Surviving Spouse Tax Planning: Avoid Post-Death Tax Bracket Jumps
Episode 6
Surviving Spouse Tax Planning: Avoid Post-Death Tax Bracket Jumps
Published on September 17th, 2025
In Episode 7 of Retirement Tax Matters we tackle a critical, yet often emotionally challenging, aspect of HNW retirement planning: the significant tax bracket shock a surviving spouse can face. We reveal how a married couple's ~$250,000 taxable income, typically in the 24% bracket, can jump to a 35% bracket for a surviving spouse due to the shift from married filing jointly to individual rates, compounded by growing RMDs and even higher Medicare premiums. Learn why proactive Roth conversions in your 60s or 70s can strategically lower lifetime tax burdens, protect a surviving spouse from this abrupt financial shift, and create a more tax-efficient legacy for beneficiaries. This conversation equips high-net-worth retirees with foresight to prevent a financial shock during an already difficult life transition.
Key Tax Planning Questions
Click Below To See The Answer
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The death of a spouse triggers a significant financial transition, and the impact on your taxes can be complex. The first step is to conduct an evaluation of all your current income sources to understand what will continue for the survivor.
For Social Security, a surviving spouse will generally receive the higher of the two benefits, while the lower benefit check will disappear. Other guaranteed income sources, like pensions or annuities, often have survivorship options you previously elected. Rental income, for example, would typically continue without reduction. It's crucial to itemize these sources and model the scenario for each spouse, as the financial picture can change dramatically depending on who passes away first.
The most significant change, however, is the shift in tax filing status from "Married Filing Jointly" to "Single." Even if the surviving spouse's total income drops, the less forgiving tax brackets for a single filer can mean they are pushed into a higher marginal tax bracket. This issue is often compounded over time as Required Minimum Distributions (RMDs) grow, which is why proactive planning, such as a Roth conversion strategy earlier in retirement, can be so critical.
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2025 Federal Income Tax Brackets
Source: IRS.gov10% Bracket
Single: $0 to $11,925
Married: $0 to $23,85012% Bracket
Single: $11,925 to $48,475
Married: $23,850 to $96,95022% Bracket
Single: $48,475 to $103,350
Married: $96,950 to $206,70024% Bracket
Single: $103,350 to $197,300
Married: $206,700 to $394,60032% Bracket
Single: $197,300 to $250,525
Married: $394,600 to $501,05035% Bracket
Single: $250,525 to $626,350
Married: $501,050 to $751,60037% Bracket
Single: $626,350+
Married: $751,600+ -
This is where the rubber hits the road! While every situation is unique, I would recommend this couple consider this:
Itemizing your projected income sources for retirement is a great first step. For a couple with significant pre-tax IRA funds, one or both spouses likely have a substantial Social Security benefit. Remember, only the higher of the two spouse's monthly benefits typically continues for the survivor. Also, this person needs a good understanding of how other guaranteed income, like pensions or annuities, will adjust based on their elected survivorship options, and note if other income (ex. rental property income) continues unchanged. It's important to also model the scenario where the other spouse passes unexpectedly; the income and tax implications can differ significantly. When income remains relatively stable after one spouse passes, but filing status changes, it sets the stage for the surviving spouse tax shock we discuss in Episode 7: Surviving Spouse Tax Planning: Avoid Post-Death Tax Bracket Jumps.
Second, conduct a financial projection. This should estimate your spending and anticipated investment growth through your 80s, critically projecting your Required Minimum Distributions (RMDs). For example, someone turning 73 in 2026 with a $4M IRA might have an RMD of approximately $158,000. By age 81, that RMD could grow to around $228,000 annually. We assess scenarios where both spouses live long, and where one spouse dies unexpectedly, leaving a single individual with a long retirement horizon.
This foresight informs whether strategic Roth conversions right now make sense. Even if the purely mathematical projection for a Roth conversion appears marginal, the non-financial benefits can be substantial. The peace-of-mind from having paid taxes and locked in rates, plus the fact that funds for beneficiaries would pass as an inherited Roth IRA (offering an additional 10 years of tax-free growth), often outweighs minor mathematical differences. Peace-of-mind is a valuable asset itself!
Life is unpredictable, making a year-by-year tactical approach essential. Annual tax projections can guide whether and how much to convert, ensuring your estate and legacy planning supports proactive tax management.
Full Episode Transcript
Adam: Good morning and welcome to Retirement Tax Matters. I'm Adam Reed, and with me is Garrett Crawford, our resident CFP. You're joining us for our show, where we like to tackle different advanced tax-planning tips and tricks. It's an educational platform to help high-net-worth retirees learn more about what's on the horizon if you're heading into that season of life, or maybe you're in the thick of it right now. So, check us out on Spotify, Apple Music, and YouTube. Be sure to like, subscribe, and follow.
Garrett: We have a lot of good resources out there.
Adam: And check out our website. We have a free resource: "Six Point High-Net-Worth Retiree Checklist." It's a great place to start.
Garrett: It's not going to be the be-all, end-all resource for you, but it does two things. It gives you an initial checklist if you've never thought about what retirement would look like, and second, it keeps you in our communication channel. We send these things out every week, and I think people would enjoy that.
Adam: Absolutely. Let's dive into the topic for this week. We've covered a lot of things with taxes and Roth conversions. Now, one that maybe has an emotional piece to it as well is talking through the surviving spouse tax brackets. Many of the people we work with are married and filing jointly on your taxes, and are planning that way. But sooner or later, one of you will be gone, and the other will be left to deal with the finances and the burden of shifting tax brackets. What does it look like when things change?
Garrett: As a financial planner, I remember the first year I came to work and saw my first death certificate. I thought, "Ooh, that feels uncomfortable." There is a general uncomfortability about planning for the end of our life. As we talk about the passing of a spouse in financial planning, I first and foremost don't want to come across as callous, but I do think it's really important. The earlier you do this in retirement, the more mental acuity you'll have to handle it. It's not as easy to have this conversation at the end of your life when you're going through hard things. So, like a lot of things, planning ahead can be really important. Understanding what happens to a surviving spouse is very important because there's a difference between a married filing jointly tax bracket and the individual tax bracket you would be in if you're no longer married. Do Roth conversions make sense if we're planning for what happens if one of us dies early? It's not unlike people who buy term life insurance. Do I think I'm going to die in my thirties? The chances are low, but I still have that protection built in because I want my family to be taken care of. I think that's the direction we're going today.
Adam: So, what are the real dollar amounts, or what are the tax brackets? How much are those really affected? I've been married six years now, and I haven't looked at the single tax rates.
Garrett: I'm married, I know my income, and I'm pretty familiar with the married filing jointly rates. I've got my sheet here of tax brackets for 2025. This podcast is made for high-net-worth retirees, somewhere between the $2 million to $8 million range. Let's say their income is between $250,000 and $350,000. While you're married, a $250,000 taxable income would put you in the 24% tax bracket. Now, if you are an individual person and you're making $250,000—in fact, the cutoff here is $250,525—if you're over that as a non-married individual, your tax bracket is not 24%. It's 35%.
Adam: What a big jump.
Garrett: Big jump. It's not uncommon in the HNW retiree landscape for each spouse to have a Social Security check, maybe a pension, and RMDs from a traditional IRA, and they eclipse that $250,000 number. A lot of people might think, "When my spouse passes, they're going to have less income, and so they probably would drop down to being an equivalent 24%." It would have to drop down between $103,000 and $197,000 in 2025. There is a chance maybe Social Security falls off, but I see it more often that that doesn't happen.
Adam: It also hamstrings you. It leaves a lot less room to do some of these tax projections and Roth conversions. Because now it's, "Oh, wow, I've only got about $20,000 left in this tax bracket, whereas five years ago, when my spouse was living, maybe we had a lot more room to work with."
Garrett: When you go down to a single rate, your Medicare premiums can cost more. I was looking here at 2025, if you're single and your income is like $250,000, you'd be in the next-to-highest level of Medicare Part B and D income charges. It says $591 a month. Not only do you get hit on taxes, but also Medicare can jump in there. What retirees can lose sight of is this idea that RMDs are growing. If you're sitting there married and your income is somewhere around $250,000, and you think that could be about the same or it could even grow with RMDs, you have a tax quandary that you need to have some pre-planning on. What would it look like to go ahead and accelerate income from a future RMD year into the 24% rate so that if a spouse were to pass, maybe it doesn't put them up into the 35% tax bracket?
Adam: How can we help people in their sixties have things buttoned up so that when they're in their seventies and eighties, maybe caring for a spouse on hospice, they're not scrambling to do last-minute things?
Garrett: I think conversations like this, just to get it on your radar earlier in life, are really important. When I came into this industry, I remember sometimes simplifying the Roth conversion analysis. The common rule of thumb is, "If my taxes are higher today than they will be in the future, I need to contribute to a pre-tax IRA." In general, I agree with that. Why pay tax at 32% if your tax bracket really is going to be 24% later? I'm not anti-traditional IRA. In fact, I have clients where I recommend they not do Roth conversions. Then there's the other side, where if you think your taxes are going up, it probably does make sense to do a Roth conversion. I think we sometimes get lost in the discussion of what the calculator says. These ideas of protecting a spouse and what happens if I die earlier than expected are what I would call a non-financial benefit of considering a Roth conversion earlier in your retirement. The difference between doing a Roth conversion or not, from a pure math sense, is kind of close. But what if you died early, and your spouse doesn't move up to the 32% or 35%? They have more money to live on for maybe 20 years or more. That's a benefit. It's almost like insurance built into a Roth conversion. The other one is paying tax on your money now and being free from having to worry about what Congress will do with future tax rates. The conversation should be a bigger conversation. Then the final bonus is if there's money left over for kids, then they don't have to pay taxes for 10 years. The only other little tag I would throw in here is that we are currently working through a situation with a new client where a spouse is on hospice. A Roth conversion this year is probably going to make sense. We want to do as much as we can because this will be the last year that they'll be married filing jointly. So to your initial question, the sooner you handle it in your sixties and seventies, the more time the Roth has to grow, but the less you'll have to worry about it later.
Adam: It's a heavy topic. It feels heavier to talk about, but I do think getting ahead of it is important. That way, when you get there, it's not, "Oh my gosh, what do we do?" It's, "Hey, we know what we're doing. I can be there for my spouse and with the family."
Garrett: We're talking about this. The title being "A Tax Shock for Surviving Spouse," and that's really it. We want to remove fewer things from a surviving spouse. We don't want there to be a financial shock on top of everything else. The devil is in the details. You can't listen to this and know exactly what to do. Everybody's going to be unique. I'm an advocate for this type of conversation to be bigger in the financial planning space. It's another reason that we're doing this educational resource hub for high-net-worth retirees. You need to be having these thoughts and planning discussions.
Adam: That's our goal: to poke and prod and engage in conversations and thoughts about, "What do I do? How do I do this?" And that's what we're here for. So, I appreciate you guys joining us today for Retirement Tax Matters. Check out the website, RetirementTaxMatters.com, and follow along on Spotify, Apple Music, and YouTube. I always put the link in the description to our free resources, our six-point checklist for things you need to get buttoned up before retirement. We're here as an educational resource for people. So, appreciate y'all joining us. I'm Adam Reed, and this is Garrett Crawford. We'll see you all later.