Educational only. We explain concepts and help you calculate the required distribution. For tax impact in your situation, consult your CPA.
The short answer: your RMD is taxed as ordinary income, at whatever federal tax bracket your total income falls into for the year. There's no special RMD tax rate. The distribution is added to your other income — Social Security, pensions, interest, part-time work — and taxed accordingly.
The longer answer involves a few moving parts that are worth understanding before you sit down with your tax professional.
On this page
- RMDs Are Ordinary Income
- How Tax Brackets Work with RMDs
- Withholding: What Comes Out When You Take the Distribution
- Downstream Effects
- Worked Example: Margaret's Tax Picture
- What to Bring to Your CPA
- Common Misunderstandings
RMDs Are Ordinary Income
When you contribute to a Traditional IRA or 401(k), that money goes in pre-tax — you get a deduction in the year you contribute. The trade-off is that when the money comes out, the IRS treats it as ordinary income. Your RMD is that money coming out.
This means your RMD is taxed at the same rates as wages, salary, and pension income. It is not taxed at capital gains rates, and there is no flat "RMD tax rate." The amount you owe depends on your total taxable income for the year.
One exception: if you made after-tax (non-deductible) contributions to your Traditional IRA, a portion of each distribution may be tax-free. This is tracked on IRS Form 8606. If you've ever made non-deductible contributions, mention this to your CPA — it can meaningfully reduce the taxable amount.
For background on how RMDs are calculated: How your RMD is calculated
How Tax Brackets Work with RMDs
The U.S. federal income tax system is progressive — meaning different portions of your income are taxed at different rates. Your RMD doesn't get taxed at a single rate. It fills up the remaining space in your current bracket first, and any amount that pushes you into the next bracket is taxed at that higher rate.
Here are the 2025 federal brackets for reference (2026 brackets will be published by the IRS later this year):
| Taxable Income (Single) | Taxable Income (Married Filing Jointly) | Federal Rate |
|---|---|---|
| Up to $11,925 | Up to $23,850 | 10% |
| $11,926 – $48,475 | $23,851 – $96,950 | 12% |
| $48,476 – $103,350 | $96,951 – $206,700 | 22% |
| $103,351 – $197,300 | $206,701 – $394,600 | 24% |
| $197,301 – $250,525 | $394,601 – $501,050 | 32% |
| $250,526 – $626,350 | $501,051 – $751,600 | 35% |
| Over $626,350 | Over $751,600 | 37% |
Source: IRS Revenue Procedure 2024-40 · PDF. State taxes, if applicable, are separate.
Note: These are 2025 brackets. 2026 brackets (for distributions taken in 2026, filed in 2027) will adjust slightly for inflation. Check IRS.gov for the latest Revenue Procedure when available.
Remember: these rates are marginal. Only the income within each range is taxed at that rate.
The key point: your RMD is added on top of all your other income. If you're already near the top of a bracket, even a modest RMD can push part of your income into the next one. This is especially relevant in first-year double-up scenarios, when two RMDs land in the same calendar year.
We are not suggesting you adjust the timing or size of your RMD for tax purposes — that's a conversation for your CPA. But understanding why the bracket matters helps you ask better questions.
Related: First-year RMD rules
Withholding: What Comes Out When You Take the Distribution
When you request a distribution from your IRA, your custodian will ask how much federal income tax to withhold. This is similar to payroll withholding from a job — it's a prepayment toward your annual tax bill, not the final amount owed.
A few things to know:
Default withholding is 10% for IRAs. If you don't specify a withholding amount, most custodians will withhold 10% of the distribution for federal taxes. For employer plans (401(k), 403(b)), the default is typically 20% for eligible rollover distributions.
You can choose a different amount. You can request anywhere from 0% to 99% withholding, depending on the custodian. Some people increase withholding to avoid a large tax bill in April. Others prefer to withhold less and manage estimated tax payments on their own.
Withholding is not the same as the tax owed. If 10% is withheld but your effective rate is higher, you'll owe the difference when you file. If you over-withhold, you'll get a refund.
State withholding varies. Some states require mandatory withholding on retirement distributions. Others allow you to opt out. Your custodian's distribution form will show the options available for your state.
Your custodian may provide Form W-4R to let you specify your withholding preference for nonperiodic payments like RMDs. If you don't receive one, ask — it's how you change the default.
The withholding decision is a tax planning question — talk to your CPA about what makes sense for your situation. What matters for this page is that you know the choice exists and that the default may not match what you actually owe.
Downstream Effects
Your RMD doesn't just affect your income tax bracket. Because it increases your adjusted gross income (AGI), it can ripple into other areas:
Medicare premiums (IRMAA). If your modified adjusted gross income exceeds certain thresholds, you'll pay higher Medicare Part B and Part D premiums — known as Income-Related Monthly Adjustment Amounts. These are based on income from two years prior. A large RMD in 2026 could affect your 2028 Medicare premiums.
Social Security taxation. Up to 85% of your Social Security benefits can be subject to federal income tax, depending on your combined income. A larger RMD pushes combined income higher, potentially increasing the taxable portion of your Social Security.
Net Investment Income Tax (NIIT). If your modified AGI exceeds $200,000 (single) or $250,000 (married filing jointly), you may be subject to a 3.8% surtax on net investment income. Your RMD itself isn't investment income for NIIT purposes, but it raises your AGI, which can trigger the tax on other income.
State income taxes. Most states tax RMDs as ordinary income. A handful exempt some or all retirement income. Your CPA can confirm your state's treatment.
None of these downstream effects change what you're required to withdraw. Your RMD is your RMD. But they're worth understanding so you can plan ahead — and so nothing on your tax return comes as a surprise.
The ripple effect: Your RMD stacks on top of other income — which can push you into a higher bracket, increase Medicare premiums, and raise the taxable portion of Social Security. Ask your CPA about the full picture before choosing a withholding amount.
Worked Example: Margaret's Tax Picture
Margaret is 76 and single. Here's a simplified view of how her RMD interacts with her other income:
| Income Source | Amount |
|---|---|
| Social Security | $28,000 |
| Small pension | $12,000 |
| Interest/dividends | $4,000 |
| RMD from Traditional IRA | $14,768 |
| Approximate total income | $58,768 |
How Margaret's RMD stacks on top of her other income, pushing her from the 12% bracket into the 22% bracket
Based on the 2025 single-filer brackets, most of Margaret's income falls in the 12% bracket, with a portion reaching into the 22% bracket. Her RMD is the piece that pushes her into that higher range.
This is a simplified illustration — Margaret's actual tax picture involves deductions, credits, and possibly state taxes that only her CPA can compute. The point is that the RMD isn't taxed in isolation. It stacks on top of everything else.
Want to know your RMD amount? Run the SimpleRMD calculator — free, no account required. Then bring the number to your CPA. With a SimpleRMD account, you can export a CPA-ready PDF with your inputs, balances, and results — everything your tax professional needs in one document.
What to Bring to Your CPA
SimpleRMD calculates the distribution amount. Your CPA handles the tax impact. To make that conversation productive, bring:
- Your RMD amount for each account (the SimpleRMD calculator can generate this, or export a PDF report if you have an account)
- Your December 31 account balances
- Your Social Security benefit statement (SSA-1099)
- Any pension or annuity income (1099-R)
- Investment income (1099-INT, 1099-DIV)
- Last year's tax return (for comparison)
The goal is to give your CPA a complete income picture so they can advise on withholding and flag any downstream effects before you take the distribution — not after.
Related: Does my accountant calculate my RMD?
Common Misunderstandings
"My RMD is taxed at 22% (or whatever bracket I'm in)." Not exactly. Only the portion that falls within a given bracket is taxed at that rate. If your RMD crosses a bracket boundary, part is taxed at the lower rate and part at the higher one. The U.S. system is progressive, not flat.
"My custodian withheld 10%, so I owe 10%." Withholding is a prepayment, not the final tax. We've seen people assume the withheld amount is the tax — and then get surprised by a balance due in April. If your effective rate is higher than 10%, you'll owe the difference.
"I can reduce my taxes by taking a smaller distribution." You must take at least the minimum. Taking less than your RMD triggers a 25% excise tax on the shortfall — far worse than the income tax. See: What happens if you don't take an RMD
"RMDs are taxed at capital gains rates." No. Distributions from Traditional IRAs and 401(k)s are always taxed as ordinary income, regardless of how the money was invested inside the account.
"Roth IRA distributions are always tax-free." For the original owner, yes — Roth IRAs don't require RMDs during your lifetime. But if you inherited a Roth IRA, the 10-year rule still applies, and non-qualified distributions could be partially taxable. See: Tax on inherited IRA RMDs
"My RMD only affects my income tax bracket." It affects more than that. We've seen people blindsided by higher Medicare premiums two years after a large RMD — because IRMAA surcharges are based on income from two years prior. A large distribution can also increase the taxable portion of your Social Security. The downstream effects section above covers the full list.
What to do next
- Calculate your RMD — free, no account required
- How your RMD is calculated
- Tax on inherited IRA RMDs
- Back to RMD tax basics
This article is for informational purposes only and does not constitute tax, legal, or financial advice. IRS rules and tax laws are subject to change. Consult a qualified tax professional or financial advisor for guidance specific to your situation. SimpleRMD is a calculation and tracking tool — not a financial advisory service.
Sources: IRS.gov (Publication 590-B · PDF, Revenue Procedure 2024-40 · PDF). Rules confirmed current as of February 2026.