Taxes during retirement

[Mary Jay]

How to figure out what tax bracket you’ll be in during retirement? For example, let’s say a single person makes a 100K per year on W-2 right now working for a corporate world.  It’s taxed at about 25-30 percent, right? For simplicity let’s say this person pays 30 percent in taxes, which is 30k
Let’s say the same person when he or she retires, will be making the same amount, 100 K, from long term Rentals, which is a passive income and it’s been texted to 15%, correct? So he or she probably will be paying 15k, roughly?

[Michael Plaks]

@Mary Jay

Your question does not have a specific answer that you hope for.

1. What does it mean making $100k from rentals? Before or after expenses? Are there mortgages? If you're referring to a $100k cash flow after all expenses, this is NOT what taxes will be calculated on. Mortgage principal does not count if you have mortgages; some repairs are not immediately deductible; and you have a paper deduction for depreciation. So your taxable income will not be $100k, it could be higher or lower.

2. Our tax system does not have flat rates. Not on a $100k salary and not on $100k rental income. It's a mixed rate: 0% on the first few thousands, 10% on the next few, and so on. Besides, it depends on your family situation, on your other income and investments and a lot of other factors. Impossible to give you one specific number.

3. W2 job will always be taxed higher than an equivalent rental income, because you also pay 7.5% for Social Security and Medicare.

4. State taxes are extra.

5. And our tax system is unstable, these days in particular. The rates and rules can change many times before you retire.