As football season kicks off, many families are focused on game-day schedules, back-to-school routines, and year-end financial housekeeping. But for retirees and those nearing retirement, this season ...
Football Season Is Tax Planning Season: Retirement Income Strategies to Consider for 2026
Football Season Is Tax Planning Season: Retirement Income Strategies to Consider for 2026
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As football season kicks off, many families are focused on game-day schedules, back-to-school routines, and year-end financial housekeeping. But for retirees and those nearing retirement, this season presents another important opportunity: reviewing how retirement income will be taxed in the year ahead.
The truth is that retirement does not automatically mean lower taxes. While your paycheck may eventually stop, taxable income often continues through IRA distributions, retirement account withdrawals, Social Security benefits, interest income, and investment earnings. Without proactive planning, taxes can quietly reduce the income you’ve worked decades to build.
As 2027 approaches, now may be an ideal time to evaluate whether your retirement income strategy is working efficiently or creating unnecessary tax exposure.
Advisor Notes
Retirement income planning is tax planning. Once your paycheck stops, you gain more control over when and where your income lands on your tax return — but that control only works in your favor if you have a game plan in place. The years just before and just after retirement begins are often your best window to make those calls.
Retirement Income and Taxes: The Planning Opportunity Many Retirees Overlook
One of the key themes in the new tax environment is flexibility. Once employment income is no longer your primary source of cash flow, you may have greater control over when and how retirement income appears on your tax return. Income from retirement accounts, Social Security, and other sources can often be coordinated strategically rather than simply taken as needed.
That level of control creates planning opportunities.
The recently enacted One Big Beautiful Bill (OBBB), signed into law in July 2025 with most provisions taking effect January 1, 2026, permanently extends several key provisions from the Tax Cuts and Jobs Act while introducing additional tax changes. At the same time, some of the new individual tax provisions are temporary, creating uncertainty about what future tax rates may look like beyond the next few years.
For retirees, that uncertainty makes proactive tax planning even more valuable.
Review Where Interest Income Is Being Generated
Many investors overlook how interest income is taxed.
Taxable interest reported on Form 1040 is generally taxed as ordinary income. If the purpose of an account is long-term growth rather than current income needs, it may be worth evaluating whether the current investment structure is the most tax-efficient approach. In some cases, alternative financial instruments could potentially defer taxation and ultimately receive more favorable capital gains treatment when taxes become due.
The goal is not simply generating income. It’s generating income efficiently.
Location Matters: Are Your Dividend Investments in the Right Accounts?
Many retirees use dividend-producing investments as a source of income. However, where those investments are held can significantly affect their tax treatment.
Qualified dividends received in taxable accounts may be taxed at favorable rates ranging from 0% to 20%. However, when those same dividend-producing investments are held inside traditional IRAs, 401(k)s, or other tax-deferred retirement accounts, eventual withdrawals are generally taxed as ordinary income.
This concept, often referred to as asset location, can play an important role in improving overall tax efficiency during retirement.
Is Your IRA a Retirement Asset or a Future Tax Bill?
It’s easy to view retirement account balances as entirely your own. Yet traditional IRAs and 401(k)s represent future taxable income.
Because taxes will eventually be due when withdrawals occur, it can be helpful to think of tax-deferred retirement accounts as partially belonging to the IRS. The earlier retirement tax strategies are evaluated, the more options may be available to potentially reduce future tax liability.
This is one reason many retirees begin discussing Roth conversion strategies before required distributions force additional taxable income into future years.
Advisor Notes
No income source should be coached in isolation. Social Security, IRA withdrawals, capital gains, interest, and pensions all interact — and one move can quietly push another form of income into a higher bracket. Reviewing your full income picture together, rather than one play at a time, is where real tax efficiency is found.
Managing the Social Security Tax Challenge
Many retirees are surprised to learn that Social Security benefits can still be taxable.
While recent tax legislation includes provisions designed to reduce overall tax burdens for many older Americans, retirees should remember that Social Security benefits may still be subject to federal income tax depending on their income level. Under current rules, up to 85% of Social Security benefits may be taxable for some individuals and couples.
For some households, managing where retirement income comes from can make a significant difference. Income generated from traditional retirement accounts, pensions, interest, and other taxable sources can increase the calculation used to determine whether Social Security benefits are taxed. Qualified withdrawals from Roth IRAs, however, are generally tax-free and may provide additional flexibility when building a tax-efficient retirement income strategy.
As part of a comprehensive retirement income plan, retirees may benefit from evaluating how withdrawals from different account types could affect the taxation of their Social Security benefits over time.
Consider Capital Gains Planning in Lower-Income Years
One often-overlooked strategy involves taking advantage of years when taxable income is lower.
Depending on your situation, certain taxpayers may be able to realize long-term capital gains and potentially pay a 0% capital gains tax rate if income falls below specific 2026 thresholds. Strategic gain harvesting during lower-income years may help reduce future tax exposure while increasing after-tax wealth.
Retirement frequently creates opportunities for this type of planning, especially during years between leaving the workforce and beginning larger retirement account withdrawals.
Drain or Fill Your Tax Bracket?
Two common strategies involve managing taxable income within specific tax brackets.
Bracket Draining focuses on reducing income that falls into higher tax brackets through strategies such as increased retirement contributions, charitable giving, or realizing capital losses. For taxpayers already in higher brackets, strategically reducing income may generate immediate tax savings.
Bracket Filling takes the opposite approach. If income falls well below the upper limit of a tax bracket, retirees may intentionally generate additional taxable income through withdrawals or partial Roth conversions to take advantage of today’s rates before potential future increases.
The right approach depends on the individual’s tax situation, future income expectations, and long-term retirement objectives.
Charitable Giving Can Support Tax Efficiency
For charitably inclined retirees, giving strategies may provide additional tax benefits.
Qualified Charitable Distributions (QCDs) allow eligible IRA owners to make direct charitable gifts from their IRA while potentially reducing taxable income. In addition, QCDs can help satisfy required minimum distributions while supporting causes that are important to the individual or family.
For retirees seeking greater flexibility in their philanthropic planning, donor-advised funds may also play a role in a broader charitable giving strategy. When coordinated appropriately with an overall retirement income plan, charitable giving strategies can help align personal values with tax-efficient wealth management objectives.
Advisor Notes
A big retirement balance doesn’t always equal the same amount of spendable income — taxes still have to be accounted for on the scoreboard. Planning around tomorrow’s tax environment, not just today’s, can help you keep more of what you’ve built for the people, goals, and experiences that matter most.
Don’t Wait for the Two-Minute Warning
Football season is often the last meaningful planning window before the calendar turns and tax opportunities begin to close. Just like a well-run two-minute drill, the moves you make before year-end can determine your final outcome.
Whether you’re already retired or preparing for retirement in the coming years, now is a good time to evaluate how much of your future retirement income may ultimately be lost to taxation and whether adjustments could improve your long-term outlook. As tax laws evolve and future administrations consider additional changes, planning around tomorrow’s tax environment rather than today’s may become increasingly important.
A tax-efficient retirement income strategy isn’t just about paying less in taxes. It’s about helping ensure more of your retirement income remains available for the people, experiences, and goals that matter most.
Start the Conversation
A comprehensive retirement income plan should address more than investments alone. It should evaluate when to take income, where to take it from, how Social Security fits into the picture, and whether tax-efficient strategies may enhance long-term outcomes.
The experienced advisors at SWBC Wealth Management can help you evaluate how taxes may affect your retirement income and identify planning opportunities that support your broader financial goals.
Kyle Hittle, Wealth Advisor
As Wealth Advisor, Kyle joined SWBC in 2020 after obtaining his master’s degree in Business Administration from the University of the Incarnate Word (UIW.) He brings valuable expertise to the financial industry with a strong background in institutional retirement planning and is committed to helping clients achieve their financial goals and secure their futures. Kyle combines personalized strategies with in-depth market knowledge to guide clients through every stage of their financial journey. Kyle enjoys giving back to the community and looks forward to participating in SWBC activities and community service projects. During his spare time, he enjoys spending time with family and friends. He holds FINRA Series 7, 63, 65, and 99 licenses. Check the background of this investment professional on FINRA's BrokerCheck.
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