Maximize Taxable Retiree Income in 12% Bracket

IMHO, the 12% tax bracket is a sweet spot for taxable retiree income.  As a retiree, I could partially manage whether to receive taxable income or not.

Here was my thinking:

• 12% is a terrifically low tax bracket. For reference, I was in the 30% tax bracket at an entry level salary when I first started working in the early 80s.  This tax bracket will be available at least until 2030.
  
  
• The next bracket is 22% which means almost a 100% increase in one's marginal tax rate. If future income can be pulled forward  to the 12% tax bracket and avoid being in the 22% tax bracket in the future, that is a tremendous savings.
  
  

Here are some examples to take advantage for this "tax bracket arbitrage:"

• Do a Roth conversion, especially if one has traditional IRA accounts that will have current or future RMDs that may put one in the 22% tax bracket.  This will allow retirement investments to continue to grow tax free and pay 0% taxes when withdrawn in the future.
  
  
• Realizing long term capital gains that will be taxed at 0% instead of 15% or higher in the future.


• Invest in ETFs or stocks that pay qualified dividends that will be taxed at 0% instead of 15% or higher in the future.
  

Paying 0% or 12% tax on income now is definitely better than paying 15% or 22% in the future on the same income.

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This is not financial nor tax advice. Please consult a professional advisor.

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