How an IRA Withdrawal Is Taxed
Money taken from a traditional IRA is ordinary income in the year you take it, reported on Form 1099-R. It adds to wages, pensions and the taxable part of Social Security, so it is taxed at your top bracket, not at an average rate.
- No Social Security or Medicare tax applies to IRA distributions.
- The part that returns nondeductible (after-tax) contributions is tax-free; the calculator assumes you have none.
- Qualified Roth IRA distributions are tax-free and do not need this calculator.
Withholding Versus the Tax You Actually Owe
IRA payouts on demand are nonperiodic payments, and the payer withholds 10% federal tax by default. On Form W-4R you can pick any rate from 0% to 100%. Withholding is a prepayment, not the final bill.
For a 20% default with no lower choice, look at employer plans: an eligible rollover distribution from a 401(k) paid to you has 20% withheld. That rule does not apply to IRA withdrawals.
| Withdrawal | Withheld at 10% | Federal tax on it | Still owed | Left after all tax |
|---|---|---|---|---|
| $5,000 | $500 | $600 | $100 | $4,400 |
| $10,000 | $1,000 | $1,200 | $200 | $8,800 |
| $20,000 | $2,000 | $2,400 | $400 | $17,600 |
| $40,000 | $4,000 | $6,150 | $2,150 | $33,850 |
| $75,000 | $7,500 | $13,850 | $6,350 | $61,150 |
Rows assume $40,000 of other income, single, age 59½ to 64, Texas. Once a withdrawal pushes you into the 22% bracket, 10% withholding falls short.
Early Withdrawal Penalty and Its Exceptions
Before age 59½, the taxable part of a withdrawal also pays a 10% additional tax. The same $20,000 taken at 50 costs $2,000 extra and leaves $15,600. IRS Topic 557 lists exceptions for IRAs, including:
- total and permanent disability, terminal illness, or the owner's death (paid to a beneficiary);
- substantially equal periodic payments over life expectancy;
- unreimbursed medical costs above the AGI floor, and health premiums while unemployed;
- qualified higher education costs and up to $10,000 for a first home;
- up to $5,000 for a birth or adoption, an IRS levy, qualified reservist service, disasters, domestic abuse and personal emergency expenses.
Tick the exception box to drop the 10%. Income tax still applies.
Gross Withdrawal Needed for a Net Amount
Choose "What I want after tax" to find the gross distribution behind a cash target. To end up with $30,000 after all federal tax, with $40,000 of other income, request $35,064.10; the tax on it is $5,064.10.
Under 59½ with no exception, the same $30,000 needs $40,220.59. To have the payer cover the whole bill, set the W-4R rate to the calculator's tax rate on the withdrawal, 14.4% here.
Required Minimum Distributions
Traditional IRA owners must start required minimum distributions (RMDs) at age 73. An RMD is taxed like any other withdrawal, and the 10% default withholding applies unless you elect another rate.
A married couple filing jointly, with $30,000 of other income and the 65+ deductions counted for one spouse as the calculator does, taking an $18,000 RMD pays $815 of federal tax on it and keeps $17,185. RMDs cannot be rolled over to another IRA.
Withdrawals at 65 and Older
From 65 the tax falls, because two extra deductions apply: the additional standard deduction ($2,050 unmarried, $1,650 per married spouse) and the senior deduction of up to $6,000 a person for 2025 to 2028. The senior deduction shrinks by 6% of MAGI over $75,000 ($150,000 joint).
A single 66-year-old with $20,000 of other income gets $8,050 of extra deductions, so a $20,000 withdrawal costs $1,654 in federal tax, against $2,230 for someone aged 62 with the same income. The calculator applies these for one person.
State Tax on IRA Withdrawals
- No wage tax states such as Texas and Florida do not tax IRA distributions.
- Illinois lets residents subtract federally taxed IRA distributions, so the state tax is $0.
- Pennsylvania does not tax IRA withdrawals made at 59½ or later; an earlier one is taxable above your contributions, $614 on $20,000 in the calculator.
- Other states differ, and many exempt part of retirement income. Enter your rate under "Other state".
Assumptions and Sources
- Traditional IRA with no after-tax basis; federal tax is the increase the withdrawal causes over your other income.
- Standard deduction, plus the 65+ deductions for one person when you pick 65 or older; no credits.
- Other income is treated as fully taxable; enter only the taxable part of Social Security.
- State tax is a flat rate, with the Illinois and Pennsylvania rules above.
For a monthly employer pension, the Pension Calculator handles the senior deductions the same way. The Net to Gross Calculator grosses up wages instead.
Sources: IRS Form W-4R; IRS Topic 557; IRS Rev. Proc. 2025-32; IRS RMD FAQs; Illinois Department of Revenue Pub-120; Pennsylvania Department of Revenue. Rates for 2026.
Frequently Asked Questions
How much tax is withheld from an IRA withdrawal?
10% federal by default. You can choose 0% to 100% on Form W-4R.
Is 10% withholding enough?
Only while all of the withdrawal stays in the 10% or 12% bracket. In the 22% bracket or higher you owe more at tax time.
What is the penalty for taking money out of an IRA early?
A 10% additional tax on the taxable amount before age 59½, on top of income tax, unless an exception applies.
How do I calculate the gross IRA distribution for a net amount?
Choose "What I want after tax". $30,000 net needs about $35,064 gross with $40,000 of other income, single.
Is an RMD taxed differently?
No. It is ordinary income like any other traditional IRA withdrawal.
Do IRA withdrawals pay Social Security tax?
No. Only income tax, and the 10% additional tax for early withdrawals.
How is this different from the pension calculator?
This page handles a one-off or yearly IRA withdrawal with withholding and the early penalty. The pension calculator handles a regular monthly pension.