Other Taxes on Income

Income tax isn't the only tax that affects your spendable income. Be sure to take these taxes into account in your planning as well. Note any changes from 2025.

Alternative Minimum Tax

Initially designed to ensure that high-income earners who benefit from various deductions and credits still pay a minimum level of tax, the AMT is imposed at a flat tax rate of 26% or 28%. The 28% rate applies to taxpayers filing jointly with $244,500 or more AMT income (AMTI) and $122,500 or more for other taxpayers. You'll be subject to AMT if your tax calculated under the AMT rules is higher than your tax calculated under regular income tax rules.

Before the TCJA, AMT had increasingly affected a broader range of taxpayers due to its different rules and exemption structure. TCJA reduced AMT exposure, but those relief measures shift under the OBBBA starting in 2026. As you see in the table below, for 2025, the phaseout of the exemption that single taxpayers may claim before AMT is imposed at $626,350 in AMTI. For married couples filing jointly, the phase begins at $1,252,700 AMTI.

Starting in 2026, however, OBBBA resets the exemption phase-out thresholds to the TCJA's $500,000 and $1 million AMTI, with annual inflation adjustments for 2026 and beyond. So, for 2026, these phase-out thresholds will be lower than in 2025. More bad news: OBBBA also increases the exemption phase-out percentage from 25% to 50%. As a result, more high-income individuals may be hit with the AMT, starting in 2026.

The AMT is complicated. Contact us to determine your status under the OBBBA changes.

Social Security Tax on Earnings

The 2025 Social Security Board of Trustees Report estimates the maximum wage for Social Security taxes will be $184,500 in 2026, an increase of $8,400 from the 2025 ceiling of $176,100. Currently, you and your employer each pay half of the 12.4% Social Security tax due. Workers also pay a Medicare tax of 1.45% each year, plus an extra 0.9% on wages earned over $200,000. Self-employed workers pay the full 12.4% Social Security tax.

Some retirees may be taxed on up to 85% of their Social Security benefits. Check below to determine how much of your Social Security may be taxable for 2026. The provisional income referred to in the guide is your other taxable income plus tax-exempt interest and half of your Social Security benefit.

A new senior tax deduction created by OBBBA may offer a little relief. See Deductions and Credits for more details.

SMART MOVES: Ask your tax professional about Qualified charitable distributions (QCDs) for required minimum distributions (RMDs) from retirement plans, staged Roth conversions*, and timing capital gains, all of which may reduce the taxable share of your Social Security benefit. Also, if realizing additional income in 2026 would trigger additional tax on your benefits, consider deferring the income to early 2027.

Additional Income-Triggered Taxes

If your modified adjusted gross income (MAGI) includes investment gains and exceeds certain levels, you may owe a 3.8% net investment income tax above and beyond any capital gains tax paid. Taxpayers who are married and file jointly and widowed spouses pay the tax if their MAGI exceeds $250,000. Single individuals and heads of household owe the tax after $200,000 in MAGI, while the threshold for married taxpayers filing separately is $125,000.

You will also owe an extra 0.9% for the Additional Medicare Tax if you earned more than $250,000 (married filing jointly), $200,000 (single, heads of household, and qualifying widow(er)s with a dependent child), and $125,000 (married filing separately) in a calendar year. Employers are typically responsible for withholding the extra tax.

*Converting a traditional IRA to a Roth IRA is a taxable event. A Roth IRA offers tax-free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal of earnings, a Roth IRA must be in place for at least five tax years, and the distribution must occur after age 59-1/2 or due to death, disability, or a first-time home purchase (up to a $ 10,000 lifetime maximum). Roth IRA distributions may be subject to state taxes.