Key Takeaways
- A conversion is taxed at your marginal rate: converted amount × your top bracket.
- Filling a bracket to its ceiling — not converting a round number — minimizes the tax.
- State taxes and Medicare surcharges can add meaningfully to the federal bill.
The Basic Tax Bill
The federal cost of a Roth conversion is simply the converted amount times your marginal tax rate. Convert $50,000 while in the 24% bracket and the bill is $12,000; in the 32% bracket it is $16,000. The 2026 federal brackets run from 10% to 37%, and the conversion stacks on top of your other income — so a $50,000 conversion for someone whose income already fills the 24% bracket may spill into the 32% bracket, making the effective rate on the conversion a blend. The professional move is to convert up to the top of a bracket, not to a round dollar amount: converting $50,000 when only $30,000 of bracket space remains means $30,000 at 24% and $20,000 at 32%.
Beyond the Federal Bill
- State taxes: most states tax conversions like income. A few (Texas, Florida, Nevada, Washington, Alaska, South Dakota, Tennessee, Wyoming, New Hampshire) have no state income tax; Pennsylvania, Illinois, and Mississippi exempt retirement income. If you plan to move, consider converting before or after the move for state-tax leverage.
- IRMAA: a large conversion can push MAGI over Medicare surcharge thresholds (roughly $106,000 single / $212,000 married in 2026), adding hundreds of dollars per month to Part B and D premiums for two years.
- Net Investment Income Tax: above $200,000 (single) / $250,000 (married), conversions do not trigger NIIT — but the added income can push investment income into the 3.8% surtax zone.
- Credits and deductions: higher income can phase out the Child Tax Credit, education credits, and other benefits — run a full tax projection before converting.
How to Pay the Tax
Pay the tax from outside cash. If you elect withholding from the conversion itself, the withheld amount is treated as a distribution — it reduces the balance that compounds tax-free and, if you are under 59½, can trigger the 10% early-distribution penalty on the withheld portion (withholding is not eligible for the conversion exception). If you cannot pay the tax without raiding the conversion, that is a strong signal the conversion is too large. A partial conversion — see our separate guide — lets you size the tax bill to your cash flow.
Action Steps
- Project your full-year income, deductions, and bracket before converting.
- Convert only up to the top of your target bracket.
- Set aside the tax in a savings account before the conversion date.
- Check IRMAA and state-tax consequences with a tax professional if the conversion is large.
Worked Example: A $100,000 Conversion
Take a concrete case. David, 55, single, earns $60,000 (24% bracket) and holds a $400,000 Traditional IRA. He converts $100,000 in one year. The conversion pushes his income to $160,000: roughly $46,000 of the conversion is taxed at 24%, and the remaining $54,000 spills into the 32% bracket — a blended rate near 28%, or about $28,000 of federal tax (plus state tax at his 5% rate, another $5,000). If he instead converts $40,000 per year for five years, each conversion stays entirely inside the 24% bracket: $9,600 federal per year, $48,000 total — a saving of roughly $10,000, and he stays under the IRMAA threshold every year. Same total amount converted, five-figure difference in cost, purely from pacing. This is why "convert up to the bracket ceiling, every year" is the single most important rule in Roth conversion planning.
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Use the Calculator →How to Estimate Your Conversion Tax
Estimate the tax in four steps. (1) Project your taxable income for the year, including wages, interest, and capital gains. (2) Add the conversion amount — this is ordinary income. (3) Calculate the marginal rate on the conversion slice using the 2026 brackets: 10% up to $11,925, 12% to $48,475, 22% to $103,350, 24% to $197,300, 32% to $250,525, 35% to $626,350, 37% above (single filer figures). (4) Multiply. A $50,000 conversion for a single filer with $60,000 of other income lands in the 22% bracket — about $11,000 in federal tax, plus any state tax. Use a Roth conversion calculator to model bracket creep: converting too much in one year can push part of the money into a higher bracket, so splitting a large conversion across two or three years often saves thousands. Also check the Net Investment Income Tax — conversions can push you over the $200,000/$250,000 thresholds.