about how much they owed, or whether they were facing a tax penalty.

But then they were faced with their first RMD of more than $120,000.

That caused their Social Security to go from a small amount showing up as taxable to the maximum 85% showing up as taxable income.

And it pushed them from regular Medicare costs to paying extra through the IRMAA (Income-Related Monthly Adjustment Amount) Medicare surcharges.

Each low tax year of their 60s felt like a win. Instead, it was a missed opportunity to take advantage of their lower tax bracket by making use of Roth conversions.

A Roth conversion allows you to intentionally pay taxes — within the tax bracket you'd like — by choosing the timing and amount of your traditional IRA that shows up on your tax return.

This level of control on the timing of your tax payments is generally the biggest during your golden tax planning window — the time between when you retire and when your RMDs start at 73.

When you retire in your 60s, your taxable income is generally the lowest it's been in decades. This allows you to convert part of your traditional IRA to a Roth IRA so that your future gains can grow tax-free — and won't be subject to required taxable distributions later on as an RMD.

Here is a three-step action framework I created to help retirees in their 60s make the most of their golden window:

Find your lower-income years: Usually these are the gap years between when you stop working and when guaranteed retirement income (pensions, Social Security benefits, RMDs) begins.

Estimate your future RMDs: Using the IRS' formula, calculate what your traditional IRA balances will be at your RMD ages, how large those RMDs will be and how much you'll have to pay in taxes.

Compare your current versus future tax brackets: If your tax rate on a Roth conversion during your golden window is lower than the tax rate on an RMD will potentially be in the future, that's your opportunity to reduce your overall lifetime taxes.

Mistake No. 2: Forgetting the tax component of Social Security

Bob and Sue were like many retirees who view Social Security strictly as an income decision.

They were like many of their friends, who took their Social Security right away because it helped them get enough income to retire.

Other retirees look at the near 8% growth on waiting to file Social Security and they choose to delay their claiming, so they get the most income later on.

Whether you take Social Security early or late, focusing just on the income component may often mean you overlook the tax flexibility and lifetime tax bill that your Social Security decision can create.

Start claiming Social Security too soon, and you might drive up your taxable income for the rest of your retirement. This could potentially slam shut your golden window for Roth conversions, resulting in higher RMDs later on.

On the other hand, if you start claiming maximum benefits at 70, and you haven't already made moves to reduce the taxable impact of your RMDs, you could be facing the same basket of tax problems.

Sure, in a vacuum, letting your Social Security benefits grow by approximately 8% per year is a smart move. But maintaining long-term financial flexibility and reducing your lifetime tax liability are also parts of the Social Security equation.

Before claiming your Social Security benefits, remember to:

Evaluate your claiming age: Calculate how your projected benefits at various ages affect the other parts of your financial plan — especially taxes and your golden window for Roth conversions.

Compare your tax projections: Run scenarios showing how your taxes could look if you claim at 62 versus claiming at full retirement age and later.

Target Roth conversion opportunities: Once you start taking Social Security, your golden window for Roth conversions starts to close. Make the most of these low-tax years before you are on Social Security so that you're taxed less in the future as well.

Mistake No. 3: Leaving the survivor with the 'widow's penalty'

No one wants to imagine a world without them or their spouse in it. But preparing for both of those difficult scenarios is an important part of retirement planning.

Bob and Sue were fortunate to both be living as they hit their RMD age of 73. But at some point, one of them will pass away. The other could be faced with the same RMD amount but with the single taxpayer brackets, instead of married filing jointly brackets.

When you transition from a married couple filing taxes jointly to a single filer, the tax brackets and the standard deduction are cut in half. But RMD percentages often stay relatively the same — and the taxable RMD amount stays relatively the same.

With a similar taxable distribution, and half the room in each bracket, the widow runs through the tax brackets quicker, getting to the higher tax rates quicker.

For a surviving spouse, the taxable income often stays nearly the same, yet their tax bill goes up.

To avoid this "widow's penalty," you can take the opportunity during your golden window to:

Model survivor tax projections: What will each spouse's income and tax brackets look like if they become a single filer at various ages?

Consider Roth conversions while filing jointly: Take advantage of the wider married filing jointly tax brackets while you both are still living. The more money you can convert into a Roth IRA now, the more potential tax-free money a surviving spouse will have in the future.

Evaluate the long-term household tax burden: Too many 90-year-old widows are living off the income and tax decisions their husbands made decades ago. Couples should plan for each survivor's long-term tax scenario before they start claiming Social Security.

Create your tax-smart retirement plan

When you consider not just this year's taxes, but your lifetime tax bill, your 60s might be the most valuable decade of your entire life.

And while each of these three mistakes — missing out on Roth conversions, forgetting the tax aspect of Social Security and leaving the survivor with the widow's penalty — can be costly, I believe the biggest retirement planning mistake you can make in your 60s is not realizing how each decision coordinates with the other.

The key to retirement planning, which I cover in more detail in chapter 5 of my book Retire Today, is to follow a system that helps you make retirement decisions in a coordinated manner.

During the golden window you can often manage your tax strategy for the rest of your retirement by:

Using your lower-income years intentionally: Pay lower taxes today "on purpose" through Roth conversions.

Evaluating Social Security through a tax lens: Don't just claim benefits because you stopped working. And don't delay taking benefits just to maximize them. Consider, as well, using your Social Security plan to help lower your lifetime taxes.

Planning for the survivor tax situation before it happens: Try to avoid the "widow's penalty" by shifting taxable IRAs to the tax-free growth potential of Roth IRAs while you still have the advantage of larger tax brackets on your married filing jointly tax return.

Remember: Once the golden tax planning window closes, it's likely closed for good. Unlike Bob and Sue, use the lower tax brackets you might find in your 60s to lower your tax bill over your lifetime.

Related Content

• Why Most People Overpay Taxes in Retirement — and Don't Even Know It
• Tactical Roth Conversions: Why Now Through 2028 Is a Critical Window for Retirees
• Don't Get Caught by the Medicare Tax Torpedo: A Retirement Expert's Tips to Steer Clear
• Retiring in the Next 12 Months? Answer These 3 Questions Before Your Paycheck Stops
• Are Roth Conversions for Retirees Dead in 2026 Because of the New Tax Law?

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.

Over time, her properties increased dramatically in value, but the properties' tax bases (called "tax basis") are now incredibly low because she had claimed depreciation on the improvements for tax savings.

Now, Sarah faces a challenge: If she sells her properties, she will owe a large capital gains tax based on those low original values, or she must engage in an IRC Section 1031 tax-free exchange.

Sarah's parents, Helen and James, recently retired and had a modest estate well below the $15 million per person ($30 million per couple) estate tax exemption, which if unused at their death would be wasted.

Sarah wondered whether their unused exemption could help reduce taxes on her own properties someday.

At a meeting with her estate planning attorney, Sarah learned about a special estate planning tool called a testamentary general power of appointment (TGPA). The TGPA is regularly used to help taxpayers grant powers to other beneficiaries without subjecting the underlying property to risks the grantee may be subject to.

This power means Sarah could give her parents the right to exercise the TGPA through their wills at their deaths, but if the power was not exercised under their wills, the property to which the power relates is undisturbed.

Why would Sarah do this? Because the assets covered by this power would be included in her parents' estate when they die.

Even though Sarah still owns these assets, they get a big tax benefit when Sarah's parents pass because the tax value of those assets is "stepped up" to their current market value.

For Sarah, this is huge. The property she bought for $200,000, which has now appreciated to $2 million, would receive a step-up in tax basis at the death of Sarah's parents, even if the parents didn't exercise this power via their wills.

If her parents didn't have the power over these assets, Sarah's tax basis would remain at what she paid for the property, less depreciation deductions. If Sarah decided to sell the property for $2 million after her parents died, she would legally owe no capital gains tax.

Due to the step-up in basis at the deaths of her parents, if she decides to keep the property, she receives a new tax basis for purposes of depreciation and amortization to be used to offset the rental income she receives.

Thanks to this planning, Sarah has options she otherwise didn't know existed, which optimize her tax savings for the long term.

What this means for you

If your parents' estate is below the estate tax exemption amount, it might be possible to use their exemption to step up the tax basis of your assets at their deaths.

This strategy can reduce the taxes you pay when you sell or keep valuable investments and real estate.

Working with an estate planning attorney is critical to set this up correctly.

This story is for educational purposes only and is not legal or financial advice. Always consult with a qualified tax specialist or attorney about your situation.

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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.

1. 401(k) catch-up contributions

Question: I am 53, and I make tax-deferred contributions each month to my employer's 401(k) plan. This year, I intend to max out my regular contributions and also make catch-up contributions to the plan. However, I was told by my employer that, because of the amount of my annual salary, I can put catch-up contributions only into my employer's Roth 401(k). Is this true?

Joy Taylor: Yes. This change, which was enacted under the 2022 Secure 2.0 Act, first takes effect this year. Employees who are 50 and older, and whose annual compensation exceeds $150,000 in 2025, can make 401(k) catch-up contributions only to a post-tax Roth 401(k). Note that the IRS offered a grace period until 2027 for employers and plans to implement the rule in good faith, but many employers have already done so.

2. Roth IRA conversions

Question: I am 75 years old. I am thinking of converting a portion of my traditional IRA to a Roth IRA. Can I do that before taking my required minimum distribution (RMD) from my traditional IRA for the year?

Joy Taylor: No. You must first take your annual RMD for the year before doing the Roth conversion.

For people with multiple traditional IRAs, the rule that you must take your annual RMD before doing a Roth conversion for the year can be tricky. That’s because if a person has multiple traditional IRAs, the total aggregate RMD for the year must be withdrawn during the year before doing a Roth conversion from any of the traditional IRAs. (Note that this doesn’t include RMDs from 401(k)s or other workplace retirement plans.)

3. IRA inherited from spouse

Question: My wife passed away last year in late December. She had a traditional IRA, and I am the beneficiary. After she died, I elected to have her IRA funds added to my traditional IRA, but that didn't happen until February of this year. How do I calculate my RMD for 2026?

Joy Taylor: Since you rolled your deceased wife's IRA into your own IRA, you are treated as owning the IRA. So you determine your RMD as if you were the owner, beginning the year you are deemed to be the owner (that would be 2026, when you added the funds to your IRA). You would then determine your RMD for 2026 using your life expectancy. I am guessing your wife, while alive, already took her RMD for 2025, the year of her death. If not, you have until December 31, 2026, to do so.

4. Inherited Roth IRA

Question: I inherited a Roth IRA from my uncle earlier this year. Do I have to take annual RMDs?

Joy Taylor: No. Roth IRA owners do not need to take RMDs. You should, however, be aware of the 10-year rule for inherited IRAs. Similar to the rules for traditional IRAs, many non-spousal beneficiaries of Roth IRAs inherited after 2019 must clean out the account by the end of the 10th year after the owner’s death.

Because Roth IRA owners are not required to take annual RMDs, beneficiaries of inherited Roth IRAs needn’t worry about whether the original account owner died before or after the starting date for taking RMDs. Roth IRA beneficiaries can opt to clean out the account in year 1, wait until year 10 to take out all the Roth IRA funds, skip years, or take annual distributions, provided they fully deplete the Roth IRA within the 10-year period.

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.

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But it's not just centi-millionaires and billionaires who are generous — average Americans are committed to charitable giving, too. According to a survey from the Associated Press-NORC Center for Public Affairs Research, roughly three-quarters of U.S. adults say their households have donated to a charitable cause.

While "'tis better to give than to receive," it does help that the U.S. tax code rewards generosity. Of course, the structure of the gift is important when considering the tax implications of philanthropy.

Heading into the second half of the year, many people begin to think carefully about their year-end giving strategy. Here are four structures to consider.

Direct giving

The simplest, most straightforward way to give to a charitable organization or cause is direct giving. While most people think philanthropy must involve monetary donations, you can also gift appreciated securities, automobiles, recreational vehicles, boats and other personal items, all of which will also qualify for a tax benefit.

Direct gifts of appreciated securities, for example, may allow donors to avoid recognizing capital gains while potentially receiving a charitable deduction for the full fair market value, subject to applicable IRA rules.

Not only is this the most common form of giving, it can also supplement the other structures outlined below.

Donor-advised funds

Donor-advised funds (DAFs), which effectively separate the tax savings from the charitable-planning component, are becoming increasingly popular.

With a DAF, an advisor opens the fund, and the donor immediately receives an eligible charitable income tax deduction. Meanwhile, the fund continues to grow, giving the donor time to decide how to disburse money.

Beyond the planning benefits, DAFs can provide meaningful tax savings. With the standard deduction for married couples (filing jointly) now at $32,200, most Americans will find that it doesn't make sense to itemize their taxes for a standard charitable gift.

But if you can afford to bunch multiple years of charitable donations into one lump sum, it might help you surpass the standard deduction and realize significant tax savings.

This strategy is particularly helpful in a year when a family has an unexpected windfall, such as a large bonus, and it's looking to offset larger tax liabilities. Another perk of setting up a DAF: You can name the fund, which can allow you to preserve anonymity.

DAFs are also great for teaching children about giving back and money management, as families can decide together how to distribute the funds based on shared values.

Charitable trusts

For families gifting larger dollar amounts, charitable trusts can wrap charitable donations in a larger estate planning framework. There are typically two trust structures which clients choose from when creating a charitable trust.

A charitable remainder trust provides income from investments during the donor's lifetime, with the remaining assets ultimately passing to the charity.

Conversely, if a donor wants to leave assets to their children, a charitable lead trust operates in the opposite fashion — the charity receives payments for a specific period before the remaining assets pass to heirs.

Both options allow families to pair their charitable giving with estate planning to support both personal and philanthropic goals.

Foundations

Individual or family foundations provide donors with more control over named charities and benefactors, but this structure also requires a significant commitment, both financially and timewise.

Donors must be prepared to set up and fund the entire organization, including operational oversight and administrative expenses. Often, foundations can become difficult to sustain over time when the administrator steps away, and the foundation begins looking at how to wind down operations, either via a merger or dissolution.

While the idea of a foundation might sound appealing, we typically advise wealthier clients that they can achieve the same goals through either a donor-advised fund or a charitable trust.

Some parents like the idea of creating a foundation to provide a child with a job and an income stream. But if you're simply looking for income, you can achieve the same goals by setting up a charitable remainder trust with the child as the income beneficiary, or as a grantor charitable lead trust, with children or grandchildren eventually inheriting.

Families sometimes view private foundations as a path to involving younger generations in philanthropy. However, donor-advised funds and charitable trusts can often provide similar opportunities with less administrative complexity.

Philanthropy is personal. Whether you give to express your values, honor a loved one or leave a legacy, the smartest philanthropists make it a win-win, structuring their gifts to increase both the effectiveness of their giving and the value of available tax incentives.

Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting or legal advice. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax adviser.

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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.

Instead, a local welcomes you in an American accent.

Each year, millions of Oktoberfest revelers skip the expensive transatlantic flights and long hours of air travel, opting for the authentic spirit of Gemütlichkeit (that cozy, welcoming cheer) right here in the United States.

If that's you, we're taking a look at how state tax policies compare across the country's top festival spots. Rounding up the ten most famous American Oktoberfest destinations, we've ranked them by their state's beer excise tax rate (the festival's official drink, and, hey — we're not complaining).

So pack your dirndls and warm up your polka: Here's where Alpine charm meets beer taxes on a budget.

Top Oktoberfests ranked by beer tax in 2026

To compare state beer taxes across top Oktoberfest spots, we used the 10 American destinations featured in Time Out magazine.

We then ranked them by their mandatory state beer excise tax rates per gallon, using the latest data from the Tax Foundation. The list utilizes a standard 12-ounce pour of a baseline imported 4.7% ABV lager.

Keep in mind that state excise taxes are built into the wholesale price upstream, providing a foundational baseline for beverage costs across each state. Thus, festival prices on the ground are also shaped by factors like local sales taxes, brewery selections, and souvenir packages.

However, this ranking offers a unique look at how state tax policy frames the nation's premier German celebrations — one stein at a time.

10. Helen, Georgia

State beer tax: $0.48

Dates: Sept. 10 - Nov. 1, 2026

As the longest-running Oktoberfest in the U.S., the festival in Helen, Georgia, has the most expensive state beer tax on our list, according to Tax Foundation data. Additionally, admission generally costs $5 to $25 per person per day (though entry to the Festhalle is completely free on Sundays).

But Helen is famously known for its Bavarian charm. Redesigned in the late 1960s to mirror alpine architecture, the festival is backdropped against the Blue Ridge Mountains, delivering picturesque fall foliage views along the Chattahoochee River.

Visitors can watch the festive Oktoberfest Parade on opening weekend, try holding their beer the longest at the annual Stein Holding Competition in October, or sip warm spiced apple ciders and rich wheat beers. Helen also offers a costume party on Halloween night and 12 to 16 rotating traditional bands inside the Festhalle over the nearly two-month-long celebration.

Thus, if you want to feel like you're in Germany this autumn without ever actually leaving the States, you might consider a surprisingly authentic Oktoberfest in America's South.

Want to be a little closer to the action year-round? Check out the 10 Cheapest Places to Live in Georgia.

9. Stowe, Vermont

State beer tax: $0.27

Dates: Sept. 19, 2026

The von Trapp Family Lodge & Resort Oktoberfest ranks ninth on our list, with a state beer tax of $0.27, per the latest Tax Foundation data. Ticket prices for the one-day affair are typically $80 per person and include an official souvenir mug, one beer pour, and a festive appetizer, entree, and dessert.

Musical fans and history buffs will especially appreciate the setting. Hosted by the real-life family that inspired the film "The Sound of Music", the resort brings an Austrian twist to the traditional festival. The event packs a full schedule of vibrant folk music, cask tapping, Steinholding contests, traditional outfit competitions, and — yes — plenty of singing.

Perched high above the town of Stowe, the lodge also has some of the prettiest scenery on our list, with panoramic views of Vermont's fall foliage. And while the festival itself is a single-day event, booking a weekend stay allows you to enjoy on-site brewery tours, crisp Austrian-style lagers, and cozy fireside retreats.

So you might want to check out von Trapp Family Lodge & Resort in Vermont for one of America's most unique Oktoberfests.

8. Leavenworth, Washington

State beer tax: $0.26

Dates: Oct. 2-3, 9-10, and 16-17, 2026

Taking place over three weekends in October, the traditional Oktoberfest of Leavenworth, Washington, ranks eighth on our list, according to the latest data from the Tax Foundation. Single-day tickets range from $20 to $40, with weekend passes costing about $55 per person (and kids 12 and under enter for free).

Framed by the jagged peaks of the Cascade Range, entering Leavenworth might just feel like you're stepping straight into a Bavarian postcard. Music is at the heart of the festival, with three stages featuring live performances from 6 p.m. to close each day.

The annual Festzug grand parade also marches through town every weekend, while stein hoists and costume contests run throughout the day. Plus, whoever rocks the best or funniest mustache wins a prize on Saturdays (so get your hair gel ready).

Those traveling with children will also love the dedicated "kinderplatz" play area chock full of classic carnival games and a 62-foot Ferris wheel.

Ergo, whether you like browsing street fair merchandise or jumping onto the dance floor with European headliners, enjoy Leavenworth this fall.

See also: 10 Cheapest Places to Live in Washington.

7. Frankenmuth, Michigan

State beer tax: $0.20

Dates: Sept. 17-20, 2026

Frankenmuth's Oktoberfest charges a state beer excise tax rate of $0.20, according to the Tax Foundation, and ticket prices are only $10 per person per day, though kids 15 and under are free (and Sunday admission is free as well).

Known as "Michigan's Little Bavaria," Frankenmuth was settled in 1845 and holds the distinction of hosting the very first Oktoberfest officially sanctioned by the City of Munich outside of Germany. For this reason, Germany’s world-renowned Hofbräuhaus München exported its beer to the U.S. and Frankenmuth for the first time in history.

The festival features live music, authentic cuisine, and beloved events like the Wiener Dog Races — where up to 100 dachshunds compete for glory. (And ribbons, trophies, cash, and a free hotel stay…maybe it's time to adopt a pet?)

Dog lovers will also appreciate that the festival is exceptionally pet-friendly, welcoming leashed pups throughout the outdoor grounds. Frankenmuth offers several walkable (and pet-friendly!) hotels downtown, meaning you and your pooch can enjoy Oktoberfest together.

Thus, if you're a fan of Germanic history and want to take your pup along for the ride, stay for select hotel access in Frankenmuth, Michigan.

6. Fredericksburg, Texas

State beer tax: $0.19

Dates: Oct. 2-4, 2026

Walk under a big tent and experience Fredericksburg, Texas Oktoberfest with remarkably low beer taxes — at just $0.19, according to the Tax Foundation. Ticket prices usually range from $1 to $20 (depending on your age and the day you go), and you can add an extra $10 for daily shuttle passes that run between Marktplatz, local parking, downtown shopping, and nearby county fairgrounds.

Rooted in 19th-century German immigrant heritage, Fredericksburg serves up genuine schnitzel and cold Hofbräu on tap alongside Texas Hill Country classics like spiced wines and warm mulled cider.

You might start your festival with the Saturday morning chicken dance, which is perfect for little ones who want to meet costumed feathered friends on the dance floor. Or, if you're feeling particularly energetic for the autumn air, sign up to walk or run the annual Oktoberfest Kraut Run (benefiting local youth and literacy programs).

With easy shuttles, endless steins, and plenty of Texas hospitality, Fredericksburg may be well worth the trip.

Looking to live nearby? Check out the 10 Cheapest Places to Live in Texas.

5. Cincinnati, Ohio

State beer tax: $0.18

Dates: Sept. 17-20, 2026

Celebrating its 50th anniversary this year is Oktoberfest "Zinzinnati" in Cincinnati, Ohio. With state beer taxes as low as $0.18, per the Tax Foundation, you might not break the bank celebrating here — after all, admission is free.

As America's largest Oktoberfest, this riverfront celebration welcomes nearly one million guests with colorful spectacles like the "World's Largest Chicken Dance" and the Running of the Wieners dachshund race. The festival also features over 30 live musical performances along with circus acts, competitions, and games.

Plus, guests can opt for paid extras with all the free festival admission they save, like a local glassblowing workshop or a VIP pass for dedicated bars and shaded seating. Starting this year, the plaza also has a new Glockenspiel, a two-story clock tower with hourly chimes and choreographed performances.

For America's biggest Oktoberfest blowout with (relatively) cheap beer taxes, head right to the heart of the Midwest.

Related: Check out the 10 Cheapest Places in Ohio to Live.

4. Tempe, Arizona

State beer tax: $0.16

Dates: Oct. 9-11, 2026

Located along Tempe Town Lake at Beach Park, the Four Peaks Brewing Oktoberfest is a must-see for West Coasters and desert travelers alike. Arizona state beer taxes are a cool $0.16, according to 2026 Tax Foundation reports. And with free admission for everyone aged 20 and under, it might offer one of the best values on our list.

Sponsored by the local Four Peaks Brewing Company, this festival proves you don't need alpine pine trees to throw an incredible fall party. Enjoy classic Oktoberfest traditions like live music, brat-eating contests, and the annual "Runnin' for the Brats" 5K, together with a full carnival with rides and games.

Additionally, event hosts put on Dachshund races and a "Low Center of Gravity" dog race specifically for short-legged, non-weiner breeds.

But to upgrade your experience, check out the VIP backstage pass for prime lakefront viewing of mainstage performances, private shaded lounges, and included drink coupons.

So for lederhosen and dirndls in the Southwest, stop by Tempe, Arizona.

Related: 10 Cheapest Places to Live in Arizona.

3. Mt. Angel, Oregon

State beer tax: $0.08

Dates: Sept. 17-20, 2026

Surrounded by Bavarian-style architecture, scenic Willamette Valley farmlands, and hop fields, Mt. Angel hosts the Pacific Northwest's largest Oktoberfest. The Beaver State's beer tax is a startling $0.08, according to the Tax Foundation. Festival passes are only $15 to $20 per day (or $50 for a full season pass), while attendees under 21 enter free.

Explore a host of specialized "gartens" throughout town. This includes a bustling Biergarten, a Weingarten serving regional Oregon pinots and warm spiced wines, an Alpinegarten for live shows, and dedicated play areas for families.

Mt. Angel also features an authentic four-story Glockenspiel clock that chimes and spins hand-carved figures four times daily. Or for a more peaceful moment to get away from it all, step inside historic St. Mary Church to savor uplifting pipe organ music beneath stained glass windows.

Just south of Portland, deep cultural tradition and autumnal charm come together at the Mt. Angel Oktoberfest.

Want to make the commute a bit shorter next year? Check out the 10 Cheapest Places to Live in Oregon.

2. Denver, Colorado

State beer tax: $0.08

Dates: Sept. 18-20 and 25-27, 2026

The heart of downtown Denver beats to a German-style celebration spanning two autumnal weekends. Denver's Oktoberfest offers free general admission and holds the second-lowest beer tax on this list, per Tax Foundation data (tied with Oregon when rounded to the nearest penny).

The schedule is packed with interactive competitions, like the famous Keg Bowling tournament, where participants can pair strength with expert aim. The festival also boasts the annual Stein Hoisting Championship, the Long Dog Derby, a silent disco (whew, what a great way to take a break from it all), and of course, daily costume contests.

Have a dietary restriction? Not a problem. Denver also stands out for its dietary inclusivity, serving up plenty of vegetarian bratwurst, gluten-free bites, local ciders, and non-alcoholic brews alongside traditional taps.

For a high-altitude block party with free general admission, check out the Denver, Colorado Oktoberfest in 2026.

See also: 10 Cheapest Places to Live in Colorado.

1. La Crosse, Wisconsin

State beer tax: $0.06

Dates: Sept. 24-27, 2026

The most famous Oktoberfest with the cheapest state beer tax in America is located in La Crosse, Wisconsin, where the rate is barely above $0.05, according to the Tax Foundation. General admission wristbands are about $25 (with free ground entry on Sunday), giving you access to lederhosen games, food vendors, live polka, and craft beer gardens.

Holding its celebration along the Mississippi River bluffs since 1961, La Crosse has unmatched community traditions. Thursday night launches the famous Torchlight Parade — a tradition added to the festival in 1965 — which glows through the Northside and kicks off the Afterglow Bash.

Meanwhile, daytime brings carnival rides, vendor shopping, and festive community events, culminating in Saturday morning's Maple Leaf Parade and a grand fireworks show that evening. The celebration then wraps up on Sunday with the traditional Parade Marshal Pancake Breakfast and family-friendly activities.

In favor of an action-packed weekend full of Midwestern Gemütlichkeit, culture, and cheap beer taxes? Check out the Wisconsin USA Oktoberfest festival, and you'll be glad you did.

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Deducting Losses

Individuals can deduct personal casualty losses that are not reimbursed by insurance to the extent those uninsured losses are attributable to federally declared disasters that affect a wide area.

Your loss is equal to the smaller of the damaged property's adjusted basis or decline in value, less any insurance proceeds you receive or expect to receive.

New legislation passed by Congress has tax easings identical to prior relief for victims of federally declared disasters that occurred in 2020 through July 4, 2025. The law, named the "Doug LaMalfa Federal Disaster Tax Relief Certainty Act," applies to federally declared disasters beginning before 2026, which includes disasters that occurred in the last six months of 2025.

The new legislation lets taxpayers deduct their uninsured personal losses, such as damage to a house, car, or personal belongings, from federally declared disasters in excess of a $500 threshold, without regard to the 10%-of-adjusted-gross-income offset that generally applies to disaster loss deductions.

This expanded tax break is available for taxpayers who claim the standard deduction and for those who itemize on Schedule A of Form 1040. The IRS refers to these losses as “qualified disaster losses.”

Computing the amount of loss to your home, car, or belongings can be difficult. Luckily, the IRS has multiple safe harbors that may help with this calculation.

• For example, one method lets a homeowner with casualty losses of $20,000 or less take the lesser of two repair estimates to determine the decrease in the home's value.
• Homeowners can also use the estimated loss in reports prepared by an insurer or a licensed contractor's invoice.
• And there is a safe harbor to help you compute the replacement cost of your personal belongings destroyed in the federally declared disaster.

You can find out more about these safe harbors in IRS Publication 547 and IRS Revenue Procedure 2018-08.

If you suffered a disaster loss last year after July 4, 2025, and you used the old tax rules when preparing your 2025 tax return, you have three years from the filing due date to amend your return by filing Form 1040X to take advantage of the new law.

If you suffer a disaster loss in 2026, you can claim the loss on your 2026 or 2025 federal tax return. That's because individuals can opt to take the loss for the disaster year or the year immediately preceding the disaster.

For example, if a tornado damaged your home or personal belongings this year, you can claim the loss on your 2026 return or your 2025 return, giving you the flexibility to claim it in the year that provides the greatest benefit. If you decide to claim it for 2025 and you have already filed your 2025 return, you can amend it by filing Form 1040-X.

Note that for this purpose, the filing due date for a 2025 amended return is six months after the normal due date for filing your return (without extensions) for the year in which the loss took place. So for 2026 disaster losses, you would need to file an amended 2025 return by October 15, 2027.

IRS Resources

The IRS can be your friend after a disaster. If you lost prior-year tax returns in a hurricane, fire or other disaster, there are multiple ways to get a tax transcript, which is a summary of your key tax information. You can get a paper copy of your full return, but that would take longer.

The IRS also has a dedicated phone line for disaster-related questions: 866-562-5227. This is in addition to the tax filing and tax payment extensions that the IRS regularly provides after a disaster.

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that's right on the money.

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We’re talking about Delaware.

According to U.S. Census Bureau data, Delaware’s population of residents age 65 and older has increased by 23% since 2020. That’s the fastest growth rate in the nation for the 65-and-older population, according to Census estimates.

Part of the draw might be that newcomers to beach communities like Lewes, Rehoboth Beach and Milton can enjoy a coastal lifestyle without moving far from family and friends elsewhere in the Northeast and Mid-Atlantic.

Interestingly, though Delaware isn't a zero-income-tax state like retirement powerhouses Florida or Texas, taxes factor into the equation for some retirees running the numbers. Here’s more to know.

Why Delaware is becoming a retirement destination

Delaware is becoming increasingly popular with older adults.

• Seniors now make up nearly 22% of the state’s population, according to USAFacts, compared with roughly 18% nationwide.
• In Sussex County, older adults make up nearly a third of residents, pushing the median age to just over 53 years, according to U.S. Census estimates.

New residents are also arriving with financial resources. The latest available IRS migration data show that households moving into southern Delaware from higher-cost states have average annual incomes over $136,000.

So what makes Delaware appealing as a retirement destination? The answer lines up in several ways with what many retirees say they want in a place to live.

• A 2025 survey from the Transamerica Center for Retirement Studies found that an affordable cost of living was the top consideration, cited by 65% of retirees, followed closely by proximity to family and friends at 61%.
• Access to excellent health care and hospitals ranked third, cited by 49%, while 28% pointed to leisure and recreational activities.

Delaware's healthcare infrastructure is geared toward an aging population. For example, in Sussex County, Beebe Healthcare operates a 210-bed medical center in Lewes, while ChristianaCare has reportedly expanded primary care and senior-focused services in Rehoboth Beach and Milford.

Additionally, retirees from neighboring Mid-Atlantic states may choose Delaware for its proximity to children, grandchildren, and longtime friends without giving up a coastal lifestyle.

There’s also plenty to do beyond the beaches.

Southern Delaware offers miles of hiking and biking trails, including those at Cape Henlopen State Park and the Junction & Breakwater Trail linking Rehoboth Beach and Lewes, along with boating, fishing, and golf. Other areas are bustling with restaurants, boutiques, and galleries, plus live music, festivals, and other events throughout the year.

Those amenties help explain the First State’s appeal. But for some retirees from higher-cost states, the retirement math also includes taxes.

How Delaware taxes retirement income

Delaware levies a progressive state income tax with rates ranging from 2.2% to 6.6%. However, retirees rarely pay Delaware income tax on their full income. That’s because:

Delaware exempts Social Security benefits from state tax. (The state also doesn’t tax Railroad Retirement benefits.)

Delaware offers retirement income exclusions. Residents age 60 and older can exclude up to $12,500 of eligible pension and retirement income from state taxable income. Qualifying sources include distributions from IRAs and 401(k)s, as well as dividends, capital gains, interest, and net rental income.

For a married couple where both spouses are at least 60, each spouse can generally claim up to a $12,500 exclusion for eligible retirement income, for a combined potential exclusion of $25,000.

For some retirees, those exclusions could result in a lower state tax bill than they would face on the same retirement income in other states.

Note: We're talking about state tax liability. You still may have federal taxes on retirement income to consider.

Sales and property tax tradeoffs

However, income taxes are only part of the tax equation. Delaware offers zero sales tax and relatively low property taxes.

• No sales tax: Delaware has no state or local sales tax, which can reduce the cost of everyday purchases and larger expenses. (Florida, by comparison, has a 6% statewide sales tax, plus local surtaxes in many counties.)
• Low property taxes: Delaware’s effective property tax rate is about 0.54%, compared with 0.78% in Florida, according to 2026 Tax Foundation data. The actual difference depends on the home’s value, location, and applicable exemptions.

But…that doesn't necessarily make Delaware the cheaper place to own a home.

Sussex County's growth (nearly 40,000 residents in the past six years) has reportedly increased housing demand and pushed prices higher. That can be good news for people who already own homes there, but it can be a different story for retirees just arriving.

Someone moving to Delaware for retirement from a high property-tax state might see lower property taxes while paying more for the house itself.

Delaware vs Florida cost of living

While Florida draws attention for having no state income tax, the full financial picture can change once other costs enter the calculation.

The following table shows how various costs might add up.

Average Annual Costs in Florida and Delaware

Note: This comparison, for educational purposes only, assumes a $500,000 primary residence, $500,000 in homeowners insurance dwelling coverage, and $20,000 in annual taxable purchases. Property-tax estimates use 2026 statewide effective rates; insurance estimates use 2026 published rates; and Florida sales tax uses the 2026 average combined state and local rate.

State income taxes are excluded because they vary by income, deductions, and exemptions. Actual costs vary by location, coverage, exemptions, and spending.

Is retiring in Delaware a good idea? Bottom line

For some retirees, the appeal of a retirement state isn't always about finding the lowest income-tax rate. It's about what happens when you add up all the smaller pieces of the budget.

Before choosing a retirement destination, consider the sometimes seemingly "hidden" costs that follow you into retirement — including how retirement income is taxed, what you'll pay to own a home, and how much you plan to spend each year.

The state you might assume to be cheapest due to having no income tax might not necessarily be the one that leaves you with the most money to spend.

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When you were saving for retirement, you were in the accumulation phase as you built wealth. Once you reach retirement, you move into the distribution phase where you begin spending those savings. This warrants a different approach to your financial decisions — and possibly a different adviser.

Just as doctors have specialties, so do many financial professionals. Those who concentrate on the accumulation phase are adept at helping you grow your money during your working years and finding ways to make the market work for you. Their view is long term — as it should be — because they are looking at your retirement from a distance.

Other financial professionals specialize in the distribution phase of retirement. They understand the strategies that can help you maximize your retirement income, improve tax efficiency and make your savings last. Their primary objective is to help you avoid the costly mistakes that can derail an otherwise well-planned retirement.

1. How much income will you really need?

As someone who works in the distribution phase, one of the first things I discuss with clients is what type of lifestyle they want in retirement.

Do they expect to be on the go, traveling to bucket-list locales or buying that boat they fantasized about for years? Or do they envision being a homebody, reading books, chatting with friends and babysitting the grandchildren?

Their answer helps determine how much income they will need, and income is the heartbeat of retirement. Without a sustainable income strategy, retirement plans can go awry.

That's why it's important to make sure your income aligns with your spending goals. Your sources of income may include Social Security, a pension, IRA withdrawals, dividends and interest, cash and rental property.

For example, if someone expects to spend $10,000 monthly in retirement, their withdrawal strategy should be tailored to that need. I always plan for the worst-case scenario and recommend budgeting for more than you will actually spend.

2. When will you claim Social Security?

One significant decision that affects retirement income is when you claim Social Security benefits. The federal government offers plenty of options but not a lot of guidance on this, so Social Security is another area where a conversation with an adviser who specializes in the distribution phase is helpful.

You can begin drawing Social Security as early as age 62 but at a reduced amount that remains reduced for life. There are also income limits if you plan to keep working.

If you wait until your full retirement age (67 for most people these days), you receive more money and there are no income limits. Finally, you can postpone Social Security up until age 70 and receive a larger monthly benefit.

Each claiming strategy has its own advantages and trade-offs, which is why there is no one-size-fits-all answer. The right decision depends on factors such as your health, life expectancy, income needs, tax situation and whether maximizing survivor benefits for a spouse is an important consideration.

3. Can you lower your tax burden?

Taxes may not have been a concern during your accumulation phase, but they could become one during the distribution phase. There are ways to reduce your tax burden in retirement, but if you're not careful, you could unintentionally increase it.

Roth conversions, for example, allow you to move money from taxable retirement accounts, such as traditional IRAs and 401(k)s, to a Roth account that isn't taxed.

It's better to start using them when you are still a few years away from your required minimum distribution age. You pay taxes when you make the conversion, but then your money grows tax-free and isn't taxed when you withdraw it in retirement.

Be careful about transferring too much money into a Roth in the same year, though. You could bump yourself into a higher tax bracket or even cause an increase in your Medicare premiums if your taxable income grows too high.

With the right planning, you can reduce your taxes, keeping more of your money to pay for your retirement needs and wants.

4. Have you thought about sequence of returns risk?

Sequence of returns risk is a potential shadow looming over many retirements — and it may be one of the most significant differences between the accumulation and distribution phases.

It's also another reason retirees need a financial professional who has distribution-phase experience.

Sequence of returns risk can be summed up this way: Before you enter retirement, the order in which your investment returns happen generally makes no difference.

For example, in a 20-year stretch, you can have weak years followed by strong years, or strong years followed by weak years, and at the end the total in your portfolio will be substantially the same.

This is not the case when you retire and are making withdrawals. If the market performs poorly in the first five to 10 years, that combination of market losses with withdrawals can severely drain your portfolio. By the time a recovery happens, you may not have enough in your accounts to capitalize on it.

On the other hand, if the market is strong in your first years of retirement and you are seeing growth even as you make withdrawals, you will be better poised to withstand a down market later on.

Sequence of returns risk is one reason people might want to revisit their investments as they approach retirement. One strategy is to reduce the level of volatility your portfolio faces.

5. And finally: Will you let yourself have some fun?

Many people are hesitant to spend money in retirement, watching pennies carefully and avoiding luxuries or anything even vaguely ostentatious. Remember what I said about retirement requiring a new mindset? That applies here as well.

People who lived frugally as they saved for retirement sometimes struggle to turn off that economical mental attitude when they reach the distribution phase.

They worry so much about running out of money that they risk missing out on the enjoyment these years they saved for can bring. I encourage them to spend that money, to reap the benefits of those years of frugality and to remember the adage they have heard their entire lives, "You can't take it with you."

Of course, they need clarity, structure and some level of comfort to make such a mindset adjustment. That's where the right financial professional comes into play, helping them achieve that comfort by discussing income plans, expenses and any legacy they want to leave behind for children, grandchildren or favorite causes.

The distribution phase can and should be the fun phase — if you let it.

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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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 a CFP® and wealth adviser with more than 20 years of investment experience, I hear some version of that question from nearly every client approaching retirement in a high-tax state, and it's a fair one.

If you've spent decades building your savings, of course you want to keep more of it. States like Florida, Texas, Tennessee and Nevada have long attracted retirees because they skip state income tax entirely. Next to a high-tax state like Connecticut, New Jersey or California, the choice can look obvious.

After helping hundreds of families work through this decision, I've learned it rarely is. The tax savings are usually smaller than people expect, and the true cost of relocating is almost always bigger.

Recent changes in federal tax law have shifted the math even further. Before you list your house, it's worth running the numbers.

Here's what I walk clients through before they make the call.

The tax gap has narrowed

New federal legislation has changed how I evaluate a move for clients. A higher cap on the state and local tax (SALT) deduction, a new bonus deduction for eligible older taxpayers and a permanent federal estate tax exemption of roughly $15 million per individual all reduce the federal tax burden for many retired households.

None of that eliminates state income tax. But it does mean the gap between staying in a high-tax state and relocating to a no-tax one is often smaller than it looked just a few years ago, especially for clients who assumed the old rules still applied.

I've started running this comparison earlier in the planning process for exactly that reason: The answer clients got two or three years ago may not hold up today.

Consider a hypothetical couple pulling $90,000 from IRAs, $45,000 in Social Security and $20,000 in investment income. Depending on their deductions and how that income is structured, moving to a no-tax state might save them several thousand dollars a year, which is real money but rarely the whole story.

The moving costs add up fast

Clients focus on the annual savings and forget the one-time bill: Real estate commissions, closing costs, movers, repairs before listing, furnishing a new home, temporary housing and the cost of rebuilding a healthcare and professional network from scratch.

I've seen these add up to tens of thousands of dollars before anyone accounts for the stress of starting over.

If a move saves $6,000 a year but costs $60,000 to pull off, that's a decade just to break even. I want clients to see that number before they call a Realtor, not after.

You're not just leaving a state

The cost that's hardest to put on a spreadsheet, and the one I push clients hardest on, is distance from family. I've watched clients move south for the weather, then start flying back for birthdays, grandchildren's games and Sunday dinners they didn't expect to miss. The airfare and hotel bills climb, and some eventually move back entirely.

There's also the team you leave behind: Your financial adviser, tax preparer, estate attorney, insurance agent, doctors. You can rebuild that team, but it takes time, and a physician who knows your history or an adviser who's worked with your family for years provides continuity you can't buy on day one in a new state.

I've had clients spend the better part of a year finding a new cardiologist or estate attorney they trusted as much as the one they left, and that search has a cost even if it never shows up on a spreadsheet.

Moving isn't the only lever

Relocating is one way to lower your lifetime tax bill. It's far from the only one.

I regularly help clients cut their tax burden through Roth conversions timed to lower-income years, coordinating retirement account withdrawals, managing required minimum distributions (RMDs), tax-efficient investing, charitable giving and smarter timing of Social Security.

Done well, these strategies can produce meaningful savings while letting clients stay exactly where they are.

When a move actually makes sense

None of this means relocating is a mistake. I have plenty of clients for whom it was the right call: Their family had already scattered, healthcare needs were easy to meet elsewhere, housing costs fit their goals better, or the long-term tax savings genuinely outweighed the cost of getting there.

The difference is that those clients ran the numbers first. Before you decide, ask yourself what you'd actually save after every tax year, what the total moving cost would be, how long it would take to break even, how often you'd travel back for family and whether better tax planning could get you a similar result without packing a single box.

Sometimes those questions confirm that moving is the right move. Just as often, they reveal that staying put is the smarter financial decision — you just hadn't run the full comparison yet.

Retirement isn't about finding the state with the lowest taxes. It's about building a life you won't spend the next decade second-guessing.

When I walk clients through taxes, income, healthcare, housing, estate planning and family togetherness, the answer usually gets a lot clearer, and it isn't always the one they expected when they first asked about moving to Florida.

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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.

I recently read a news story in which a lottery winner who received a jackpot worth more than $167 million had reportedly been arrested four times within 14 months of receiving the money.

Such stories often generate headlines because they reinforce the belief that sudden wealth changes people.

After more than 25 years as a financial planner, I don't believe that's entirely true.

I believe sudden wealth reveals whether someone has developed the habits and discipline necessary to manage it.

While lottery winners capture the headlines, they're among the least common examples of becoming suddenly wealthy.

Sudden wealth typically arrives in four main ways:

• Inheritance
• The sale of a closely held business (liquidity event)
• A significant legal settlement
• On rare occasions, a lottery or other unexpected windfall

Although each situation is unique, they all have one thing in common. Money that was once unavailable suddenly becomes accessible. That transition is both psychological and financial.

People who accumulate wealth over time (commonly decades) become accustomed to seeing money in their accounts and formulating successful financial and emotional discipline.

• They watch retirement accounts fluctuate with the markets without panic
• They realize that consistent contributions, compounding returns and time is what it took to get to a particular level

The goal is to make work optional through having a balance sheet that yields enough to replace your income.

For some, their balance sheets aren't there yet, or maybe they were never working toward financial independence, then one day the inheritance arrives or the settlement comes in. Whatever the source, the money is available, and it is now a spendable currency.

Real-life examples

I've watched families respond to this moment very differently.

Years ago, I worked with a blue-collar worker and father who spent his entire working life doing everything right. He lived modestly, saved consistently and built a meaningful estate because he wanted to leave something for his three children.

After his passing, two of the children requested checks rather than seeking guidance or developing a long-term plan. Within a couple short weeks, their inheritance was spent on a trip to Las Vegas. The third sibling made some responsible decisions, but within a relatively short period, those funds had also been depleted.

It would be easy to conclude they simply made poor choices. I see it differently. They inherited the money. They never had the opportunity to develop the habits that created it.

I've also witnessed the opposite. A client's mother accumulated substantial wealth during her lifetime and explained not only what she hoped her daughter and son-in-law would receive, but what she hoped the wealth would accomplish.

Today, they continue to manage those assets thoughtfully, taking disciplined annual distributions while preserving the portfolio for future generations.

The difference between these two families wasn't as much about the size of the inheritance. It was the mindset, and the steps below can help anyone with mental framing and decision-making related to sudden wealth.

4 steps to staying wealthy after experiencing 'sudden wealth'

1. Do nothing.

When a significant amount of money suddenly appears on your balance sheet, resist the urge to act.

In most situations, I recommend making no major financial decisions for four to six months. Don't purchase a vacation home, quit your job or make large investments simply because the money is available. The assets aren't going anywhere.

What often changes during that time is your perspective.

2. Understand what you have.

Before making any financial commitments, determine the tax consequences and legal obligations associated with your newfound wealth.

Depending on how the assets were received, there might be income taxes, capital gains taxes, inheritance taxes, trust provisions, estate planning implications or other considerations that affect what's truly available.

3. Decide what this wealth is meant to accomplish.

Start with your own household. Does this wealth provide financial independence or greater flexibility?

Once your household is secure, consider whether you want to help family members, support charitable causes or strengthen your community.

Finally, revisit your estate plan so your own legacy reflects your new financial circumstances.

4. Create a sustainable spending plan.

What lump sum amounts are immediately required? Evaluate what impact spending today has on future income.

Risk tolerance and time horizon will influence what amount of annual distribution is sustainable.

Look for articles on strategies and options on calculating a safe withdrawal rate and methodologies of creating a paycheck from your portfolio.

The real measure of success

After more than two decades helping families navigate life's biggest financial transitions, I've come to believe that sudden wealth isn't really about money. It's about stewardship.

Money can be transferred in a single day. The judgment required to preserve it often takes time to develop.

Whether your wealth arrives through an inheritance, the sale of a business, a settlement or an unexpected windfall, the greatest responsibility isn't deciding what to buy. It's properly preparing before starting to deploy your newfound resources.

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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.

1. Higher home-sale exclusions

Question: My wife and I have lived in our home for many years, and it has greatly appreciated in value since we bought it. If I sell now, my gain will be way above the current $500,000 gain exclusion for selling a home. I have heard that Congress is thinking of raising the gain exclusion cap for home sales. Do you think that will happen this year?

Joy Taylor: Since 1997, individuals who own and use a home as their primary residence for at least two of the five years before the sale can exclude from taxable income up to $250,000 of the gain. The exclusion is $500,000 for joint filers. These figures have never been adjusted for the appreciation in residential real estate during this tax break's 30-year history.

Some congressional lawmakers want to increase the home-sale gain-exclusion amounts. Identical House and Senate proposals introduced by Representative Jimmy Panetta (D-CA) and Senator John Cornyn (R-TX) would hike the exclusion to $1 million for joint filers and $500,000 for others. The bills would also index these amounts to inflation each year.

The odds of enactment into law of these higher home-sale gain-exclusion amounts are a bit better than they have been in past years. But it's still a steep climb. Neither bill will be enacted as stand-alone legislation, so it must be attached to a bigger tax package or to a must-pass legislative priority. We certainly don't see anything happening before the November midterm elections.

2. Age-in-place home modifications

Question: My husband and I want to stay in our home during our golden years. So we are starting to add some age-in-place modifications to it. Will Congress ever give us a tax break for these changes?

Joy Taylor: A Senate proposal by Senators Angela Alsobrooks (D-MD) and Kirsten Gillibrand (D-NY) would do just that. The "Senior Accessible Housing Tax Credit Act of 2026" would give individuals age 60 and older a nonrefundable tax credit of up to $10,000 per year for the cost of specific home improvements. They include:

• Widening doorways
• Replacing toilets and faucets
• Installing non-slip flooring
• Putting in chair lifts and wheelchair ramps
• Installing handrails and shower seats
• Putting in furniture risers

The credit would begin to phase out at modified adjusted gross incomes (MAGI) of over $200,000 for joint filers and $100,000 for single filers.

The odds of passage this year are pretty slim, but we are definitely keeping a close eye on this idea because we expect it will come back again as the U.S. population continues to age.

3. IRS regulation of unenrolled preparers

Question: I am a tax return preparer. I am not a CPA, enrolled agent or lawyer. I heard that Congress wants to make it harder for me to get a preparer tax identification number (PTIN) each year. Can you explain exactly what Congress is proposing for tax return preparers?

Joy Taylor: Last month, the Senate Finance Committee approved a bipartisan bill called "The Taxpayer Assistance and Service Act" that has over 60 proposals covering 10 broad topics:

• Tax administration and customer service
• U.S. citizens who live abroad
• Streamlining judicial review for filers who challenge IRS in court
• Tax return preparers
• IRS's Taxpayer Advocate's office
• IRS's appeals office
• Whistle-blowers
• U.S. citizens held hostage overseas
• Small businesses
• Miscellaneous provisions

One of the secitons in this bill would let the IRS regulate unenrolled paid tax return preparers. An unenrolled preparer is someone who prepares tax returns for money, but is not a CPA, lawyer, enrolled agent or a comparable state-license holder.

Under the bill, unenrolled preparers would have to meet various requirements in order to apply for or renew a PTIN each year. These preparers must provide information about their competence and character, pass criminal background and tax compliance checks, and take up to 18 hours of continuing education courses. Importantly, the proposal does not require unenrolled preparers to pass a competency exam. Under the proposal, the IRS would be able to deny, revoke or suspend PTINs for unenrolled preparers who don't comply with the rules.

Giving the IRS power to regulate unenrolled preparers has been tried before. Since 2014, after an appeals court struck down the IRS's administrative oversight rules for unenrolled preparers, the IRS's National Taxpayer Advocate, Treasury inspectors, government auditors and tax practitioner groups have pleaded with Congress to let the IRS regulate unenrolled preparers. But this has always faced a wall of naysayers in the House and Senate, mainly Republicans, with added pressure from key free-market groups that oppose giving the IRS more statutory authority to regulate preparers.

But some tax professionals say this time could be different. The current language in the bipartisan Senate bill is more modest when compared with prior proposals. Democrats have made preparer oversight a top priority. And it is well documented that unenrolled preparers make more errors with their clients' refundable credits and certain other tax breaks, when compared with filers who do their own returns, CPAs, enrolled agents, attorneys, and volunteers with tax-filing assistance programs.

Maybe we will see Congress act on the Taxpayer Assistance and Service Act in the short time period after the mid-term elections and before lawmakers head home again for the Christmas holidays. There are many factors that will determine this, including which party comes out ahead in the mid-terms, other items on Congress's plate, and the determination of legislators to focus on taxes.

4. Losses from natural disasters

Question: My car was destroyed last fall in a flood that ended up being a federally declared disaster. I didn't have the car insured. I already filed my 2025 Form 1040 and didn't claim a disaster loss because I took the standard deduction. I heard that a new law retroactively allows disaster loss deductions for all of 2025 without having to itemize on Schedule A. What should I do to claim the loss?

Joy Taylor: Before the Senate left Washington, D.C., for its August recess, it approved a House-passed bill. We expect President Trump to sign this bill soon. The legislation provides easings for personal disaster loss write-offs identical to those given to victims of disasters in 2018 through July 4, 2025. The relief applies to losses incurred in federally declared disasters that begin before January 1, 2027. The IRS refers to these as "qualified disaster losses."

Individuals can deduct these disaster losses in excess of a $500 threshold without regard to the 10%-of-adjusted-gross-income offset that generally applies. The relief is available for filers who claim standard deductions and for individuals who itemize on Schedule A of Form 1040.

Since your disaster loss occurred last year after July 4, 2025, and you relied on the old tax rules when preparing your 2025 Form 1040, you can amend your return by filing Form 1040-X to take advantage of the new law.

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

For retirees with modest savings and no pension, leaving traditional accounts untouched until it's time to start RMDs can work well. But retirees with pensions face an entirely different tax reality.

In a recent article, Joe F. Schmitz, a CFP® and CEO of Peak Retirement Planning, explains why Roth conversions are so important for retirees with pensions. Schmitz is a regular contributor to Kiplinger's Adviser Intel program, a curated network of trusted financial professionals who share expert insights on wealth building and preservation.

Check out these five questions to test your knowledge about Roth conversions, pensions and taxes.

Good luck! (Don't worry if you miss an answer: You can follow the links below the quiz to brush up on your knowledge.)

Related Content From Adviser Intel

• Why a Roth Conversion Is Wrong for Most People But Often Right for Pension Holders
• When Is a Roth Conversion a Bad Idea? 6 Situations Retirees Should Consider Carefully
• If You're Converting to a Roth IRA, Don't Do It Like This
• 5 Reasons Roth Conversions and Pensions Work Well Together
• 7 Times to Dip Into Your Roth IRA if You Have a Pension (and When to Leave It Alone)

Even after securing a home, many homeowners face recurring ownership expenses — like property taxes, utility bills, and sudden home insurance spikes — that come as a costly surprise.

Some relocate to a state without an income tax in search of financial relief. However, to offset the lack of a personal income tax, several states have steep sales taxes or heavy property tax bills. Others rely on natural resources, energy production, or tourism taxes to keep the burden off resident homeowners.

Below, we rank all nine states with no personal income tax by their homeowner cost score, ordered from most costly to least costly. Here's the result.

States that don't tax income ranked by home costs

To rank each state, Kiplinger combined three key homeownership expenses into a single weighted homeowner cost score:

• Property taxes (50% of the score): Using PropertyShark data (citing 5-year U.S. Census Bureau estimates), Kiplinger examined the median property tax bill. Because property taxes can be a homeowner's largest recurring bill (besides a mortgage), this metric makes up half of the state's total score.
• Utility bills (30% of the score): Using Move.org data, Kiplinger aggregated average annual costs for electricity, natural gas, water/sewer, and internet/TV. This accounts for nearly a third of the score.
• Home insurance costs (20% of the score): Using LendingTree data (sourced from Quadrant Information Services), Kiplinger analyzed average annual premiums for a standard policy with a $1,000 deductible.

To account for recent market conditions, scores also reflect present-day market adjustments, including coastal insurance spikes, heavy summer cooling demand, and remote freight/heating overhead.

9. New Hampshire: Low home insurance, high property taxes

Homeowner cost score: 155

Ranking as the most costly state on our list, New Hampshire incurs a weighted score of 155, driven primarily by exceptionally high property taxes. This is largely due to the Granite State's high effective property tax rate of 1.5% — well above the national average of around .90%, according to the Tax Foundation.

High costs: Lacking a state sales tax and state income tax, New Hampshire relies heavily on local property taxes to fund public services. Utility bills are also elevated (around 21% above the national average).

On the bright side: New Hampshire homeowners enjoy relatively low insurance costs due to minimal coastline exposure and stable climate risks. Plus, the state levies no state estate or inheritance tax, meaning family real estate can be passed down to heirs without a state "death tax."

8. Texas: High insurance costs for a no-income tax state

Homeowner cost score: 150

Texas ranks near the bottom for homeowner affordability due to high property tax rates and surging homeowners insurance. Texas homeowners pay high monthly housing costs that rank among the highest in the nation relative to local incomes, according to 2026 reports by Rice University's Kinder Institute for Urban Research.

High costs: Like New Hampshire, Texas relies on high effective property tax rates to fund local government (since there is no personal income tax). Simultaneously, severe weather risks drive up average annual homeowners insurance premiums substantially, along with high summer air-conditioning electric bills.

On the bright side: Residents age 65 and older can ease their tax burden through homestead exemptions that decrease assessed property values for school districts. Texas also charges no estate tax, preserving wealth for heirs and keeping select areas relatively affordable.

Related: 10 Cheapest Places to Live in Texas

7. Florida: Insurance crisis drives homeowner costs

Homeowner cost score: 103 to 155

Florida's score spans a wide range because homeowners insurance premiums vary widely by location. In inland counties, costs remain closer to national averages; in coastal zones, persistently high insurance rates push Florida toward the top of the overall unaffordability rankings, according to data from the Insurance Information Institute and LendingTree.

Related: 10 Cheapest Places to Live in Florida

High costs: While Florida's median property tax bill is moderate, homeowners insurance premiums have surged in recent years — often reaching $5,000 to $10,000 annually — due to increased hurricane risks and reinsurance spikes. Year-round air conditioning demands also drive up utility bills.

On the bright side: Florida offers a standard $50,000 homestead property tax exemption for primary residences (with expansions being considered on upcoming ballots). Florida also levies no state estate tax, which can potentially save heirs money.

See also: Florida Voters to Decide on $250,000 Property Tax Exemption

6. Alaska: High utility bills and low property tax burden

Homeowner cost score: 84 to 151

Alaska presents a unique financial landscape: while its vast rural boroughs are entirely free of property taxes, this benefit is confined to remote areas. For most residents, living in the state means balancing significant urban property taxes against extreme geography that triggers high utility and shipping costs, as highlighted in Move.org's annual utility report.

High costs: Alaska's annual utility bills are among the highest in the nation — with electric and heating bills running roughly 50% above the U.S. average due to harsh winters and remote fuel delivery.

On the bright side: Alaska homeowners enjoy low base insurance rates thanks to zero hurricane risk, and substantial state oil revenues eliminate state income and state-level sales taxes. Plus, Alaska pays eligible residents an annual Permanent Fund Dividend (PFD) check, offers a $150,000 homestead exemption for homeowners 65 and older, and charges no state estate tax.

5. Washington: Moderate utility bills, higher property tax

Homeowner cost score: 133

Washington lands in the middle tier of non-income-tax states. Although the Evergreen State levies no personal income tax on standard wages, high home prices drive up annual property tax bills, according to U.S. Census Bureau estimates.

High costs: Property tax bills exceed the national average because local municipalities rely considerably on property assessments for funding. Total utility costs are higher than average, and Washington levies a state tax on certain high-value capital gains in addition to a state estate tax capped at 20% (as well as a 9.9% Washington income tax starting 2028 for earners with more than $1 million).

On the bright side: Washington state homeowners insurance premiums remain 35% below the national average, per LendingTree data, even though some local premiums have climbed in recent years. Also, homeowners continue to benefit from lower electricity rates than most of the country, thanks to relatively cheap hydroelectric power.

Related: 10 Cheapest Places to Live in Washington

4. South Dakota: Near national averages for homeowner costs

Homeowner cost score: 102

South Dakota aligns closely with the weighted national baseline for recurring home bills, scoring about 2% above the U.S. average according to data from LendingTree and PropertyShark.

High costs: Severe Midwest weather, including frequent hail and tornado risks, drives home insurance premiums higher than the national average. However, despite the state's rural nature, everyday costs like groceries generally remain at or below the U.S. average due to a strong local agricultural economy.

On the bright side: Local property tax bills hover near or slightly below national midpoints, partially offset by state sales tax revenues. Renewable wind power and hydroelectric generation help keep utility costs manageable. South Dakota also offers a senior property tax assessment freeze for qualifying households and levies no state death tax.

3. Nevada: Relatively low taxes with seasonal utility shocks

Homeowner cost score: 100

Nevada can be tax-friendly for homeowners, but its final cost score depends greatly on the season.

High costs: Nevada summer heatwaves trigger utility bill surges that push utilities above average, while mild winters may help keep costs low. For this reason, peak summer bills can surpass the national average, even though recent statewide averages have dropped significantly below it, per Move.org and LendingTree.

On the bright side: Nevada limits annual tax growth through state-mandated property tax caps and a low assessment ratio. Additionally, weighty tourism tax revenue from millions of out-of-state visitors helps fund public infrastructure, keeping residential property taxes and insurance rates down. Nevada also has no state estate or inheritance tax, making it attractive for passing assets to heirs.

2. Wyoming: Below-average homeownership costs

Homeowner cost score: 96

Wyoming is the second-most affordable state without an income tax for homeowners, boasting property tax burdens up to 40% below the national average according to Tax Foundation property tax maps.

High costs: Rising energy prices have increased utility bills in Wyoming. Groceries and other essential goods can be more expensive in remote towns.

On the bright side: Like Alaska, Wyoming funds much of its state budget through natural resource extraction (coal, oil, and gas) rather than residential property taxes. Low base property taxes and reasonable insurance keep total carrying costs well below national midpoints. Wyoming charges no estate or inheritance taxes, which can preserve real estate value for future generations.

1. Tennessee: Lowest overall homeownership costs

Homeowner cost score: 95

Tennessee claims the #1 spot as the most affordable state for homeowners among those with no income tax. A combination of low property tax assessments and stable carrying costs gives the Volunteer State the lowest overall score, according to PropertyShark and Census data.

High costs: Home insurance rates have risen sharply in recent years, making Tennessee the 7th most expensive state for homeowners insurance, according to LendingTree. Tennessee also has one of the highest sales tax rates in the U.S..

On the bright side: Tennessee boasts some of the lowest average property tax rates in the nation. Plus, the overall cost of fixed housing overhead keeps recurring homeowner bills highly competitive compared to most other non-income-tax states. The state also has no estate tax and offers property tax relief programs for low-income seniors aged 65 and older — making some places in Tennessee cheap to live.

Read More

• 10 Can't-Miss Tax Breaks for Homeowners and Homebuyers
• States With the Lowest Property Tax Bills Ranked by Affordability
• Most Expensive States for Homeowners in 2026

While many of us look at inheritance as something purely for the wealthy, 66% of Americans either expect to or have already received an inheritance from their parents, according to a survey from Choice Mutual.

Receiving any kind of inheritance can be overwhelming, and being unprepared can lead to losing much of that money to poor financial decisions or taxes. If you think you may be a part of the Great Wealth Transfer, either as a provider or a beneficiary, here's how to avoid those pitfalls.

1. Start conversations now

One of the biggest issues with the trillions of dollars expected to be passed down during the Great Wealth Transfer isn't the money itself, but beneficiaries being unprepared to manage the assets they receive.

Although it may be uncomfortable, discussing the plan for these ahead of time helps family members know exactly how much they will receive and what taxes they might expect.

If beneficiaries don't have a chance to discuss the inheritance before their loved one passes away, they may end up making important decisions while they're grieving.

Bringing the topic up well beforehand will give them time to plan before their emotions take over, helping reduce the likelihood of poor decisions or impulsive spending.

Some of the most successful inheritances I have seen are among families who prioritize these conversations.

2. Avoid spending sprees

If you suddenly receive a windfall, it can be tempting to spend money on the things you've always dreamed of. You may want to buy a bigger house, a more expensive car or finally take that extravagant vacation. But going on a shopping spree can lead to disaster.

Your dream items will come with additional costs, such as taxes, insurance and maintenance, and those will stick around long after the initial purchase.

You should look at your inheritance as a long-term investment, not an excuse for a one-time splurge. If you have a good plan for the assets, they should help provide financial security for years.

Using the money to pay down any debts you have or starting an emergency fund is much more valuable than spending it on an asset that will eventually lose its value.

3. Consider tax implications

While the tax implications that come with an inheritance will depend on what you inherit and where you live, receiving an inheritance can trigger estate, capital gains, inheritance or income taxes.

For example, while many people may believe they will owe federal income taxes on any inherited money they receive, that may not be the case. Cash that is passed down from a person who has passed away is not considered taxable income for the beneficiary.

If you are gifted a property as an inheritance, receiving it is not taxed in most cases. However, depending on how you plan to use it, you need to consider a few things:

• Ongoing property taxes, insurance and maintenance costs
• Capital gains tax if the property value increases significantly before it is sold
• How you will use the property (personal, investment, rental) determines which tax deductions you can take

Most people don't have a full understanding of which processes will be triggered when estates are handed down. It's important to work with a financial professional before signing anything.

4. Build a strong team

Being part of the Great Wealth Transfer may be life-changing, but it could also be overwhelming. You may be faced with financial decisions you've never had to navigate before.

Having a strong team of professionals, such as a trusted financial adviser, tax professional or estate attorney, can help everyone involved avoid costly mistakes and create strategies that align with their goals.

A large inheritance is a life-changing event, and surrounding yourself with the right people can be the difference between enjoying it and watching it disappear.

Related Content

• Manage an Inheritance Like a Pro in Just Seven Steps
• Preparing for an Inheritance: Don't Let Your Blessing Become a Curse
• What Not to Do After Inheriting Wealth: 4 Mistakes That Could Cost You Everything
• Four Things to Know About Managing a Loved One's Finances
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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.

Some experts argue that everyone should convert their traditional IRA to a Roth. Others insist it's a costly mistake. The truth is far more nuanced.

As a CERTIFIED FINANCIAL PLANNER® and CEO of Peak Retirement Planning, I can tell you that for most Americans, a Roth conversion probably isn't necessary. However, retirees with pensions often live by a different set of tax rules (I wrote a book for those with pensions, The 2% Club, that you can request for free here.)

Their guaranteed income can create tax challenges that don't apply to the average retiree, making Roth conversions worth a much closer look.

Before deciding whether a Roth conversion belongs in your retirement strategy, it's important to understand the factors that actually determine whether the math makes sense. You can learn more about this in my YouTube video:

The only question that really matters

Many investors focus on whether they can afford to pay the taxes on a Roth conversion today. While that's certainly part of the equation, it isn't the deciding factor. The more important question is this: Will your total tax rate be lower today than it will be later?

That "total tax rate" extends beyond your federal income tax bracket. A Roth conversion can also influence:

• State income taxes
• Medicare IRMAA surcharges
• Social Security taxation
• Capital gains taxes
• Estate planning outcomes

When viewed together, your true tax cost could look very different than your federal bracket alone suggests.

Why most people don't need a Roth conversion

For many retirees, taxable income will naturally decline when they stop working. Someone who retires with modest retirement savings, no pension and Social Security as their primary income source usually remains in relatively low tax brackets throughout retirement.

In those situations, paying taxes today through a Roth conversion could result in paying more tax than necessary.

Roth conversions are frequently overpromoted, as they can be powerful, but they aren't universally beneficial.

Pension holders face a different tax reality

Rather than seeing their income in retirement decline, retirees with pensions often have multiple sources of guaranteed retirement income arriving simultaneously:

• Pension payments
• Social Security benefits
• Required minimum distributions (RMDs) from traditional retirement accounts

Each source adds taxable income, and together they can keep retirees in higher tax brackets for decades.

For households that have accumulated substantial balances in tax-deferred accounts, such as 401(k)s, IRAs, TSPs or 403(b)s, RMDs can make the situation even more challenging as they grow over time.

That's why many pension recipients find themselves paying as much, if not more, in taxes during retirement than they did while working.

Today's tax environment creates planning opportunities

Another consideration is today's tax landscape: Current tax laws provide relatively favorable tax rates and expanded standard deductions compared with historical norms.

While no one can predict future legislation, many economists expect government revenue needs to increase over time because of rising national debt and the long-term funding challenges facing programs such as Medicare and Social Security.

If future tax rates eventually rise, converting portions of traditional retirement accounts while rates remain relatively low could produce meaningful lifetime tax savings. The objective isn't simply to pay taxes sooner, but to pay them when they're expected to be lower than they otherwise would be.

Don't look only at your tax bracket

One of the biggest mistakes retirees make is evaluating Roth conversions using only the federal tax tables. Your retirement tax picture is much more interconnected.

Increasing taxable income through a Roth conversion could:

• Cause more of your Social Security benefits to become taxable
• Push you into a higher Medicare IRMAA bracket, increasing Medicare Part B and Part D premiums
• Raise your capital gains tax rate
• Increase state income taxes

This is why comprehensive tax planning frequently produces better results than simply converting up to the top of a particular tax bracket.

The widow's penalty can create future tax problems

Married couples regularly overlook one significant future risk: When one spouse dies, the surviving spouse generally transitions from married filing jointly to single tax status. At that time:

• Tax brackets and IRMAA thresholds shrink
• The standard deduction lowers
• One Social Security benefit typically disappears
• The surviving spouse often continues receiving pension income and RMDs

The result can be substantially higher taxes for the surviving spouse. Completing Roth conversions while both spouses are alive allows couples to take advantage of the wider married tax brackets before this transition occurs.

Your children's tax situations matter, too

If leaving money to your children is one of your goals, their future tax bracket deserves consideration as well.

Under current law, most non-spouse beneficiaries must empty inherited retirement accounts within 10 years. A child inheriting a large traditional IRA might be required to recognize hundreds of thousands of dollars of taxable income during that period, potentially pushing them into significantly higher tax brackets.

On the other hand, if your children are likely to remain in relatively low tax brackets, leaving them traditional retirement assets instead of paying higher taxes through Roth conversions today could prove more efficient.

Estate planning isn't one-size-fits-all, and understanding your heirs' financial circumstances is an important part of the analysis.

Tax diversification provides flexibility

Many retirees have accumulated the vast majority of their wealth inside tax-deferred retirement accounts, and that creates a challenge. Every dollar withdrawn becomes taxable income, leaving retirees with limited flexibility when tax laws or personal circumstances change.

Building assets across multiple account types — including traditional retirement accounts, Roth accounts and taxable brokerage accounts — creates what many planners call tax diversification.

Having multiple "tax buckets" allows retirees to decide where retirement income comes from each year, making it easier to adapt to changing tax laws, Medicare thresholds or unexpected expenses.

Where you live can affect the timing

State taxes can also influence whether a Roth conversion makes sense. Someone planning to relocate from a high-income-tax state to one with no state income tax could benefit from delaying Roth conversions until after the move.

Conversely, someone expecting to move into a higher-tax state might decide to accelerate conversions before relocating.

State taxes generally receive less attention in planning than federal taxes, but they can meaningfully affect lifetime tax costs.

A common Roth conversion myth

One objection frequently raised against Roth conversions is that paying taxes today means losing years of investment growth. That argument overlooks an important concept: Taxes on a traditional IRA already represent a future liability.

Paying that liability earlier doesn't necessarily reduce long-term wealth if tax rates remain unchanged — it simply satisfies the government's share sooner.

Where Roth conversions can create additional value is by reducing future RMDs, potentially lowering Medicare premiums, limiting Social Security taxation, providing greater withdrawal flexibility and protecting against higher future tax rates.

The comparison isn't simply about investment growth — it's about maximizing what you keep after taxes over the course of retirement.

The bottom line

Roth conversions aren't appropriate for everyone. In fact, many retirees with modest savings and no pensions might be better off leaving their traditional retirement accounts untouched.

Pension holders, however, ordinarily face a different reality. Guaranteed income, RMDs and long retirement horizons can create tax burdens that make proactive planning far more valuable.

Rather than asking whether Roth conversions are "good" or "bad," ask a better question: Will paying taxes today likely cost less than paying them later?

For retirees with pensions and substantial retirement savings, the answer is often worth exploring through a comprehensive, long-term tax strategy that considers not only income taxes but also Medicare premiums, Social Security taxation, estate planning and future tax flexibility.

Because when it comes to retirement, it's not just about how much you've saved — it's about how much you'll ultimately keep.

Related Content

• Do You Know Why a Roth Conversion Isn't Right for Everybody? Test Your Knowledge With This Quiz
• 13 Things to Know About How Your Pension Affects Your Taxes in Retirement
• Many Retirees With a Pension and $1 Million-Plus Do These 7 Things (and Regret It Later)
• 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 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 the One Big Beautiful Bill Act (OBBBA) made Opportunity Zones permanent in July 2025, the industry had to wait nine months for the guidelines to be released.

Here are five things I think every investor with significant capital gains needs to understand.

1. We know exactly which communities are eligible

Revenue Procedure 2026-12 doesn't just describe the nomination process. It identifies, by name and by census tract, every community in America that qualifies for Opportunity Zone designation in 2027.

The number? 25,332 population census tracts across the United States, the District of Columbia and U.S. territories. Every single one of them meets the definition of a low-income community under the updated rules of the OBBBA.

The IRS formally adopted the 2020-2024 American Community Survey five-year dataset as the controlling data source for determining eligibility — locking in the methodology and removing any ambiguity about which tracts qualify and which don't.

Not all 25,332 tracts will become Opportunity Zones. Governors can nominate up to only 25% of their state's eligible tracts. But investors and developers are no longer guessing which tracts are eligible to be nominated.

2. Rural America is a bigger part of the story than ever

Of those 25,332 eligible tracts, 8,334 are classified as fully rural. That's roughly one out of every three eligible communities.

This matters for two reasons. First, the OBBBA created powerful new incentives specifically for rural Opportunity Zone investments. Investors in Qualified Rural Opportunity Funds receive a 30% basis step-up after five years, triple the standard 10%, and rural properties benefit from a reduced substantial improvement threshold of just 50% instead of 100%.

These aren't minor tweaks — they fundamentally change the math on deals that wouldn't have penciled out under the original program.

Second, the law requires that states give rural communities meaningful representation in their nominations. With a third of all eligible tracts classified as rural, governors will have both the incentive and the inventory to direct capital into parts of the country that have historically been overlooked by institutional investors.

For those of us who believe Opportunity Zones should be about real economic development in communities that genuinely need it, this is encouraging news.

3. The clock is ticking

Here's the timeline every investor should have on their calendar.

The nomination window opened on July 1, 2026. State governors — along with the mayor of Washington, D.C., and territorial executives — have less than 45 days to submit their nominated census tracts to the Treasury Department.

That puts the initial deadline at September 28, 2026, with a provision for a single 30-day extension that could push final submissions to October 28.

One important detail from the new guidance: States can submit and revise their nominations multiple times during the window, and nominations filed early in the window aren't processed until the window closes. In other words, this isn't a race to gain first-mover advantage — it's a thoughtful, deliberative process designed to arrive at the best possible outcome.

If you're a developer or community leader trying to make the case for a particular tract, you have a genuine window to advocate right up until the deadline.

After the nomination window closes, Treasury will review and certify the selections. The IRS has indicated it expects to publish the final designated Opportunity Zones before January 1, 2027, the date the new OZ 2.0 map officially takes effect.

Treasury has also announced that it will roll out online tools and resources to help state officials with the nomination process, which should make this round smoother than the sometimes chaotic 2018 experience.

But here's what I want you to take away: If you're an investor or a fund manager, you don't have the luxury of waiting until the final map drops in December.

The smart money is positioning now, identifying likely zones, building relationships with developers and local officials and structuring deals to be ready to deploy capital the moment the new designations go live.

4. Fewer zones, fixed boundaries and more competition for the best deals

One thing that sometimes gets lost in the excitement is this: OZ 2.0 will almost certainly have fewer designated Opportunity Zones than OZ 1.0.

Under the original program, there were 8,764 designated zones. Industry estimates suggest the new round will produce roughly 6,300 to 6,500, a reduction of about 25%.

That's because the eligibility rules are tighter:

• The median family income threshold dropped from 80% to 70%
• The contiguous tract loophole (which allowed some higher-income areas to qualify under OZ 1.0) has been eliminated
• Tracts that qualify based on high poverty rates are now disqualified if their median family income exceeds 125% of the area median

Here's something else the new guidance confirms that should matter to anyone doing long-horizon underwriting: The OZ 2.0 tract boundaries are drawn from the 2020 decennial census map and are set in stone for the entire decade the designation is active, which is January 1, 2027, through December 31, 2036.

No redrawing of lines. No splitting of tracts. No adjustments of any kind. Whatever map gets certified in late 2026 is the map for the next 10 years. That's the kind of certainty that serious investors and fund sponsors can build a strategy around.

Fewer zones do not mean fewer opportunities. It means the zones that do get designated are more likely to be genuinely distressed communities where investment capital can make a real difference. But it also means that the best deals in the best locations are going to attract more competition. Early movers will have a meaningful advantage.

5. Puerto Rico investors: Your timeline is different

If you have Opportunity Zone money in Puerto Rico, this one's for you, and it may come as a surprise.

Most investors know that the original OZ 1.0 designations across the 50 states run through December 31, 2028. What many don't realize is that Puerto Rico has always operated on its own schedule.

Back in 2018, the Bipartisan Budget Act gave the island a unique deal: Every eligible tract was automatically designated as an Opportunity Zone, and that designation was backdated to the passage of the Tax Cuts and Jobs Act (TCJA) on December 22, 2017. That was a full year before most states received their designations.

Both parts of that unique deal are now history.

A 10-year clock that started in December 2017 doesn't end in December 2028. It ends in December 2027. The new guidance makes this point clearly, and that gives Puerto Rico investors one less year than they may have been counting on.

In addition, Puerto Rico will play by the same rules as everyone else going forward: No more automatic island-wide coverage. The governor will nominate up to 25% of eligible tracts, just like every other state.

That's a dramatic reduction in scope for a territory where nearly all census tracts were previously designated.

If you have exposure to Puerto Rico in your OZ portfolio, now is the time to review and make sure your timeline assumptions still hold up.

What all of this means for you

If you have unrealized capital gains — whether from real estate, a business sale, stock or any other appreciated asset — and you've been thinking about Opportunity Zone investing, the new guidelines should sharpen your focus.

The OZ 2.0 framework is no longer theoretical. The eligible tracts are published. The timeline is set. The boundaries are locked. And the enhanced benefits, especially for rural investments, are some of the most generous tax incentives the federal government has ever offered.

This is the starting gun. The investors who do their due diligence now, not in January 2027, will be the ones best positioned to capture the full power of what OZ 2.0 has to offer.

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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 pattern shows up consistently: A client prefers to draw first from Roth accounts or taxable brokerage accounts, which are taxed at favorable capital gains rates, to avoid touching their IRA or 401(k) for as long as possible. It feels like a win. They've deferred taxes.

But when you model it out over 20 or 30 years of retirement, that approach often increases the cumulative tax burden, because they haven't spread withdrawals across tax brackets in a way that keeps their taxable income in check year after year.

That's what happens when you optimize for April instead of the next two decades.

Why deadlines are the enemy of good tax planning

When tax planning happens only in the fourth quarter, or in the final days of December, it may limit available strategies.

First, there's a logistical problem: Custodians can't guarantee that transactions such as qualified charitable distributions (QCDs), donor-advised fund (DAF) contributions or Roth conversions will settle before year-end if you wait until the last minute. A missed deadline isn't a tax strategy, it's a penalty.

Second, and more importantly, you lose flexibility. Many tax-saving moves depend on timing relative to market conditions, income fluctuations and life circumstances. Gifting appreciated shares to charity, for instance, is far more impactful when a stock has just jumped on an earnings report than when you're scrambling in December.

The difference between gifting 10 shares at $80 vs $88 per share, a 10% move that translates directly into a larger charitable deduction and greater tax savings, is an opportunity you can only capture if you're watching for it throughout the year.

Four strategies that require time to be effective

Some of the most effective tax moves cannot be executed well in a single tax season. Four stand out, and each one requires years, not months, to deliver.

1. Roth conversions in the low-income window.

For clients who retire before claiming Social Security, there's often a window, of about five to 10 years, when taxable income drops considerably.

Converting IRA or 401(k) funds to a Roth account during this window, at the 12% or 22% bracket rather than the 32% or higher rate that may apply once Social Security and required minimum distributions (RMDs) kick in, may produce meaningful lifetime tax savings, depending on individual income levels, bracket projections and future tax law changes.

This is cash flow modeling at its most useful: Mapping out conversion amounts year by year rather than deciding in isolation.

2. Coordinated charitable giving.

Bunching charitable deductions into a high-income year, such as one marked by a significant portfolio rebalance or a large Roth conversion, can be far more effective than spreading gifts evenly.

When income spikes irregularly, charitable giving becomes a natural offset. Planning this in advance, rather than reacting after the income event has already occurred, is what separates intentional strategy from coincidence.

3. Inherited IRA management under the SECURE Act.

For clients who inherit an IRA, the old "stretch" provision that allowed distributions over a lifetime is largely gone. Most beneficiaries now have a 10-year window to deplete the account. The planning question is when, within that window, to take distributions.

Consider a client who inherits an IRA two years before retirement and is still earning a full income. Depending on their income trajectory and tax bracket, delaying those withdrawals until after they stop working, while still within the 10-year depletion period, could shift distributions into meaningfully lower tax years.

4. Portfolio transitions for clients with embedded gains.

When a client comes in holding a portfolio of highly appreciated securities, triggering all of those gains in year one is rarely the right answer. A better approach recognizes those gains gradually over two, three or more tax years, spreading the burden while moving toward a better-diversified portfolio.

This requires a long-range view of the tax cost, not a reflex to get everything repositioned quickly.

Where investment decisions and tax strategy meet

Paying capital gains taxes is not inherently bad. It means your investments have grown. The risk of staying in a concentrated position that may no longer outperform can be far greater than the tax cost of diversifying.

We see clients hold individual company stock well past the point where it makes portfolio sense, purely to avoid a capital gains bill. That's a case where the tax tail is wagging the investment dog.

The better goal is minimizing taxes without compromising portfolio quality and diversification. Strategies such as tax-loss harvesting, asset location and direct indexing are genuine tools, but they work best as optimizations on top of a sound plan, not as substitutes for one.

Three steps to explore before your next tax season

If you've been taking a reactive approach, here are three places to start looking for opportunities:

1. Pull out your 2025 tax return and look for surprises.

Were there large distributions you didn't anticipate? Did you end up in a higher bracket than expected? Are there tax-advantaged accounts you could be contributing more to?

2. Identify any irregular income on the horizon.

Equity compensation, a business sale, a liquidity event, a large one-time expense: Each of these is a planning opportunity, and the earlier you can model the tax implications, the more options you have.

Once the income has already hit your return, many of the best strategies are off the table.

3. Get organized before you need to be.

One of the biggest sources of tax-season friction is simply not knowing where things are: Prior returns, IRS PINs, cost basis records, charitable contribution receipts.

Building a simple reference document for your annual tax prep reduces stress and makes it far easier to execute time-sensitive strategies without scrambling.

Taxes are unavoidable. But the total taxes paid over a lifetime of retirement are not fixed. They're shaped by decisions made years in advance, at the right income levels, in the right accounts, in the right sequence. That's a long game worth playing.

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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.

But once the deed is in your hands, you’re probably wondering what comes next. Beyond deciding whether to keep it, sell it, or rent it, there’s one almost universal question: What are the tax implications?

There's good news: Inheriting a house doesn’t automatically mean you’ll owe taxes to the IRS or your state. But what happens next depends on several factors, including whether you decide to sell the property and how the step-up in basis affects your tax bill.

Here’s more of what you need to know.

What happens with taxes if you inherit a house

Inheriting a house doesn’t automatically trigger federal taxes. Instead, you’ll need to decide what to do with the property. Whether you sell it, keep it, or turn it into a rental, each option can have different tax implications.

One of the most important tax rules for inherited property is the step-up in basis. A home’s basis is the amount the IRS uses as the starting point for calculating capital gains tax.

Think of the home’s basis like a car’s trip odometer. Resetting the trip odometer doesn’t erase the miles already driven. Instead, it creates a new starting point, tracking only the miles driven from that point forward.

• When you inherit a home, the IRS generally measures your gain from the home’s fair market value on the date of death instead of what the previous owner originally paid.
• The step-up in basis doesn’t change what the house is worth. It changes where the IRS starts measuring your gain.

For example, your parents bought a home decades ago for $150,000. By the time you inherit it, it’s worth $700,000. If you later sell the home for $750,000, your taxable gain would be $50,000, not $600,000.

That’s because your taxable gain is based on the appreciation that occurred after you inherited the home, not when your parents owned it.

Selling, keeping, or renting inherited property

Selling an inherited home is often one of the biggest financial decisions you’ll make after inheriting property. A Real Estate Inheritance Report from Trust & Will finds that 56% of heirs choose to sell an inherited home, making it the most common path forward.

• Fortunately, you won’t pay capital gains tax on the difference between what the original owner paid for the home and its fair market value when you inherited it. Instead, the IRS uses the home’s stepped-up basis as the starting point for calculating your taxable gain.
• That means when you sell, you’ll owe capital gains tax only on any appreciation that occurs after you inherit the home.
• If you sell the home soon after inheriting it for about its fair market value, your taxable gain may be minimal.

What if you decide to keep the house? Keeping an inherited home doesn’t create an immediate federal tax bill. You’ll still be responsible for ongoing costs like property taxes, homeowners insurance, and maintenance. If you eventually decide to sell the home, the stepped-up basis will determine how your capital gains are calculated.

Some beneficiaries—roughly 17%—decide to turn an inherited home into a rental property. If you do, rental income is typically taxable. You may also be able to deduct certain expenses related to the property.

Depending on your situation, you might qualify to claim depreciation, which can affect both your annual taxes and your capital gains calculation if you eventually sell.

Estate and inheritance tax considerations

If you’ve inherited a house, you may also be wondering whether you’ll owe inheritance tax or estate tax.

For most families, the answer is no.

The federal government doesn’t impose an inheritance tax, and only a handful of states do. Furthermore, the federal lifetime estate and gift tax threshold sits at $15 million per individual ($30 million for married couples), meaning it generally applies only to exceptionally large estates.

Whether either tax applies depends on factors like the overall size of the estate, where the deceased lived, and state law.

Where you live matters with inheritance

While federal tax rules dominate the conversation, state-level rules can create unexpected financial surprises. But the baseline rule is the same: Nearly all state tax codes conform to the federal step-up in basis, resetting the property's starting value to its fair market value on the date of death for state capital gains purposes.

However, state rules diverge from IRS rules in several key areas:

State Capital Gains Rates: If you hold the home and sell it after it appreciates further, any post-inheritance gain is subject to state income tax alongside federal capital gains tax.

In high-tax states like California, New York, or Minnesota, state capital gains tax rates can add 8% to 13%+ to your tax bill.

State Inheritance and Estate Taxes: Five states—Pennsylvania, New Jersey, Maryland, Kentucky, and Nebraska—levy a state inheritance tax on certain heirs.

Additionally, twelve states and Washington, D.C. enforce state estate taxes with exemptions far lower than the federal threshold—in places like Oregon or Rhode Island, kicking in on estates valued as low as $1 million or $1.8 million.

Local Property Tax Reassessments: In some jurisdictions, transferring title triggers a local property tax reassessment. The capped property tax rate the previous owner enjoyed could reset to current fair market value, significantly increasing annual holding costs.

Key questions to consider before making a decision

Before deciding whether to sell, keep, or rent an inherited home, take time to evaluate a few financial factors:

• What is the home’s official stepped-up valuation? Securing a professional, independent appraisal as of the date of death establishes your baseline basis and protects you if you sell later.
• Can you afford the ongoing carrying costs? If you plan to keep the home, calculate the true cost of holding it — including updated local property taxes, insurance premiums, utilities, and deferred maintenance.
• Are there co-heirs or sibling dynamics to navigate? If you inherit with siblings, clarify whether everyone agrees on selling or keeping the property, or if one party needs to buy out the others.
• What are the local property tax reassessment rules? Check with the local tax assessor to see if transferring title triggers an immediate tax reassessment that could increase annual property taxes.

Inheriting a home: Frequently asked questions

Tax laws are complex, and every beneficiary's tax situation is unique. The information provided here is for general educational and informational purposes only and does not constitute formal tax, financial, or legal advice. Be sure to consult a qualified tax professional, CPA, or estate planner to evaluate your specific circumstances before making any financial decisions.

Do you automatically pay taxes when you inherit a house?

No. Inheriting a house by itself won’t trigger federal taxes. Taxes may arise later depending on what you do with the property.

Can you sell an inherited house immediately?

Generally, yes. Many beneficiaries sell an inherited home shortly after probate or once they have the legal authority to do so. However, the timing depends on the estate administration process and state law, so consult a trusted professional to understand any timing restrictions that may apply to your situation.

How is capital gains tax calculated on an inherited house?

In many cases, capital gains are calculated using the stepped-up basis, meaning the home’s fair market value on the date of death becomes the starting point for measuring future gain.

What if I inherit a house with my siblings?

If you inherit a house with your siblings, you may become co-owners of the property. Together, you’ll need to decide whether to keep the home, sell it, or rent it out. If you sell the home, each beneficiary’s share of any capital gain is based on their ownership interest and the home’s stepped-up basis.

Can I live in an inherited house without paying taxes?

Usually, yes. Moving into an inherited home doesn’t automatically create a federal tax bill. However, you’ll likely become responsible for ongoing expenses like property taxes, homeowners insurance, and maintenance.

If you later sell the home, your taxes will depend on the selling price and your stepped-up basis.

What if the house was held in a trust?

It depends on the type of trust. Many homes held in a revocable living trust receive the same step-up in basis as homes passed through a will.

Some trusts, however, have different tax rules that can affect your tax situation. If you’re unsure how the trust is structured, consider consulting a tax professional before selling the property.

Do I have to pay property taxes on an inherited house?

Yes. Once you inherit a home, you’ll typically become responsible for ongoing property taxes, just as any other homeowner would be. Depending on where the property is located, you may also need to update or reapply for property tax exemptions after ownership changes.

Related Content

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State taxation impacts how much of your nest egg is truly yours. It shapes your monthly budget during your golden years and can give you a clearer sense of your long-term financial security.

And depending on where you live, your state may not tax retiree income at all. This can save you thousands on Social Security benefits taxes, pension payouts, and 401(k) withdrawals in retirement.

So check out these five quick questions to test your knowledge and see if your state makes the cut.

Good luck!

Remember that no matter where you live, federal income tax still applies. You may want to consult a tax professional for advice tailored to your specific financial situation.

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But it can also be one of the least effective times to make important financial decisions. Schedules are crowded as deadlines are closing in, while advisers, accountants and attorneys may have limited capacity to support.

Instead of rushing through year-end checklists, summer can give you the space and time to think more strategically. By this time of year, you can see how income, spending and investments are tracking, with several months left to make changes while they can still have an impact.

In my experience as a CFP®, that head start often leads to better decisions because families have time to consider trade-offs and adjust gradually.

1. Rebalance your portfolio and review asset location

Even if you haven't made any trades, market performance over time can change your portfolio's risk profile. Strong returns in equities, a particular sector or one concentrated holding can gradually increase risk, leaving the portfolio more aggressive than it was at the beginning of the year.

An end-of-summer review can identify where allocations have drifted and whether new contributions should be directed toward underweight areas. The goal is to ensure that the portfolio still reflects your goals, time horizon and tolerance for risk.

The review can also include asset location, or which investments are held in taxable, tax-deferred and Roth accounts. As markets move and contributions are added, assets may no longer be held tax-efficiently.

Income-producing investments may be better suited to a retirement account, while investments that receive favorable long-term capital gains treatment may fit better in a taxable account.

Liquidity needs, charitable plans, required minimum distributions and estate considerations also matter. Reviewing where assets are held can improve after-tax efficiency without changing the overall strategy.

2. Check your retirement contribution pace

Many employees choose their retirement plan contribution rate at the beginning of the year and rarely revisit it. By summer, however, a raise, bonus or promotion may have changed both cash flow and the contribution needed from each remaining paycheck to reach a retirement savings goal.

Reviewing your retirement strategy in late summer allows time to make smaller adjustments over several months. Waiting until November may require a much larger increase over only a few pay periods.

This is an overlooked aspect of financial planning that has come up often in my client conversations: People assume they are on pace because their contribution percentage has not changed, but soon discover that compensation or payroll changes have left them short.

A summer financial review can also consider a mix of traditional and Roth contributions. Retirees should confirm how much remains to be withdrawn from required minimum distributions and whether qualified charitable distributions fit into their giving plans.

3. Run a tax projection

By the end of the summer, your financial picture is typically much clearer and more comprehensive than it was at the start of the year. Wages, bonuses, business income, investment gains and equity compensation are easier to estimate, making summer an ideal time to determine whether tax withholding or estimated payments need to be adjusted.

A summer tax projection may also reveal valuable planning opportunities, including Roth conversion, gifts of appreciated securities, the timing of stock-option exercises or the use of investment losses to offset realized gains.

Some of these strategies may be better executed later in the year, once the full tax picture is clearer. But reviewing them now allows you to identify your options before year-end deadlines begin to dictate your decisions.

The goal isn't simply to lower this year's tax bill — it's to ensure every tax decision supports your broader long-term objectives without creating avoidable cash-flow constraints.

4. Put cash and debt to work more deliberately

Over time, cash can accumulate without a clear purpose. Conversely, some households may have too little set aside, forcing them to rely on credit or investment sales to cover predictable expenses.

An end-of-summer review can separate money needed for taxes, travel, home improvements or other near-term spending from assets intended for longer-term goals. It is also worth checking whether savings are earning a competitive return.

Borrowers with adjustable-rate loans, home-equity lines or other variable-rate obligations should understand how interest costs are affecting cash flow. Anyone planning a major purchase should consider how new debt would interact with retirement savings and other priorities.

Cash and debt can be managed intentionally rather than carried forward without review.

5. Prepare for employee benefit decisions

Open enrollment often leaves employees with little time to make important choices. Reviewing benefits during the summer creates more time to consider whether health, life and disability coverage still match the household's needs, particularly after a marriage, divorce, new child, home purchase or change in income.

Employees eligible for a health savings account can reassess their contribution pace and consider how the account fits into their broader plan.

Executives may also need to review stock options, restricted stock, deferred compensation or company-stock concentration before election deadlines arrive.

These choices affect taxes, cash flow and investment risk, and deserve more than a rushed year-end review.

6. Review estate documents before there is an emergency

Estate planning is easy to postpone when nothing feels urgent. Summer is a good time to ensure that wills, trusts, powers of attorney, health care directives and beneficiary designations still reflect the family's circumstances and long-term intentions.

Major life events — such as births, deaths, marriages, divorces, moves and significant changes in wealth — may also require updates to your broader financial plan.

For families considering significant gifts, planning should begin well before December, given valuations, legal documents and trust administration often require coordination among several advisers.

In conversations with clients, estate planning reviews often uncover practical issues that have little to do with estate taxes. An outdated beneficiary designation, an unfunded trust or a missing power of attorney can all create complications long before federal estate-tax exposure becomes relevant.

The goal is straightforward: Ensure the right people have the authority to act in an emergency and that your assets will be distributed as intended. Don't wait for an arbitrary year-end deadline to review your plan.

Act earlier to save stress later

Year-end planning will always matter. After all, certain tax, retirement and gifting decisions are tied to the calendar. But I believe that December should not be the first time you review and adjust your financial plan.

By summer, enough information is available to provide a clearer picture of your finances while still leaving enough time to make intentional adjustments without being rushed. Acting earlier can give investors the breathing room they need to make meaningful adjustments.

For many households, the most important question is simple: Has anything changed in the markets, my finances or my life that should change what I do next? Asking that question now — rather than in December — can lead to better decisions and less stress in the year-end.

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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.

That happens by default, unless you plan around it.

Most people who reach this point spent decades doing everything right: Saving consistently, maxing out their 401(k), following the advice they were given. That advice was built for accumulation, not for the withdrawal phase.

This is often called the Social Security tax torpedo. It shows up the same way in almost every retirement plan I, as the founder of MOKAN Wealth Management, review for the first time. It's not a mistake. It's what happens when there's no planning for the tax impact of retirement withdrawals.

How the IRS decides what gets taxed

The IRS uses a number called provisional income to decide how much of your Social Security check gets taxed: Your regular income, plus any tax-free interest, plus half of your Social Security benefit.

Once that number crosses certain levels, your Social Security starts getting taxed, and those levels have never been adjusted for inflation.

Married couples filing jointly start owing tax at $32,000 of provisional income. Above $44,000, up to 85% is taxable. Single filers cross at $25,000 and $34,000.

Frozen since the 1980s and 1990s, these thresholds mean a couple with a modest combined income can land at the maximum simply because the numbers are so outdated.

In retirement, income piles on top of itself:

• Your IRA withdrawal gets taxed
• Your Social Security gets taxed on top of that
• Medicare premiums climb along with both

If almost all your savings sit in a traditional IRA or 401(k), every dollar you pull out to pay the bills is fully taxable, and adding half your Social Security on top pushes most retirees past every threshold in year one, often by a wide margin.

Nobody made a bad decision. They just never built a different kind of account to draw from.

The one exception is a Roth IRA. Money pulled from a Roth doesn't count toward provisional income, doesn't show up on your tax return and doesn't raise Medicare premiums. It's the one source of retirement income the IRS leaves alone.

The three buckets every retirement needs

Think of your savings in three buckets:

• Money you've already paid tax on (a brokerage account, where you owe tax only on the growth)
• Money you haven't paid tax on yet (a traditional IRA or 401(k), where every dollar withdrawn is taxed as ordinary income and where most people hold nearly all their savings)
• Money you'll never pay tax on again (a Roth IRA, which grows and comes out tax-free and is invisible to the IRS)

When almost everything sits in the second bucket, every dollar you withdraw pushes more of your Social Security into the taxable zone.

Tax diversification means having enough in each bucket to choose which dollars to spend each year based on what creates the smallest tax bill.

Roth conversions: Moving money to the third bucket

The most reliable way to build the tax-free bucket is through a Roth conversion: Moving money from your traditional IRA into a Roth IRA and paying income tax on the converted amount that year.

After that, the money and all its future growth come out completely tax-free and never count toward provisional income again.

The window to do this well is shorter than most people think. It typically opens in the years just before or after retirement, before Social Security starts and before required minimum distributions (RMDs) force taxable income onto your tax return. Income is usually at its lowest point during that stretch, which means lower rates on any conversion done then.

Three approaches work well in practice:

• Filling your tax bracket by converting just enough each year to use up room in your current bracket
• Converting larger amounts over a shorter window when a balance is too large for small annual conversions to move the needle in time
• Converting more aggressively when the market is down, since the same number of shares costs less in tax

The biggest mistake is waiting. RMDs force taxable income onto your return at age 73 or 75 whether you need it or not — on a balance that's kept growing with the tax bill still attached.

A before-and-after example

John and Karen, both 60, have $1.8 million combined in traditional IRAs, $200,000 in a brokerage account and almost nothing in a Roth. They plan to retire at 63 and need about $150,000 a year to live on. Their combined Social Security benefit is roughly $70,000 at full retirement age, or about $53,000 if they claim benefits early at 63.

On the default path, they retire and claim at 63, then pull the remaining $97,000 they need straight from the IRA. Provisional income comes out to roughly $123,000, well past the $44,000 ceiling: The 85% maximum, or roughly $45,000 of taxable Social Security, stacked on top of the $97,000 IRA withdrawal.

On the coordinated path, starting at 60 while they're still working, they convert a portion of the IRA to Roth each year, paying the tax from income and the brokerage account so the full converted amount keeps growing tax-free.

They keep converting through their mid-60s and wait until 67 to claim Social Security, when the benefit reaches its full $70,000. By then, the Roth is large enough to cover roughly $40,000 of annual spending tax-free, with the remaining $40,000 from the IRA.

Provisional income lands around $75,000 instead of $123,000: Still above the ceiling, but with substantially less Social Security taxed and a large share of spending arriving with no tax bill.

Same retirement date, same lifestyle spending, a meaningfully different tax outcome for the rest of their retirement. The only difference was starting at 60 instead of waiting until the options had narrowed.

What to do now

Most people don't choose to pay the maximum tax on their Social Security. It happens because they didn't plan for it, which also means it's predictable enough to fix.

Run your own provisional income number. Figure out how much room is left in your current bracket. Then start moving money into the Roth bucket, even a few years before retirement. The window narrows every year you wait.

The Social Security Administration's benefit estimator and IRS Publication 915 are good starting points for running your own numbers.

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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.

Contribute early, get the match, max out the IRA and let it compound. That part of the advice is sound, and most disciplined savers follow it well.

What gets far less attention is what happens after the money is in there. For some retirees who did everything right and accumulated a large IRA balance, that account can quietly turn into a complicated tax problem for themselves, a surviving spouse and, eventually, their kids.

The culprit is required minimum distributions (RMDs). Once RMDs start, at age 73 or 75 depending on your birth year, that money adds to taxable income whether you need it or not, on top of whatever else you're already reporting. That's the part most retirees eventually hear about, usually from an accountant and usually a year or two too late.

What almost nobody discusses is where that balance goes after the RMD math is finished for the year.

A large IRA won't create a tax bill only for the original owner. It can create a bigger one for the spouse who is left filing alone and a different one for the kids who inherit what's left when they're in their peak earning years.

One account, three tax bills, three different taxpayers.

John and Jane did everything right

John and Jane are 64. They maxed out their 401(k)s for three decades, didn't touch the money early and rolled everything into IRAs at retirement. Between them, they're sitting on $2.3 million in traditional IRA balances, a paid-off house and modest investment income each year.

Fast-forward to age 75, when their RMDs begin. Assuming reasonable growth and no withdrawals, that $2.3 million could be $3 million or more, generating an RMD of roughly $122,000 in the first year.

Add combined Social Security of about $65,000 and an additional $45,000 of investment income, and they're looking at $232,000 to report on their tax return. It's far more than they need, and none of it is optional.

That $232,000 lands on John and Jane's return, and it's the most straightforward of the three tax bills this balance is about to generate.

The widow's penalty

The problem doesn't stop with John and Jane filing jointly. Assume John passes first, which is statistically likely. Jane's income marginally changes. She still collects the survivor Social Security benefit, still owns the investment account and still has to take RMDs on essentially the same IRA balance.

What changes is her filing status. She moves from joint brackets to single brackets, which are roughly half as wide through most of the income range. Her standard deduction shrinks by close to half as well, pushing more income into taxable territory.

Income that used to be taxed at 12% or 22% when John was alive is now landing at 24% or 32%, even though her income hasn't moved.

Many couples model their household income. Very few model what that same income looks like once one spouse is filing alone. For a couple with John and Jane's numbers, the bracket and deduction squeeze alone can mean $10,000 to $15,000 more in tax every year, for the rest of her life.

This is what is referred to as the widow's penalty and could cost the taxpayer additional tax for decades.

The beneficiary problem

Push the timeline out further. Jane eventually leaves the remaining IRA to their two children, and by then, it's worth roughly $3 million combined, about $1.5 million to each child.

Under rules in place since the SECURE Act, most nonspouse individuals must empty an inherited IRA within 10 years of the original owner's death. Withdrawals don't have to be even, but if the original owner was already taking RMDs, annual withdrawals are typically required throughout that window, too.

For a child who's in their peak earning years, that inherited IRA doesn't always arrive as a windfall. It arrives as $150,000 or more of additional taxable income, stacked directly on top of a salary, a bonus and whatever else they've already got going on. A meaningful chunk of that inheritance can go straight to the IRS.

John and Jane spent 30 years deferring tax on that money, and their children may pay more on it than John and Jane ever would have.

Why this matters now

Two recent changes make this the right moment to make the projection.

First, RMD ages have moved. The SECURE 2.0 Act pushed the starting age to 73, moving again to 75 in 2033. That gives people born after 1959 a longer runway before distributions are forced and more years to plan around it.

Second, the One Big Beautiful Bill Act made the current tax brackets permanent instead of letting them expire at the end of 2025. For years, planners hedged Roth conversion advice with "rates might go up, might go down." That uncertainty has diminished.

Neither change fixes the underlying problem: A large traditional IRA is still going to generate a large RMD. But both make it easier to plan while there is still room to act.

The planning runway

John and Jane have an advantage most people overlook: They're 64, retired, and neither Social Security nor RMDs have started. That runway is valuable, but it won't last.

They could consider a Roth conversion. Every dollar converted gets taxed at today's rate, while their income is relatively low, instead of at a future rate stacked on top of Social Security, RMDs and investment income. A smaller traditional IRA can mean smaller future RMDs, less pressure on a surviving spouse's tax return and less taxable income passed to children.

Another move is a qualified charitable distribution, or QCD, once they turn 70½. IRA owners can send money directly from the IRA to a qualified charity — up to $111,000 per person in 2026 — and that amount counts toward the RMD without showing up as taxable income.

For the charitably inclined, it's one of the few ways to satisfy an RMD and lower a tax bill at once.

Neither move is automatically right for everyone, not even for John and Jane. The goal isn't converting for its own sake, it's optimizing the tax bill across a lifetime, and Roth conversions and QCDs are tools for that, not the whole strategy.

What matters more than picking a tactic is running the numbers every few years, since today's right answer may not be right in five years.

The real problem isn't the balance

There's nothing wrong with having a large IRA. It means the saving worked. The problem is assuming that planning is finished once the account is funded.

Left alone, a large traditional IRA sets off a chain reaction:

• Bigger RMDs than you need
• A tax increase left for the surviving spouse
• A tax bill handed to your kids on money you spent 30 years deferring

None of it is inevitable, but all of it takes years of lead time to fix.

The best time to deal with a large IRA is before the RMDs force the issue, not after.

Related Content

• Opportunities and Challenges When You Inherit an IRA
• Tending to Your Estate Plan This Spring? Don't Forget to Give Your IRA Some Love
• The 7 RMD Tax Traps Waiting for You in Your 70s — and How to Start Disarming Them in Your 60s
• Why a Down Market is the Best Time for a Roth IRA Conversion
• Will Taxes Shred Your 401(k) or IRA During Your Retirement? It's Very Likely

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.