Sun Apr 06 2025, by Tyler Gardner

How to Pay Almost $0 in Taxes in Retirement

Here’s how I would pay almost $0 in taxes in retirement. If any of this is helpful, sign up for my free newsletter by clicking the link in my bio.

1. Use Roth Conversions

First, use Roth conversions now to lower your tax bills later. If you retire in your 60s like I'd like to, you have a tax sweet spot before you start claiming Social Security and before Required Minimum Distributions (RMDs). By converting your pre-tax accounts to a Roth while you're in this tax sweet spot, you can enjoy tax-free withdrawals for life.

2. Stay in the 0% Capital Gains Bracket

Second, stay in the 0% capital gains bracket as long as it’s sustainable. If your taxable income stays under $96,700 for those married filing jointly in 2025, you pay zero in federal tax on long-term capital gains. Smart retirees sell investments strategically to maximize opportunities given in this tax-free window.

3. Leverage Tax-Free Income Sources

Lastly, leverage your tax-free income sources. This includes municipal bonds that are federal and sometimes even state tax-free, Roth IRA withdrawals (even though I don’t encourage that one), and health savings accounts (HSAs). The biggest mistake retirees make isn’t how much money they have, but how much they keep in their own pockets.

Conclusion

If any of this is helpful, tune into my new podcast, Your Money Guide on the Side, by clicking the link in my bio.

Source