Tax Planning After the Loss of a Spouse

The death of a spouse is, first and foremost, a profound personal loss with intense emotional and psychological impact. But it can also bring about major financial changes at a difficult time.

One that many people don't think about is that the surviving spouse may eventually face a higher tax burden. A thoughtful plan, made with the help of a professional tax advisor, can help preserve more after-tax income, reduce avoidable taxes on retirement accounts and ease the adjustment to a new financial reality.

Why Taxes Can Rise

Surviving spouses can face higher taxes if their income remains roughly the same. This is because they eventually must transition from married joint filing to single or head-of-household filing status, which can push more income into higher tax brackets.

For example, in 2026, a married couple filing jointly with $300,000 of taxable income is in the 24% bracket. But a single or head-of-household filer with the same taxable income is in the 35% bracket. In addition, the standard deduction is significantly lower for single and head-of-household filers — for 2026, $16,100 and $24,150, respectively, vs. $32,200 for joint filers. This could increase taxes if a surviving spouse doesn't itemize deductions. And certain tax breaks begin to phase out at lower income levels for singles and heads of household, which could also increase a surviving spouse's taxes.

However, for the year of the deceased spouse's death, the surviving spouse may still be able to file a joint return with the deceased spouse if the applicable requirements are met. And taxpayers who have a dependent child and meet other IRS requirements may be eligible for "qualifying surviving spouse" filing status for up to two years after the year of death. It allows eligible taxpayers to keep using joint-filer rates during that period.

Surviving spouses can face an added challenge if they're subject to required minimum distributions (RMDs) from their spouse's traditional IRAs or employer-sponsored retirement plans. When applicable, RMDs must be taken whether or not the money is needed for living expenses, and RMDs increase taxable income. Generally, RMDs for original account owners now begin at age 73, though for some younger taxpayers the starting age will be 75 (unless a future law increases the age again).

Consider Gradual Roth Conversions

If a surviving spouse is likely to face higher taxes, certain tax-savvy moves may help soften the impact. For those who have time to prepare, these are well worth considering. For example, with proper planning, married couples may be able to reduce future RMD exposure and give the surviving spouse more flexibility later. One potential strategy is to convert part of a traditional IRA into a Roth IRA.

Although the converted amount is taxable in the year of conversion, qualified Roth distributions can later come out tax-free, and Roth IRAs owned by the original account holder don't have lifetime RMDs. Rather than converting a large amount all at once, many couples spread conversions over several years to manage the tax cost and avoid being pushed into a higher bracket in any one year.

Use Charitable Giving Strategically

For charitably inclined surviving spouses subject to IRA RMDs, a qualified charitable distribution (QCD) can be useful. If you're age 70½ or older, you can direct funds from an IRA straight to a qualified charity. (Various rules and restrictions apply.)

In 2026, the annual QCD limit is $111,000 per person, and those distributions can satisfy all or part of an IRA RMD while being excluded from adjusted gross income if the rules are followed. That can help reduce the tax cost of RMDs.

Review Spousal Rollover Opportunities

If a spouse inherits an IRA and is under the applicable RMD age, a spousal rollover can create a tax advantage. A surviving spouse who's the sole designated beneficiary can generally elect to treat the IRA as his or her own. Doing so allows continued tax-deferred growth and delays RMDs until the surviving spouse reaches the applicable RMD age.

For example, suppose Francine, 82, has a large traditional IRA and sizable annual RMDs. She dies in 2026, leaving the IRA to her husband, Michael, 64. If he keeps the account as an inherited IRA, he'll have to take RMDs because Francine had been taking them. But if Michael completes a spousal rollover and treats the IRA as his own, he can generally postpone RMDs until reaching his own applicable starting age. Because Michael was born after 1959, that age would be 75 (unless a future law changes it).

In some situations, however, leaving the funds in an inherited IRA may make sense — particularly if the surviving spouse is under age 59½ and may need access to the money. If the spouse rolls the account into his or her own IRA, later withdrawals before age 59½ may trigger the 10% early-distribution penalty unless an exception applies. Distributions from an inherited IRA generally avoid that penalty, which can make inherited-IRA treatment more practical for a younger surviving spouse with near-term cash needs.

Managing the Transition

The loss of a spouse can reshape nearly every part of an individual's financial life — including how income is taxed in the years ahead. Identifying and implementing strategies proactively can help preserve more assets, support long-term cash flow, and ensure greater financial stability during the difficult transition and beyond. Ask your tax advisor for assistance and advice.