It could sound too good to be true, however a retired couple might generate six-figures in revenue and pay no federal revenue taxes.
Should you assume that is solely due to President Donald Trump’s new invoice, assume once more — even underneath earlier tax guidelines, a pair might construction their retirement revenue to owe $0 in federal taxes.
The important thing lies in good monetary planning and a stable mixture of revenue sources. Understanding how various kinds of revenue are taxed is crucial to creating this technique work.
Social Safety advantages aren’t taxed like odd revenue, and their taxability is decided utilizing a “provisional revenue” calculation by the IRS.
For married {couples} filing collectively:
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Advantages aren’t taxed if provisional revenue is lower than $32,000.
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Between $32,000 and $44,000, as much as 50% is taxable.
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Above $44,000, as much as 85% might be taxed.
If Social Safety is your solely supply of revenue, you seemingly wouldn’t owe taxes. Even with different revenue sources, you could keep away from a tax legal responsibility relying on the kind of revenue and the way it impacts your provisional revenue.
Revenue from long-term investments is taxed in another way than common employment revenue.
For instance, in case you maintain shares of a home firm for greater than a yr, certified dividends are taxed on the similar preferential tax charges as long-term capital positive aspects, despite the fact that they aren’t technically thought-about capital positive aspects.
For the 2025 tax yr, single filers with as much as $48,350 in taxable revenue and married {couples} submitting collectively with as much as $96,700 might pay 0% federal tax on their long-term capital positive aspects and certified dividends, according to the IRS.
Provided that these thresholds are comparatively excessive — and normal deductions cut back taxable revenue — a married couple might earn a considerable quantity from long-term investments and nonetheless owe no capital positive aspects taxes.
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To know how a retired couple with a sensible mixture of revenue sources pays no taxes on $100,000 in annual earnings, let’s take the instance of John and Jane.
