The tax on your required minimum distribution depends on your total taxable income for the year, because RMDs from traditional IRAs and 401(k)s are taxed as ordinary income. There’s no special tax rate for RMDs. The money gets added to your other income (Social Security, pensions, part-time work, investment income) and taxed at whatever federal bracket that combined total falls into. Here’s how to work through the calculation step by step.
Determine Your RMD Amount
Before you can figure the tax, you need the RMD itself. Your plan custodian or IRA provider will usually calculate this for you, but the math is straightforward: take your account balance as of December 31 of the prior year and divide it by the IRS life expectancy factor for your age. The IRS publishes these factors in the Uniform Lifetime Table (or the Joint and Last Survivor Table if your sole beneficiary is a spouse more than 10 years younger).
For example, if your traditional IRA held $500,000 on December 31 and the life expectancy factor for your age is 24.6, your RMD would be $20,325. If you have multiple traditional IRAs, you calculate the RMD for each one separately, but you can withdraw the combined total from any one or combination of those IRAs. Employer plans like 401(k)s work differently: the RMD for each 401(k) must be taken from that specific account.
Figure Out How Much of the RMD Is Taxable
For most people, the entire RMD is taxable. If all your contributions were made with pre-tax dollars, which is the case for the vast majority of traditional IRA and 401(k) owners, every dollar you withdraw counts as taxable income.
The exception is if you made after-tax (non-deductible) contributions to a traditional IRA. In that case, a portion of each withdrawal is considered a tax-free return of your basis (the money you already paid tax on). You track this using IRS Form 8606. The nontaxable share is calculated by dividing your total after-tax contributions by the total balance across all your traditional IRAs. If you contributed $20,000 in after-tax money and your combined IRA balances total $200,000, then 10% of any withdrawal is tax-free and 90% is taxable.
Distributions from designated Roth accounts in a 401(k) or 403(b) are tax-free if they qualify as qualified distributions, meaning the account has been open at least five years and you’re 59½ or older. Roth IRAs don’t require RMDs during the owner’s lifetime at all.
Stack the RMD on Top of Your Other Income
RMD income is taxed at your marginal rate, which means it fills up your tax brackets from the bottom. To estimate the tax, add up all your other taxable income first, then layer the RMD on top. The portion of the RMD that pushes you into a higher bracket gets taxed at that higher rate.
For 2026, the federal income tax brackets for a married couple filing jointly are:
- 10% on the first $24,800 of taxable income
- 12% from $24,801 to $100,800
- 22% from $100,801 to $211,400
- 24% from $211,401 to $403,550
- 32% from $403,551 to $512,450
- 35% from $512,451 to $768,700
- 37% above $768,700
Suppose you and your spouse have $70,000 in other taxable income (after deductions) and your RMD is $20,325. Your total taxable income is $90,325. All of that falls within the 12% bracket for joint filers, so the federal tax on the RMD itself would be roughly $20,325 × 12% = $2,439.
Now change the scenario: if your other taxable income is $95,000, the first $5,800 of that $20,325 RMD stays in the 12% bracket, and the remaining $14,525 spills into the 22% bracket. Your federal tax on the RMD would be about ($5,800 × 12%) + ($14,525 × 22%) = $696 + $3,196 = $3,892. That split across brackets is why larger RMDs can bump your effective tax rate higher than you might expect.
Don’t Forget the Standard Deduction
The bracket math above uses taxable income, which is your gross income minus the standard deduction (or itemized deductions if you itemize). For 2026, the standard deduction reverts to lower levels compared to recent years. Make sure you subtract your deduction before applying the brackets. If your only income is Social Security plus an RMD, the standard deduction may shelter a meaningful chunk of the RMD from tax entirely.
Account for State Income Tax
About a dozen states have no income tax or fully exempt retirement distributions from state tax. If you live in one of those states, your RMD faces only the federal bill. In the remaining states, your RMD is generally added to state taxable income and taxed at your state’s rate. Some states offer partial exclusions for retirement income, so the taxable amount at the state level may differ from the federal amount. Check your state’s current retirement income rules, since exclusion amounts and eligibility ages vary widely.
Reduce the Tax with a Qualified Charitable Distribution
If you’re 70½ or older and plan to donate to charity, a qualified charitable distribution (QCD) lets you send up to $105,000 per year directly from your traditional IRA to a qualifying charity. The transfer counts toward your RMD for the year but is excluded from your taxable income entirely. Your IRA trustee must send the funds directly to the charity; if the money hits your bank account first, it doesn’t qualify.
This is one of the most effective ways to lower the tax on an RMD. A $10,000 QCD on a $20,325 RMD means only $10,325 shows up as taxable income. You don’t get a separate charitable deduction for the QCD amount, but you don’t need one since the income never hits your return in the first place. QCDs are not available from SEP or SIMPLE IRAs.
Handle Withholding and Estimated Payments
When you take an RMD from an IRA, your custodian will default to withholding 10% for federal taxes unless you choose a different amount. You can request higher withholding or opt out of withholding altogether by filing Form W-4R with the custodian. For employer plans like a 401(k), the default withholding rate is 20% on eligible rollover distributions, though RMDs themselves are not eligible for rollover and may have a different default.
If the default withholding won’t cover your actual tax bill, you have two options. You can increase the withholding percentage when you request the distribution, or you can make quarterly estimated tax payments using Form 1040-ES. Many retirees prefer to take their RMD in December with elevated withholding, because the IRS treats tax withheld from an IRA distribution as paid evenly throughout the year, even if it all comes out in the fourth quarter. That trick can help you avoid underpayment penalties without making quarterly payments.
Penalties for Missing an RMD
If you don’t take your full RMD by the deadline (December 31 for most years), the penalty is 25% of the shortfall. If you correct the mistake within two years, the penalty drops to 10%. On a $20,325 RMD you completely forgot, that’s a $5,081 penalty at the 25% rate or $2,033 if corrected in time. The penalty is on top of the regular income tax you’ll owe when you eventually withdraw the money. You report the shortfall and penalty on Form 5329.
A Quick Worksheet
To estimate your federal tax on an RMD, walk through these steps:
- Step 1: Find your RMD amount (prior-year balance ÷ life expectancy factor).
- Step 2: Subtract any nontaxable portion (after-tax basis or QCD amount).
- Step 3: Add the taxable RMD to your other gross income for the year.
- Step 4: Subtract your standard or itemized deduction to get taxable income.
- Step 5: Apply the marginal tax brackets to find the total federal tax.
- Step 6: Compare that total to what your tax would be without the RMD. The difference is the tax attributable to the RMD.
Step 6 is important because the RMD doesn’t have one flat tax rate. The tax it creates is the incremental tax from stacking that income on top of everything else. Running the calculation both ways, with and without the RMD, gives you the true cost.