Roth Conversions in 2026: 7 Hidden Costs to Check Before December 31

If you're thinking about a Roth conversion for 2026, the clock is running.

A conversion counts as income in the year the money leaves your traditional IRA.¹ So if you want it on your 2026 return, it has to happen by December 31. There's no extension to April like there is for IRA contributions.

Most people size a conversion by looking at one thing: their tax bracket. Convert enough to "fill up" the 12% or 22% bracket and stop.

That's a good start. But in 2026, your bracket is only part of the story. A conversion raises your income, and a lot of other things in the tax code key off that income. Some of them are cliffs. Some of them quietly raise your real tax rate well above the bracket you think you're in.

Here are seven to check before you convert.

(If you want the basics first, such as what a conversion is and when it makes sense, start with Unlocking Tax-Free Future Income: When & How to Do a Roth Conversion.)

A few ground rules

• There's no income limit. Anyone with a traditional IRA can convert, no matter how much they earn.²
• You can't undo it. Since 2018, a conversion can no longer be reversed (recharacterized) after the fact.² Once it's done, it's done.
• RMDs come first. If you're required to take a minimum distribution this year, that amount can't be converted. You have to take your RMD before you convert anything else from that IRA.¹ (More in Required Minimum Distributions (RMDs) in 2026.)
• After-tax money gets complicated. If any of your IRAs hold after-tax contributions, the pro rata rule decides how much of a conversion is taxable.

The 2026 tax brackets

Here's where the brackets sit for 2026.³ These apply to taxable income, which is your income after deductions.

The 2026 standard deduction is $32,200 for married couples filing jointly and $16,100 for single filers.³

For a refresher on how brackets actually work, see How U.S. Income Taxes Actually Work.

Now for the part most conversion calculators skip.

1. Medicare IRMAA, two years later

IRMAA is the surcharge higher-income Medicare enrollees pay on top of their Part B and Part D premiums.

Social Security generally uses your tax return from two years earlier to set it. Premiums for 2026, for example, are generally based on 2024 income.⁵ That means a conversion you do in 2026 can raise your Medicare premiums in 2028.

Here's the 2026 table, so you can see how it works:⁴

IRMAA is a cliff, not a slope. Going $1 over a threshold puts you in the next tier for the whole year.

At the first tier, that's an extra $81.20 a month for Part B plus $14.50 for Part D, or $1,148.40 a year per person. For a married couple both on Medicare, it's $2,296.80.⁴

Two things people miss:

IRMAA starts mattering at 63. Because of the two-year look-back, a 63-year-old's 2026 income can affect the premiums they pay at 65.⁵

Filling the 22% bracket can cross the line. On the 2026 numbers, a married couple taking the standard deduction reaches the top of the 22% bracket at about $243,600 of income ($211,400 plus $32,200).³ That's $25,600 above today's first IRMAA threshold of $218,000.⁴ The 2028 thresholds aren't published yet, so you'll want to leave some cushion.

Also worth knowing: Social Security lets you request a lower IRMAA if your income drops because of certain life-changing events, such as retirement or the death of a spouse. A one-time Roth conversion isn't on that list.⁵

We go deeper in IRMAA in 2026: Why High Earners Pay More for Medicare.

2. The new $6,000 senior deduction

The One Big Beautiful Bill Act created a new deduction of up to $6,000 per person age 65 or older, for tax years 2025 through 2028. A married couple who both qualify can deduct up to $12,000, and you can claim it whether or not you itemize.⁶ ⁷

The catch is the phase-out. Each person's $6,000 shrinks by 6% of your modified adjusted gross income above $75,000 for single filers or $150,000 for joint filers.⁶ Married couples have to file jointly to claim it at all.⁶

Do the math and the deduction is gone completely at $175,000 of income for a single filer. For a married couple, it's gone at $250,000.

Inside that range, every extra dollar of conversion income takes away 6 cents of deduction per person. For a couple who both qualify, that's 12 cents per dollar.

As a hypothetical example, a married couple in the 22% bracket who are inside the phase-out range would pay about 24.64% on each extra dollar they convert, not 22%. In the 24% bracket, it's about 26.88%.

More in The $6,000 Senior Bonus Deduction in 2026.

3. More of your Social Security becomes taxable

If you're collecting Social Security, a conversion can make more of your benefit taxable.

The tax code adds half of your benefits to your other income. If that total is over $32,000 for a married couple ($25,000 for single filers), part of your benefit becomes taxable. Above $44,000 for couples ($34,000 for single filers), up to 85% of your benefit can be taxed.⁸

In the 85% range, each extra dollar of income can make another 85 cents of benefits taxable, until you hit the 85% cap.⁸ So $1 of conversion income can add $1.85 of taxable income.

As a hypothetical example, someone in that range and in the 22% bracket would pay about 40.7% on that extra dollar. In the 12% bracket, it's about 22.2%.

This is one of the strongest arguments for doing conversions before you claim Social Security, when that overlap doesn't exist yet.

4. Your capital gains can stop being tax-free

For 2026, long-term capital gains and qualified dividends are taxed at 0% as long as your taxable income stays under $98,900 for married couples or $49,450 for single filers.³

Conversion income counts toward that line, and it's stacked underneath your gains. So a conversion can push gains that would have been taxed at 0% up to 15%.

If you were planning to sell appreciated investments this year, run both decisions together.

5. The 3.8% Net Investment Income Tax

The Net Investment Income Tax adds 3.8% on investment income once your modified adjusted gross income is over $250,000 for married couples or $200,000 for single filers. Those thresholds aren't indexed for inflation.⁹

A Roth conversion itself isn't investment income. IRA distributions are specifically excluded.⁹ But the conversion still raises your modified adjusted gross income. That can pull your dividends, interest, and capital gains into the 3.8% tax when they otherwise wouldn't have been.⁹

6. The SALT deduction "torpedo" for high earners

The state and local tax (SALT) deduction cap is $40,400 for 2026. It shrinks by 30% of your modified adjusted gross income above $505,000, but it can't go below $10,000.¹⁰ The threshold is half that for married couples filing separately.¹⁰

If you itemize and pay at least $40,400 in state and local taxes, each dollar of income between $505,000 and about $606,333 costs you 30 cents of deduction.

As a hypothetical example, someone in the 35% bracket inside that range would pay about 45.5% on each extra dollar converted.

For most high earners, that's a range to avoid with conversion income, not a range to convert into. The rules behind it came from the One Big Beautiful Bill Act, which we covered in What the One Big Beautiful Bill Act Means for Retirees and High Earners in 2026.

7. ACA health insurance subsidies for early retirees

This one is for anyone retired before 65 and buying health insurance through the marketplace.

The enhanced premium tax credits expired at the end of 2025.¹¹ As of late September 2026, an extension had passed the House but had not become law.¹³ For 2026, subsidies are once again limited to households with income up to 400% of the federal poverty level, and eligibility ends abruptly above that line.¹¹

HealthCare.gov tells applicants to count most IRA and 401(k) withdrawals as income.¹² A taxable conversion adds to your income the same way. For early retirees near that 400% line, a conversion could cost them their entire subsidy for the year.

If Congress changes the rules, this one could look different. Check the status before you convert.

Your 2026 threshold map

Here are the lines from this post in one place. Keep in mind that the brackets use taxable income, while the other lines use versions of adjusted gross income.

Sources: brackets and capital gains,³ senior deduction,⁶ IRMAA,⁴ NIIT,⁹ SALT.¹⁰

How to size a conversion with all of this in mind

Map your thresholds first. Before picking a number, figure out which of these lines you're close to. The right conversion amount is often "just under the next cliff," not "the top of the bracket."

Wait for real numbers, but not too long. Late in the year, you'll have a much better read on your income, capital gains, and fund distributions. Just don't wait until the last few days of December, when paperwork gets crowded.

Think in multiple years. A smaller conversion every year often beats one big one. The senior deduction runs through 2028, and IRMAA is assessed one year at a time, so spreading conversions out can keep you under more of these lines.

Pay the tax with outside money if you can. Using cash from a taxable account to pay the bill leaves more in the Roth to grow tax-free.

Bring your CPA in. Many of these effects only show up when the whole return is modeled. A conversion that looks good in a bracket chart can look very different on a full tax projection.

For other moves to make before the year ends, see our Year-End Planning Checklist for 2026.

Quick answers

What is the deadline for a 2026 Roth conversion? December 31, 2026. A conversion is taxed in the year the money leaves the traditional IRA, so it has to be completed by year-end to count for 2026.¹

Is there an income limit for Roth conversions? No. Income limits apply to contributing to a Roth IRA, not to converting.²

Can I undo a Roth conversion? No. Recharacterizing a Roth conversion hasn't been allowed since 2018.²

Does a Roth conversion affect Medicare premiums? It can. IRMAA is generally based on your tax return from two years earlier, so a 2026 conversion can raise 2028 premiums.⁴ ⁵

Does a Roth conversion affect the $6,000 senior deduction? Yes. The deduction shrinks by 6% of modified adjusted gross income above $75,000 for single filers or $150,000 for joint filers, and a conversion raises that income.⁶

Can I convert my required minimum distribution? No. Your RMD for the year has to come out first, and it can't be converted.¹

The bottom line

A Roth conversion can be one of the most valuable tax moves available to retirees and high earners. But the cost isn't just your bracket. It's your bracket plus everything else that moves when your income goes up.

The families who get the most out of conversions tend to treat them as a multi-year plan. They know exactly where their next cliff is, and they convert right up to it, year after year.

Sources

1. 26 CFR § 1.408A-4, Converting amounts to Roth IRAs (Q&A-1, Q&A-6, and Q&A-7), via Cornell Law School Legal Information Institute: https://www.law.cornell.edu/cfr/text/26/1.408A-4
2. 26 U.S.C. § 408A, Roth IRAs, including (c)(3) and (d)(6)(B)(iii), via Cornell Law School Legal Information Institute: https://www.law.cornell.edu/uscode/text/26/408A
3. Internal Revenue Service, IR-2025-103, "IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill" (October 9, 2025), and Revenue Procedure 2025-32: https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
4. Centers for Medicare & Medicaid Services, "2026 Medicare Parts A & B Premiums and Deductibles" fact sheet: https://www.cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-deductibles
5. Social Security Administration, "Premiums: Rules for Higher-Income Beneficiaries": https://www.ssa.gov/benefits/medicare/medicare-premiums.html
6. 26 U.S.C. § 151(d)(5)(C), Temporary deduction for seniors, via Cornell Law School Legal Information Institute: https://www.law.cornell.edu/uscode/text/26/151
7. Internal Revenue Service, "Check your eligibility for the new enhanced deduction for seniors," and Publication 6142, "Additional Deduction for Seniors": https://www.irs.gov/newsroom/check-your-eligibility-for-the-new-enhanced-deduction-for-seniors and https://www.irs.gov/pub/irs-pdf/p6142.pdf
8. 26 U.S.C. § 86, Social security and tier 1 railroad retirement benefits, via Cornell Law School Legal Information Institute: https://www.law.cornell.edu/uscode/text/26/86
9. Internal Revenue Service, "Questions and Answers on the Net Investment Income Tax": https://www.irs.gov/newsroom/questions-and-answers-on-the-net-investment-income-tax
10. 26 U.S.C. § 164(b)(7), Limitation on individual deductions for state and local taxes, via Cornell Law School Legal Information Institute: https://www.law.cornell.edu/uscode/text/26/164
11. HealthInsurance.org, "Marketplace enrollees face return of the subsidy cliff" (February 11, 2026): https://www.healthinsurance.org/blog/marketplace-enrollees-face-return-of-the-subsidy-cliff/
12. HealthCare.gov, "What's included as income": https://www.healthcare.gov/income-and-household-information/income/
13. Health Insurance Network, "Will the ACA Subsidies Come Back? Where the Extension Bill Actually Stands" (updated September 2026): https://healthinsurancenetwork.org/guide/will-aca-subsidies-come-back

Disclosure: This material is for general information and educational purposes only. It is not intended to provide specific investment, tax, or legal advice or recommendations for any individual. Please consult your tax and legal professionals regarding your specific situation. Tax laws are subject to change, and figures shown are for tax year 2026 unless otherwise noted. Medicare IRMAA thresholds for future years have not been published and may differ from the 2026 figures shown. Examples are hypothetical and for illustration only. A Roth conversion is a taxable event, and it may not be appropriate for everyone. Qualified Roth IRA distributions generally require that the account has been open at least five years and that the owner is age 59½ or older, or meets another qualifying condition.