I Asked Tax and Retirement Experts: Should I Lock In My Tax Rate Before Policy Changes?
With the midterms weeks away, some people wonder whether they should pay taxes now before Congress has a chance to raise rates. The experts MoneyLion talked to were very clear that headlines shouldn't drive that decision.
"Don't try to outguess Congress," said Mark Clark, certified financial planner (CFP), founder and financial advisor at Prestige Advisors. "Plan around the brackets you can actually see, which are your own."
Explore More: What the 2026 Midterms Could Mean for Mortgages and Loans
Join Us: Start Growing Your Net Worth With Smarter Tracking
What 'Permanent' Really Means
The One Big Beautiful Bill Act, signed in July 2025, made the current federal rate structure of 10% to 37% permanent, according to Tiffany Nellums, tax principal at Nexera Tax.
As of yet, no rate increase is on the calendar. Clark pointed out that permanent only means the brackets have no expiration date, and Congress can still change them.
That's why Nellums doesn't think we should act on speculation. Paying tax early "to guard against a change nobody has passed is rarely a good trade," she said.
What Locking in Usually Looks Like
Locking in a rate means a Roth conversion. You move money from a traditional IRA to a Roth, pay the tax now and then let it grow tax-free. Nellums said this usually make sense in three situations.
A low-income year. Time between jobs, early retirement or a slow business year can all qualify.
A higher bracket later. You expect your tax rate in retirement to top what you pay today.
Cash on hand. You can pay the tax from savings rather than from the IRA itself.
Where the Real Window Usually Opens
For many retirees, the bigger risk isn't Congress. Clark said personal tax rates often climb later in life, once required minimum distributions start, Social Security begins or a spouse passes and the survivor starts filing single.
Hans Goldstein, founder of the Retirement Literacy Foundation, sees the opportunity the same way.
"For most retirees the rate worth locking in is not about a future law change," he said. "It is the low-bracket window between retiring and starting required distributions at 73."
The numbers in that window can be generous. In 2026, a married couple who are both 65 or older can deduct up to $47,500 before any income is taxed, combining the $32,200 standard deduction, a $1,650 additional deduction each and the new $6,000 senior deduction each.
Goldstein called a partial conversion that fills those low brackets "often the cleanest Q4 move."
The Ripple Effects People Miss
Conversion income raises your adjusted gross income, and Nellums said that can set off a chain reaction. It can shrink the new deduction for taxpayers 65 and older, trim the expanded state and local tax deduction for higher earners, cut health insurance marketplace subsidies and raise Medicare premiums two years later.
Goldstein put numbers on two of those risks. The $6,000-per-person senior deduction phases out above $150,000 of modified adjusted gross income for a couple. A conversion that pushes income past a Medicare IRMAA threshold also raises Part B and Part D premiums two years down the road.
Convert in Slices
Both advisors favored a measured approach over one big move. "Convert in slices, not one big swing," Clark said.
Filling your current bracket without crossing those income lines is often smarter than converting a large lump sum, according to Nellums.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion:
