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In observance of the Christmas Day federal holiday, the New York Stock Exchange and Capital Group’s U.S. offices will close early on Wednesday, December 24 and will be closed on Thursday, December 25. On December 24, the New York Stock Exchange (NYSE) will close at 1 p.m. (ET) and our service centers will close at 2 p.m. (ET)

Estimated Federal Tax Rate in Retirement

This is the federal tax rate your client expects to pay on taxable income while taking withdrawals.

How your client’s tax rate in retirement compares to your client’s tax rate while contributing could be the most important factor in determining whether to choose a Roth or traditional 401(k)/403(b) account. The table below may help you estimate your client’s tax bracket in retirement.

Keep in mind that retirement plan withdrawals from traditional accounts are treated as ordinary income, so taxable withdrawals — especially a lump-sum withdrawal — may push your client into a higher tax bracket. Tax brackets and rates may change in the future. The analyzer applies the tax rate you enter to all taxable income in retirement.

Federal income tax brackets for 2025*

Tax rate

Married, filing jointly or qualified widow(er)

Single Filers

Head of household

Married, filing separately

10%

$0 to $23,850

$0 to $11,925

$0 to $17,000

$0 to $11,925

12%

$23,851 to $96,950

$11,926 to $48,475

$17,001 to $64,850

$11,926 to $48,475

22%

$96,951 to $206,700

$48,476 to $103,350

$64,851 to $103,350

$48,476 to $103,350

24%

$206,701 to $394,600

$103,351 to $197,300

$103,351 to $197,300

$103,351 to $197,300

32%

$394,601 to $501,050

$197,301 to $250,525

$197,301 to $250,500

$197,301 to $250,525

35%

$501,051 to $751,600

$250,526 to $626,350

$250,501 to $626,350

$250,526 to $375,800

37%

$751,601 or more

$626,351 or more

$626,351 or more

$375,801 or more

 

*This information is subject to change by the Internal Revenue Service (IRS).
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the mutual fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
Although target date portfolios are managed for investors on a projected retirement date time frame, the allocation strategy does not guarantee that investors' retirement goals will be met.
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This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.