The tax you owe on a Roth conversion is ordinary income tax on the pre-tax portion of whatever you move from a traditional IRA into a Roth IRA. There is no separate conversion rate. The taxable amount stacks on top of your other income for the year and fills your federal brackets from wherever your other income leaves off, so a $100,000 conversion almost never produces a single clean rate. Your final bill blends federal brackets, any state income tax, and a handful of income-driven surcharges and phase-outs that a higher AGI can trigger.
How Much of the Conversion Is Actually Taxable
If every dollar in your traditional IRA came from deductible contributions and investment growth, the full conversion is taxable. It only gets complicated when you’ve made after-tax (non-deductible) contributions along the way.
Basis and the Pro-Rata Rule
Basis is the running total of non-deductible contributions you’ve made to traditional IRAs. You already paid tax on that money, so it isn’t taxed again on conversion. You’re responsible for tracking basis and reporting it each year on Form 8606.1Internal Revenue Service. About Form 8606, Nondeductible IRAs Lose the paper trail and the IRS treats the full conversion as pre-tax.
You can’t select which dollars to convert. When you hold both pre-tax and after-tax money, the IRS forces every conversion to be a proportional mix. Your non-taxable percentage equals total basis divided by the combined December 31 balance of all your non-Roth IRAs.2Internal Revenue Service. Publication 590-B, Distributions from Individual Retirement Arrangements
An example. You have $100,000 across all your IRAs, and $20,000 of that is basis. Your non-taxable ratio is 20%. Convert $50,000 and $10,000 is a tax-free return of basis; the other $40,000 is taxable ordinary income.
Aggregation Across Accounts
The pro-rata math treats every traditional IRA, SEP IRA, and SIMPLE IRA you own as one pool, regardless of custodian or vintage. You cannot isolate a single account holding only after-tax dollars and convert just that one.2Internal Revenue Service. Publication 590-B, Distributions from Individual Retirement Arrangements Employer plans like 401(k)s and 403(b)s are not part of this pool, which is why some people roll pre-tax IRA balances into a current 401(k) before year-end to shrink the aggregate and make a conversion more tax-efficient.
Where the Taxable Amount Lands in the 2026 Brackets
The taxable portion of the conversion is added to your other income for the year: wages, business profit, taxable Social Security, investment income, everything. It fills whatever room is left in your current bracket and spills into higher ones if it’s large enough. Each bracket’s rate applies only to the dollars that fall inside it.
The 2026 federal brackets:3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
- 10%: Up to $12,400 single / $24,800 married filing jointly
- 12%: Over $12,400 / $24,800
- 22%: Over $50,400 / $100,800
- 24%: Over $105,700 / $211,400
- 32%: Over $201,775 / $403,550
- 35%: Over $256,225 / $512,450
- 37%: Over $640,600 / $768,700
Say you’re married filing jointly with $180,000 of taxable income before converting. You have about $31,400 of room left in the 22% bracket before hitting 24%. Convert $50,000 and the first $31,400 is taxed at 22%, the remaining $18,600 at 24%. The blended federal rate on that conversion is roughly 22.7%, not a flat 24%.
This is why deliberate bracket-filling matters. Splitting a $300,000 conversion across several years at the 24% rate almost always beats one lump conversion that pushes a chunk of it into 32% or 35%.
Costs That Ride Along With a Higher AGI
The taxable conversion raises your adjusted gross income, and a higher AGI can trigger costs that go well beyond bracket tax. These are where people routinely underestimate the true bill.
Medicare IRMAA
Medicare bases Part B and Part D premiums on your modified AGI from two years earlier. A conversion in 2026 shows up in 2028 premiums. For 2026, IRMAA surcharges start at $109,000 for single filers and $218,000 for joint filers, rising through tiers that top out above $500,000 single and $750,000 joint.4Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles At the top tier the added premium runs several hundred dollars per month per spouse. If you’re near or on Medicare, model the two-year-delayed hit before deciding how much to convert.
Net Investment Income Tax
The 3.8% net investment income tax applies to the lesser of your net investment income or the amount your MAGI exceeds $200,000 single or $250,000 married filing jointly.5Internal Revenue Service. Net Investment Income Tax Conversion income itself isn’t investment income and isn’t directly subject to the 3.8% surtax. But by lifting your MAGI, a conversion can push you past those thresholds and apply the 3.8% to capital gains, dividends, and interest you already had. In effect, a large conversion can carry a hidden surcharge on your outside investment income.
Phase-Outs of Credits and Deductions
A higher AGI can shrink or eliminate the premium tax credit for health insurance, the child tax credit, education credits, and various deductions. The specifics depend on your situation, but the direction is the same: conversion income inflates AGI, and inflated AGI erodes benefits that phase out at higher income. Run a full projection, not just a bracket estimate.
State and Local Income Tax
Most states that levy an income tax start with federal AGI. If a $50,000 conversion adds $50,000 to federal AGI, that same $50,000 is generally state-taxable too. States without an income tax skip this layer. In high-tax states, the combined federal-plus-state rate can be several points above the federal bracket alone.
Some localities add another layer. Roughly a dozen states let cities or counties impose income or payroll taxes. The rates are usually small, but even 1% or 2% on a six-figure conversion is a real number. Check whether your locality taxes retirement or investment income and which income definition it uses.
Paying the Bill Without Adding Penalties
How you pay the tax matters almost as much as how much you owe. Conversion income isn’t subject to employer withholding, so the IRS expects estimated payments. You generally need to make quarterly payments on Form 1040-ES if you expect to owe $1,000 or more after withholding and refundable credits.6Internal Revenue Service. Form 1040-ES, Estimated Tax for Individuals The quarterly deadlines are April 15, June 15, September 15, and January 15 of the following year.7Internal Revenue Service. Estimated Tax
To dodge underpayment penalties, pay at least 90% of your current-year tax liability or 100% of last year’s, whichever is less. Catch for higher earners: if your prior-year AGI topped $150,000 (or $75,000 if married filing separately), the prior-year safe harbor jumps to 110%.8Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty Anyone doing a meaningful conversion is likely on the 110% number.
Your IRA custodian can withhold federal tax directly from the converted amount. It’s convenient and it’s expensive. Convert $100,000 with 22% withheld and only $78,000 lands in the Roth; the $22,000 is treated as a distribution, not a Roth contribution, and never earns decades of tax-free growth. Pay the tax from a separate account when you can.
The Conversion Is Permanent
One thing to know before you commit: since 2018, Roth conversions are irreversible. The Tax Cuts and Jobs Act eliminated the ability to recharacterize (undo) a conversion. Before that, you could convert, see how the tax math shook out, and reverse course if the bill came in higher than planned. That safety net is gone. Once you execute, the income is on your return and the tax is owed, which is why running the bracket math, the ripple costs, and the state layer beforehand matters far more than it used to.