How much of your distributions from Traditional IRA is taxed less than 22%?
Posted on July 24, 2026

The amount of Traditional IRA that is low tax is much less than most retirees think: an example for a single filer in this post shows less than $20,000 is taxed less than 22% marginal rate; it’s roughly double that $amount for married, joint filers. The tax on the balance is much more than most retirees think. The example shows tax of 27% on the amount over that first $20,000. It could be worse: 29%. This post explains:

 

• Distributions from your Traditional IRA increase the amount of Social Security (SS) that’s taxed. In effect, distributions up to roughly equal your SS benefit almost give you a double dose of taxable income, tax rate, and tax. Distributions are taxed, in effect, at 18.5% in the 10% marginal tax bracket. The first ~$20,000 of distributions increase the taxable portion of SS by $17,000 and you’ve reached the top of the 10% marginal tax bracket. Further distributions are taxed greater than 22%.

 

Two other effects add five percentage points to the tax rate on the amount greater than that first $20,000:

 

• When distributions roughly equal your SS benefit, you trip the tax rate on dividends and capital gains from 0% to 15%: a sudden spike in tax. When I average this spike over distributions, the effect is more than 3¾  percentage points greater tax rate.

 

• Again, when distributions roughly equal your SS benefit, you cross the point where you start to lose a portion of the Enhanced deduction for seniors. This loss results in 1.3 percentage points greater tax rate.

 

It’s another two percentage points to a total of 29% for some: at distributions roughly twice your SS benefit, you run afout of IRMAA. That surcharge of Medicare premiums effectively adds two points to total 29% effective tax rate. (About 10% of those on Medicare have income that crosses a tripwire.)

 

 

Detail:

 

The only way to understand this is to see how taxes increase with increased distributions from Traditional IRAs. I use a spreadsheet that calculates a 2026 tax return. I make some assumptions of income for my example:

 

 

The total tax with $60,000 of distributions from Traditional is $11,417. This is the sum of $9,917 tax on ordinary income and $1,500 of capital gain income.

 

 

I divide the $60,000 in two parts: the part taxed less than 22% and the part taxed more than 22%.

 

== The first $20,000: taxed less than 22% ==

 

About one-third, $19,800, is taxed at less than 22% effective, marginal rate. That amount results in taxable income to the top of the 10% tax bracket, and ordinary and total tax of $1,240.

 

 

That’s a relatively small amount because distributions from Traditional almost give you a double dose of taxable income and tax: each added $1 increases SS that is taxed by $.85. The 10% tax bracket is effectively 18.5% when applied to distributions from your IRA.

 

Once you cross into the 12% marginal tax bracket, you effectively pay 22.2% tax. (12% times 1.85.) The tax on the next $1,000 distributed from traditional increases by $222 to $1,462.

 

 

== The rest: tax is ~25% ==

 

The added ~$40,000 of distributions in our example is taxed at 25%.

 

 

Two things increase the tax rate on the added ~$40,000 of distributions. Both happen at ~$35,000 of total distributions or equal to your SS benefit in this example.

 

1. ~$35,000 of distributions result in >$49,450 of taxable income. The tax rate on qualified dividends and capital gains jumps from 0% to 15%. That’s a $1,500 spike in tax at that point.

 

2. ~$35,000 of distributions result in total income (MAGI of $75,000) that begins to reduce the Enhanced senior deduction. The effect is 1.3 percentage point increase in the marginal tax rate.

 

== It could be ~two percentage points worse ==

 

If total distributions were $75,000 – a bit more than twice your SS benefit – MAGI would cross the tripwire that triggers an increase in Medicare Part B and D premiums. (IRMAA = Income Related Medicare Adjustment Amount). That’s will be about $1,300 based on this 2026 return. Total tax + Medicare premium surcharge = $16,215.

 

 

 

 

Conclusion: A small amount of distributions from Traditional IRA is taxed at less than 22%: roughly $20,000 for a single filer; it’s roughly double that $amount for married, joint filers. It’s a small amount because distributions from Traditional almost double your taxable income. Each $1 distributed increases Social Security that’s taxed by $.85. You quickly reach the point where the effective tax rate is 22.2%.

 

The balance of distributions is taxed at ~25%. Distributions trigger the increase in tax on dividends and long-term capital gains from 0% to 15%. Distributions trigger the loss of Enhanced deduction for seniors which effectively raises the marginal tax rate by 1.3 percentage points for a single filer and by 2.6 percentage points for married, joint filers both over age 65.

 

It could be worse: the balance of distributions is taxed at ~27% if distributions result in crossing income (MAGI) that triggers a surcharge for Medicare Part B and D premiums: IRMAA.