Quick answer: In retirement, IRA and 401(k) withdrawals and most pensions are taxed as ordinary income federally, and up to 85 percent of Social Security benefits can be taxable depending on your other income. New York does not tax Social Security, fully exempts New York State, local, and federal government pensions, and lets residents 59½ and older exclude a portion of private pension and IRA income. Required minimum distributions generally begin at age 73 or 75, depending on your birth year.

Retirement changes where your income comes from, and that changes how it is taxed. We work with a lot of retirees around Syracuse and the rest of Central New York, and the ones who do best are not the ones with the most money. They are the ones who plan the order and timing of their withdrawals.

How is Social Security taxed?

Federally, whether your Social Security is taxable depends on your "provisional income," which is roughly your other income plus half of your benefits. Below a lower threshold, none of it is taxable. Above it, up to 50 percent, and above a higher threshold, up to 85 percent. Those thresholds are set in the law and are not adjusted for inflation, which is why more retirees owe tax on benefits each year.

New York does not tax Social Security benefits at all. If your federal return includes taxable Social Security, it is subtracted back out on your New York return.

You can have federal tax withheld from benefits by filing Form W-4V with the Social Security Administration. Many retirees find that easier than making quarterly estimated payments.

How are pensions and IRA withdrawals taxed?

Pensions, traditional IRA distributions, and 401(k) or 403(b) withdrawals are taxed as ordinary income federally, except for any portion that came from after-tax contributions. Roth IRA distributions are generally tax-free once you are 59½ and the account has been open at least five years.

New York is more generous:

  • Government pensions: Pensions from New York State, New York local governments, and the federal government are fully exempt from New York income tax.
  • Private pensions and IRAs: If you are 59½ or older, you can exclude a portion of private pension, annuity, and IRA income each year. The exclusion is claimed on your New York return, and the Tax Department's return instructions spell out what qualifies. Spouses who each qualify get their own exclusion.

That combination makes New York friendlier to many retirees than people assume. A retired teacher in Oswego County drawing a state pension and Social Security may owe little or no New York income tax.

When do required minimum distributions start?

Required minimum distributions, or RMDs, force you to start withdrawing from traditional IRAs and most employer plans. Under current law:

  • If you were born between 1951 and 1959, RMDs begin at age 73.
  • If you were born in 1960 or later, RMDs begin at age 75.

Your first RMD can be delayed until April 1 of the following year, but then you take two in the same year, which can push you into a higher bracket. Missing an RMD carries an excise tax on the amount not withdrawn, reduced if you correct it promptly. Roth IRAs have no RMDs for the original owner. The IRS keeps the current RMD rules and worksheets on irs.gov.

Inherited IRAs follow their own rules. Most non-spouse beneficiaries must empty the account within ten years, and some must also take annual distributions during that period.

What planning moves lower taxes in retirement?

A few strategies come up again and again in our office:

  1. Fill the low brackets early. The years between retiring and starting RMDs or Social Security are often low-income years. Withdrawing from a traditional IRA, or converting some of it to a Roth, during those years can reduce future RMDs and the tax on them.
  2. Use qualified charitable distributions. Once you are 70½, you can give directly from an IRA to charity. The gift counts toward your RMD and never shows up in your income. We cover this more in our piece on charitable giving strategies.
  3. Watch Medicare premium brackets. Higher income can raise your Medicare Part B and D premiums two years later. A large one-time withdrawal or Roth conversion should be sized with that in mind.
  4. Coordinate withdrawals across account types. Mixing taxable, tax-deferred, and Roth withdrawals lets you manage your bracket year by year.
  5. Look at the senior deduction. For 2025 through 2028, taxpayers 65 and older can claim an additional deduction on top of the standard deduction, subject to income limits. It is another reason to keep income in a sensible range.

Do retirees still need to make estimated tax payments?

Often, yes. Once paychecks stop, nobody is withholding for you unless you ask. You can request withholding from pensions, IRA distributions, and Social Security, or you can make quarterly estimated payments to both the IRS and New York. Many retirees prefer to take one large IRA distribution late in the year with heavy withholding, because withholding is treated as paid evenly throughout the year.

Our personal tax preparation clients get a projection each fall so there are no surprises in April.

Frequently asked questions

At what age is Social Security no longer taxed?

There is no age at which Social Security becomes tax-free federally. Taxation depends on your income, not your age. In New York, though, Social Security is never taxed regardless of age.

Does New York tax IRA withdrawals?

Partly. New York taxes IRA withdrawals, but residents 59½ and older can exclude a portion each year under the pension and annuity exclusion. Amounts above that exclusion are taxable on your New York return.

Can I skip my RMD if I do not need the money?

No. RMDs are mandatory once you reach the required age, whether or not you need the income. You can reduce the tax by directing some or all of it to charity as a qualified charitable distribution, or reinvest the after-tax proceeds in a regular brokerage account.

Should I convert my traditional IRA to a Roth?

It depends on your current bracket versus your expected bracket later, your heirs' situation, and how you will pay the conversion tax. Conversions often make the most sense in the gap years between retirement and RMDs. Run a projection before converting, because a conversion cannot be undone.

This article is general information for 2026, not tax or legal advice for your situation. Tax rules and figures change; confirm current amounts with the IRS, New York State, or your accountant before acting.

Related service: Personal Tax Preparation & Planning