Inherited IRA Tax Calculator

Estimate the federal and state income taxes on a distribution from an inherited IRA. This calculator shows your total tax bill, the net amount you receive, and your effective tax rate, helping you understand the financial impact of your withdrawal strategy. Simply enter the distribution amount, your other income, and tax details to see a clear breakdown.

This tool is for anyone who has inherited a Traditional or Roth IRA and needs to plan for the tax consequences of taking distributions. Understanding the tax impact is a critical part of managing an inheritance, especially under the SECURE Act's 10-year rule. If you need to calculate a required withdrawal, use the RMD calculator. For a broader view of your retirement finances, the main retirement calculator can be helpful.

The results provide a tax impact score, a breakdown of federal and state taxes, and your net payout. You will also see a chart showing how your distribution is split between taxes and take-home money, along with a table comparing the tax impact at different withdrawal amounts. This helps you visualize how larger or smaller distributions could affect your overall tax burden.

This calculator is designed to be straightforward. Start by entering the key details of your withdrawal in the "Distribution Details" section. Input the total gross "Distribution Amount" you plan to take from the inherited IRA for the current tax year. Next, enter your "Other Annual Income" — this includes your salary, wages, pension income, Social Security benefits, and any other taxable income you expect to receive during the year, not including the IRA distribution.

Move to the "Tax Rates" section. The calculator will use the official 2026 tax brackets, but you can enter your estimated "Federal Tax Bracket" for reference. More importantly, enter your "State Tax Rate" as a percentage. If you live in a state with no income tax, enter 0.

Under "Filing Status," choose whether you file as Single or Married Filing Jointly. This determines which set of federal tax brackets the calculator uses for its projection, which is a key factor in the final tax amount.

For more complex situations, open the "Advanced Settings." Here you can specify any tax-free portions of the distribution. If the inherited account was a Roth IRA or contains a Roth portion, enter that value in "Inherited Roth Portion." If the original owner made after-tax contributions to a Traditional IRA, enter that amount in "Non-Deductible Basis." Both of these amounts are returned to you tax-free.

Once all your information is entered, click "Calculate" to see a detailed projection of your tax liability.

Distribution Amount

This is the total amount you plan to withdraw from the inherited IRA in a single tax year. This gross amount is the starting point for the tax calculation. How you time these distributions can have a significant impact on your taxes, especially for non-spouse beneficiaries subject to the 10-year rule.

Other Annual Income

Enter your total expected taxable income for the year, excluding the inherited IRA distribution. This should include your salary, self-employment income, bonuses, taxable Social Security benefits, pension payments, and other investment income. This figure is crucial because the taxable portion of your IRA distribution is added on top of this income, potentially pushing you into a higher tax bracket.

Federal Tax Bracket

While the calculator uses the full 2026 tax bracket schedule for its calculations, entering your estimated marginal tax bracket helps frame the results. Your marginal rate is the tax you pay on your next dollar of income. A large distribution can easily push your income into a higher bracket than you are used to.

State Tax Rate

This is your state's marginal income tax rate. Some states have a flat tax, while others have brackets similar to the federal system. Use the rate that applies to your income level. If your state has no income tax on retirement distributions or no income tax at all, you can enter 0. Check our guide on the best states to retire for taxes for more information.

Filing Status

Your filing status (Single or Married Filing Jointly) determines the income thresholds for the federal tax brackets. The brackets for married couples are generally twice as wide as those for single filers at lower income levels, which can result in a lower federal tax bill for the same amount of total household income.

Inherited Roth Portion

If the IRA you inherited is a Roth IRA, or a Traditional IRA that contains a mix of pre-tax and Roth 401(k) rollovers, the Roth portion is generally distributed tax-free, provided the account was open for at least five years. Enter the amount of your distribution that comes from the Roth source here. You can learn more about how these accounts differ in our Roth IRA vs. Traditional IRA guide.

Non-Deductible Basis

This refers to after-tax contributions the original owner made to their Traditional IRA. Because taxes were already paid on this money, it is not taxed again upon withdrawal. This "basis" is returned tax-free. You can typically find this information on the original owner's IRS Form 8606. If there is no basis, leave this field at $0.

This calculator provides a detailed tax estimate by simulating how the IRS treats your distribution. It does not simply multiply the distribution by your tax bracket.

First, it determines the taxable portion of your withdrawal by subtracting any "Inherited Roth Portion" and "Non-Deductible Basis" from the total "Distribution Amount."

Next, it calculates your federal tax liability in two scenarios. Scenario A calculates the federal tax on your "Other Annual Income" alone, using the 2026 tax brackets corresponding to your filing status. Scenario B calculates the federal tax on your "Other Annual Income" plus the taxable portion of the IRA distribution.

The federal tax owed on the distribution is the difference between the tax in Scenario B and the tax in Scenario A. This method accurately reflects how adding income pushes you through the marginal tax brackets.

State tax is calculated more simply by multiplying the taxable portion of the distribution by the "State Tax Rate" you provide.

Finally, the calculator sums the federal and state taxes to find your total tax liability. It subtracts this total tax from the gross distribution amount to show you the net amount you will receive. The effective tax rate is the total tax divided by the gross distribution amount.

The calculator uses a marginal tax calculation method, not a single formula. The logic is broken down below.

Taxable Distribution

This formula determines how much of your withdrawal is subject to income tax.

Taxable Amount = Distribution Amount - Inherited Roth Portion - Non-Deductible Basis

Federal Tax on Distribution

The calculator uses a multi-step process to find the marginal federal tax impact.

Total Income With Distribution = Other Annual Income + Taxable Amount

Federal Tax With Distribution = CalculateFederalTax(Total Income With Distribution, Filing Status)

Federal Tax Without Distribution = CalculateFederalTax(Other Annual Income, Filing Status)

Federal Tax on Distribution = Federal Tax With Distribution - Federal Tax Without Distribution

Note: CalculateFederalTax is a function that applies the appropriate 2026 federal income tax brackets to a given income.

State Tax on Distribution

State tax is calculated as a percentage of the taxable amount.

State Tax = Taxable Amount x (State Tax Rate / 100)

Final Results

These formulas combine the above calculations to produce the final outputs.

Total Tax = Federal Tax on Distribution + State Tax

Net Received = Distribution Amount - Total Tax

Effective Tax Rate = (Total Tax / Distribution Amount) x 100

The SECURE Act, passed in late 2019, significantly changed the rules for most non-spouse beneficiaries of IRAs and 401(k)s. Before the act, beneficiaries could "stretch" distributions over their own life expectancy, minimizing the annual tax impact.

Now, most non-spouse beneficiaries fall under the "10-year rule." This rule requires the entire balance of the inherited IRA to be withdrawn by the end of the 10th year following the year of the original owner's death.

There are no annual Required Minimum Distributions (RMDs) within this 10-year period for most beneficiaries. However, the entire account must be empty by December 31st of that 10th year. This gives you flexibility, but also creates a potential tax trap. If you wait until the final year to withdraw a large balance, you could face a massive tax bill by pushing yourself into the highest tax brackets. Strategic planning is essential. For detailed calculations, you can use the non-spouse inherited IRA RMD calculator.

Certain individuals, known as Eligible Designated Beneficiaries (EDBs), are exempt from the 10-year rule and can still stretch distributions over their life expectancy. EDBs include:

• The surviving spouse
• A minor child of the account owner (until they reach the age of majority, then the 10-year clock starts)
• A disabled or chronically ill individual
• An individual who is not more than 10 years younger than the deceased account owner

Understanding which rule applies to you is the first step in creating a tax-efficient withdrawal strategy.

The rules for inheriting an IRA are vastly different depending on whether you are the surviving spouse or another type of beneficiary.

Surviving Spouses: A spouse has the most flexibility. They can:

1. Treat the IRA as their own: This is the most common option. The spouse can roll the inherited IRA into their own existing IRA or a new one. The account is then treated just like any other IRA, with RMDs based on the surviving spouse's age (starting at age 73 or 75, depending on their birth year). This allows the funds to continue growing tax-deferred for many more years.
2. Remain a beneficiary: The spouse can keep the IRA as an inherited account. In this case, RMDs would be based on the deceased spouse's age. This can be advantageous if the surviving spouse is younger than 59.5 and needs access to the money, as they can take withdrawals from the inherited IRA without the 10% early withdrawal penalty.

Non-Spouse Beneficiaries: As discussed above, most non-spouse beneficiaries (like children, siblings, or friends) are subject to the 10-year rule. They cannot roll the inherited IRA into their own IRA. They must open a new "inherited IRA" account, titled in a way that shows both the deceased owner's name and the beneficiary's name (e.g., "John Smith IRA, Deceased 1/15/2026, FBO Jane Smith"). All funds must be withdrawn from this account within the 10-year window.

Tax Impact Score: This score gives you a quick assessment of the distribution's tax efficiency. A higher score (e.g., 80+) indicates a relatively low effective tax rate, while a lower score (e.g., below 50) signals a high tax burden that might be reduced with better planning.

Summary Cards: These cards break down the key numbers: the gross Distribution, the estimated Federal and State Tax, and the final Net Received amount. This shows you exactly where your money is going.

Distribution Breakdown Chart: This donut chart provides a visual representation of the summary cards. It helps you see at a glance what percentage of your distribution goes to taxes versus what you actually get to keep.

Tax at Different Distribution Amounts Table: This is one of the most powerful features. It shows how your tax bill and effective tax rate would change if you took smaller or larger distributions. Pay close attention to how the effective rate climbs as the distribution amount increases—this demonstrates the effect of moving into higher marginal tax brackets.

Insights Panel: This section provides context-specific advice based on your inputs. It might point out the benefit of a tax-free Roth portion, warn you about the 10-year rule, or explain the impact of your marginal tax rate.

If the calculator shows a high tax impact, you have several strategies to potentially lower your tax bill. The key is to manage your taxable income over the 10-year withdrawal period.

1. Spread Distributions Over Multiple Years: Instead of taking a lump sum, take partial distributions each year for up to 10 years. This can keep you in a lower tax bracket each year, resulting in a lower overall tax bill. For example, withdrawing $40,000 each year for five years will likely result in far less tax than withdrawing $200,000 in a single year.

2. Time Withdrawals with Your Income: If your income fluctuates, take larger distributions in years when your other income is lower. For instance, if you plan to retire in three years, you might take smaller withdrawals now and a larger one after you stop working and your income drops.

3. Use a Roth Conversion Ladder (for the original owner): While a beneficiary cannot convert an inherited Traditional IRA to a Roth IRA, the original owner can. If you are advising someone on estate planning, a series of Roth conversions during their lifetime can create a tax-free inheritance for their beneficiaries.

4. Consider a Qualified Charitable Distribution (QCD): If the beneficiary is over age 70.5, they can donate up to $105,000 (for 2026, indexed to inflation) directly from the inherited IRA to a qualified charity. A QCD is not counted as taxable income, satisfying part of the withdrawal requirement while reducing taxes.

5. Disclaim the Inheritance: In rare cases, it might make sense to "disclaim" or refuse the inheritance. The assets would then pass to the next contingent beneficiary. This could be a tax-savvy move if you are in a very high tax bracket and the contingent beneficiary (e.g., your child) is in a much lower one. This is an irrevocable decision and requires careful legal and financial advice.

1. Missing the 10-Year Deadline: Forgetting to empty the account by the end of the 10th year after death results in a stiff penalty—25% of the amount that should have been withdrawn (or 10% if corrected in a timely manner).
2. Taking a Lump Sum in a High-Income Year: Cashing out the entire IRA at once can trigger a massive, and often unnecessary, tax bill by pushing you into the top federal and state tax brackets.
3. Rolling Over a Non-Spouse IRA: A non-spouse beneficiary cannot roll an inherited IRA into their own IRA. Attempting to do so is treated as a full distribution, making the entire amount taxable immediately.
4. Forgetting About State Taxes: Many people focus only on federal taxes, but state income taxes can take a significant bite. This calculator helps you account for both.
5. Ignoring Potential Tax-Free Portions: Failing to account for a Roth portion or non-deductible basis means you will overpay taxes on money that should be returned to you tax-free.