Key Takeaways
- The IRS’s 2027 figures give married couples filing jointly a $33,200 standard deduction and a 12% bracket that runs to $104,050 of taxable income, so a couple can have $137,250 of ordinary income before any of it is taxed at 22%.
- That’s $4,250 more room than this year’s $133,000.
- A married couple, both 62, living on a $60,000 pension could convert $77,250 to a Roth IRA next year and pay 12% on every converted dollar, which adds $9,270 to their federal tax.
- Couples who buy health coverage on the ACA Marketplace would lose their whole premium tax credit long before that, so the full conversion works for a couple with retiree coverage like this one.
If you’re married, under 65 and planning a Roth conversion next year, the IRS just gave you some good news: a little more room at 12%.
On Nov. 5, the IRS released its inflation adjustments for 2027. The standard deduction for married couples filing jointly goes up to $33,200, $1,000 more than this year, and the 12% bracket now runs to $104,050 of taxable income. Add the two together, and a couple can have $137,250 of income next year before a dollar of it is taxed at 22%.
You get $4,250 more room than this year
This year, the same math gives a couple $133,000: the $32,200 standard deduction plus the $100,800 top of the 12% bracket. So next year’s line is $4,250 higher. It’s a modest jump, and for anyone filling the 12% bracket on purpose, every dollar of it counts. The new figures apply to 2027 income, on the returns couples file in 2028.
One thing to know about “income” here: the $137,250 is ordinary income, like a pension, IRA withdrawals, Roth conversions, interest and wages. Qualified dividends and long-term capital gains stack on top of ordinary income and are taxed at their own rates, so they don’t fit into this math the same way.
6 safe dividend stocks paying retirees 6%+ yields
There are over 100 stocks paying 6%+ annual dividends today.
But after an extensive investment review leveraging TIKR’s proprietary data, we now believe only six of them are truly safe for retirees.
They’re all yours for free as part of our new investment report, which you can access right here.
Here’s what a couple at 62 could convert
Let’s take a hypothetical: you and your spouse are both 62 next year, neither of you has claimed Social Security, and your only income is a $60,000 pension, all of it taxable. Your health coverage comes through the pension’s retiree plan, so you aren’t counting on an income-based premium credit to pay for it.
After the $33,200 standard deduction, the pension alone leaves you with $26,800 of taxable income and $2,704 of federal tax. That leaves $77,250 of room before the 22% bracket, and a Roth conversion could fill it:
| Metric | Pension only | Pension + $77,250 conversion |
|---|---|---|
| Income | $60,000 | $137,250 |
| Standard deduction | $33,200 | $33,200 |
| Taxable income | $26,800 | $104,050 |
| Federal tax | $2,704 | $11,974 |
Source: IRS tax year 2027 brackets and standard deduction for married couples filing jointly.
The tax on $104,050 is 10% of the first $25,600, or $2,560, plus 12% of the other $78,450, or $9,414. So the conversion adds $9,270 to your federal bill, which is 12% of every dollar converted. Convert one dollar more, and that dollar is taxed at 22%.
Marketplace buyers lose the credit long before $137,250
That retiree plan is a big part of why the full conversion works here. A couple the same age who buy their coverage on the ACA Marketplace lose the whole premium tax credit once their income passes 400% of the poverty line, since a Roth conversion counts as income for the credit too. For 2027 coverage, that line is $86,560 for two, which is 400% of the 2026 poverty guideline of $21,640. With the same $60,000 pension, they’d cross it with less than $27,000 converted, and a $77,250 conversion would put them more than $50,000 over. So if you buy your own coverage, work out what the credit is worth to you before you convert past that line.
At 65, you get more room
For couples 65 and older, $137,250 is the starting point. Everyone 65 and older gets the permanent extra standard deduction on top of the regular one. And from 2025 through 2028, the enhanced deduction for seniors adds $6,000 each, or $12,000 for a couple who both qualify. It phases out once a couple’s modified adjusted gross income passes $150,000, though, and a big conversion can take a couple past that.
But if you’re 62 next year, you won’t turn 65 until after 2028, when the senior deduction is set to end. So for you, the extra standard deduction is the one to plan around.
Fill it, but don’t overshoot
Frankly, if a pension already covers part of your 12% bracket and your health coverage doesn’t depend on your income, next year looks like a great year to fill the rest of it. Paying 12% now on money that would otherwise come out of a traditional IRA later, at whatever rates apply then, is a trade I’d be glad to make.
A conversion counts as income in the year you make it, so 2027’s room has to be used in 2027. And since 2018, a Roth conversion can’t be undone. If a bigger-than-expected interest payment or a late distribution pushes you past $104,050 of taxable income, the money stays converted, and everything over the line is taxed at 22%. That’s a good reason to convert late in the year, once you know the rest of your income, or to leave a little cushion under the line.
Of course, this is one year’s room: the IRS will publish 2028’s brackets next fall, and couples will get a new line to plan around.
Enjoy your retirement in style with these safe 6%+ dividend yields
Dividends can hold the key to enormous wealth. But only if you buy the right ones.
Picking the right high-yield dividend stock can be the difference between a dream retirement…and scraping by every month, waiting for the next Social Security check to clear.
We’ve identified six stocks yielding 6%+ that we believe every retiree should know about right now.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
