How Are RMDs Taxed? Ordinary Income, Plus Three Knock-On Effects
Your RMD is added to your other income and taxed at your ordinary rates. The surprise is what else it moves. Three knock-on effects can make the true rate on an RMD higher than your bracket. (IRS Publication 915)
- More Social Security becomes taxable. Once income passes $32,000 for couples ($25,000 single), each extra dollar can add 50 or 85 cents of taxable benefits.
- The senior deduction shrinks. It loses 6% of income above $75,000 ($150,000 joint).
- IRMAA two years later. For 2026 premiums, IRMAA started above $109,000 of MAGI for single filers.
The calculator runs your 2026 return with and without the RMD, so all three show up in the answer.
Paying the tax: withhold it from the RMD
You can have any percentage withheld from an RMD, and the IRS treats withholding as if it were paid evenly through the year. That makes a December RMD with generous withholding a clean way to cover the year's tax and avoid underpayment penalties (IRS Publication 505).
Our take: your RMD bill was set years ago
By 73, the only big levers left are QCDs and timing. The real decisions come in your 60s: Roth conversions in low-income years shrink the balance that RMDs are figured on. Give through the QCD calculator, check the Medicare line on the IRMAA calculator, see the worksheet on the taxable Social Security calculator, and plan ahead with the Roth conversion calculator.