You pay your ordinary federal income tax rate on a traditional 401(k) withdrawal, which is anywhere from 10% to 37% in 2026, plus state tax in most states. The money is added to your other income for the year, so a large withdrawal can push part of it into a higher bracket. Qualified Roth 401(k) withdrawals are tax-free.
There is no special "401(k) tax rate." The withdrawal simply stacks on top of your other income for the year, and the IRS taxes the pile. Below we show what that means in dollars for one retiree taking out two different amounts, why the 20% your plan withholds is often the wrong number, and which states leave the money alone.
How much tax do you pay on a 401(k) withdrawal?
Traditional 401(k) money went in before tax, so every dollar of it is taxed when it comes out. The IRS says plan payments are fully taxable if you have no after-tax money in the account (IRS Topic 410). Your plan reports the withdrawal on Form 1099-R, and you add it to your income on your return.
The total bill has up to four parts:
- Federal income tax at your bracket rate. This applies at every age.
- State income tax, unless you live in a state that skips it (see below).
- A 10% additional tax if you are under 59½ and no exception applies. Our guide to the 401(k) early withdrawal penalty covers that part and every exception.
- Knock-on taxes, mainly on Social Security benefits, which a withdrawal can make taxable.
If you made after-tax (non-Roth) contributions, that part comes back tax-free. Many people have none, so we assume the whole withdrawal is taxable from here on.
What is the 401(k) withdrawal tax rate in 2026?
It is the same set of brackets that applies to wages. The rates below apply to taxable income, which is your income after the standard deduction of $16,100 for single filers and $32,200 for married couples filing jointly.
| Rate | Single | Married filing jointly |
|---|---|---|
| 10% | $0 – $12,400 | $0 – $24,800 |
| 12% | $12,400 – $50,400 | $24,800 – $100,800 |
| 22% | $50,400 – $105,700 | $100,800 – $211,400 |
| 24% | $105,700 – $201,775 | $211,400 – $403,550 |
| 32% | $201,775 – $256,225 | $403,550 – $512,450 |
| 35% | $256,225 – $640,600 | $512,450 – $768,700 |
| 37% | Over $640,600 | Over $768,700 |
Two numbers matter. Your marginal rate is the rate on the last dollar you withdraw. Your effective rate on the withdrawal is the extra tax divided by the amount you took out. The second number is almost always lower. Our explainer on what percentage federal income tax really takes goes deeper on the difference.
Can a 401(k) withdrawal push you into a higher tax bracket?
Yes, and it is the part most people underestimate. Take a single 62-year-old retiree with $40,000 of pension income who has not started Social Security. After the standard deduction, their taxable income is $23,900 and their federal tax is $2,620. They sit in the 12% bracket. Now compare two withdrawals.
| $30,000 withdrawal | $80,000 withdrawal | |
|---|---|---|
| Taxable income with the withdrawal | $53,900 | $103,900 |
| Total federal income tax | $6,570 | $17,570 |
| Extra tax caused by the withdrawal | $3,950 | $14,950 |
| Effective rate on the withdrawal | 13.2% | 18.7% |
| Top bracket reached | 22% | 22% |
| Withheld by the plan at 20% | $6,000 | $16,000 |
| Refund (+) or balance due (−) at tax time | +$2,050 | +$1,050 |
The first $26,500 of any withdrawal is taxed at 12%, because that is how much room is left in this retiree's bracket. Everything above that is taxed at 22%. So the $30,000 withdrawal costs 13.2% of the amount, while the $80,000 withdrawal costs 18.7%. Only the dollars inside the higher bracket pay the higher rate. Crossing a bracket line never makes your whole income more expensive.
- Extra tax, $80,000 in one year
- $14,950
- Extra tax, $40,000 in year one
- $6,150
- Extra tax, $40,000 in year two
- $6,150
- Two-year total
- $12,300
- Saved by splitting
- $2,650
Here is the extra federal tax for the same retiree at other withdrawal sizes:
| Withdrawal | Extra federal tax | Effective rate | Top bracket |
|---|---|---|---|
| $10,000 | $1,200 | 12.0% | 12% |
| $20,000 | $2,400 | 12.0% | 12% |
| $30,000 | $3,950 | 13.2% | 22% |
| $50,000 | $8,350 | 16.7% | 22% |
| $80,000 | $14,950 | 18.7% | 22% |
| $100,000 | $19,714 | 19.7% | 24% |
How much tax is taken out of a 401(k) withdrawal?
It depends on the type of payment, not on your bracket. The federal rules on Form W-4R set three defaults:
| Type of payment | Default withholding | Can you change it? |
|---|---|---|
| Lump sum you could roll over (most cash-outs) | 20% | Higher only, never below 20% |
| Hardship withdrawal, or an RMD paid as a single payment | 10% | Yes, 0% to 100% on Form W-4R |
| Monthly or other periodic payments | As if single, no adjustments | Yes, on Form W-4P, including no withholding |
| Direct rollover to an IRA or new plan | None | Not needed |
Withholding is a down payment, not the bill. In our example the 20% overshoots: the retiree gets back about $2,050 on the smaller withdrawal. Now flip it. If the same $80,000 came out as a required minimum distribution with the 10% default, only $8,000 would be withheld and they would owe about $6,950 in April.
How are 401(k) withdrawals taxed after 59½?
At 59½ the 10% additional tax goes away. The income tax does not. A traditional 401(k) withdrawal at 60, 70 or 90 is still ordinary income, taxed exactly as in the examples above. "Penalty-free" and "tax-free" are not the same thing.
Later, the IRS makes you take money out. Required minimum distributions start at age 73 for most people today, and at 75 if you were born in 1960 or later under SECURE 2.0 (IRS final regulations). RMDs are taxed at your normal rate and cannot be rolled over. If your plan allows it, you can delay RMDs from your current employer's 401(k) until you retire. Missing one costs a 25% excise tax, cut to 10% if you fix it within two years (IRS RMD rules).
Are Roth 401(k) withdrawals taxed?
Not if they are qualified. A qualified Roth 401(k) withdrawal is not included in your income at all. It must meet two tests (IRS Roth account FAQs):
- At least five tax years have passed since your first Roth contribution to that plan.
- You are 59½ or older, disabled, or the payment goes to your beneficiary after your death.
If you miss either test, the withdrawal is split pro rata. Your contributions come out tax-free and the earnings share is taxed. Roth 401(k)s also no longer require RMDs while the owner is alive, which makes them useful for keeping later-year income low.
Does a 401(k) withdrawal make Social Security taxable?
It can. Your benefits become partly taxable when half of them plus your other income tops $25,000 (single) or $32,000 (married filing jointly) (IRS Social Security FAQ). A 401(k) withdrawal counts as other income. Above $34,000 ($44,000 joint), up to 85% of benefits can be taxed (IRS Publication 915). So for someone already collecting benefits, each withdrawal dollar can pull more benefit dollars into tax. These thresholds are not adjusted for inflation.
There is one offset if you are 65 or older. From 2025 through 2028 you can claim an extra $6,000 senior deduction on top of the regular senior standard deduction. It phases out above $75,000 of modified AGI ($150,000 joint), so a big withdrawal can shrink it (IRS).
Which states don't tax 401(k) withdrawals?
Nine states have no tax on 401(k) withdrawals because they have no tax on ordinary income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Washington taxes only capital gains in 2026 (Tax Foundation), although it has passed a 9.9% tax on income above $1 million that starts in 2028 (Washington DOR).
Four income-tax states also exempt most 401(k) money, with conditions:
| State | What is exempt | Main catch |
|---|---|---|
| Illinois | The federally taxed part of 401(k) and other qualified plan payouts | Nonqualified plans are taxed |
| Iowa | Eligible retirement income, including 401(k) payouts | Age 55+ on Dec. 31, disabled or a surviving spouse |
| Mississippi | Retirement income once plan requirements are met | Early distributions may be taxed |
| Pennsylvania | Payouts from eligible plans after retirement age | Early withdrawals taxed above prior contributions |
Everywhere else, expect your state rate on top of federal tax. Some states give partial breaks by age or amount, and they change often, so check your state revenue department before a large withdrawal.
How to calculate the tax on your 401(k) withdrawal
- Estimate your taxable income for the year without the withdrawal (income minus your deduction).
- Work out the federal tax on that number with the bracket table above.
- Add the withdrawal and work out the tax again. The difference is what the withdrawal costs.
- Add your state rate, and the 10% additional tax if you are under 59½.
- Compare the total with what the plan will withhold, and set money aside for the gap.
If you are under 59½, our early withdrawal calculator runs steps 3 and 4 for you.
How can you lower the tax on a 401(k) withdrawal?
- Fill your bracket, then stop. Take only enough to reach the top of your current bracket each year.
- Spread big withdrawals over two or more tax years, as in the example above.
- Use the low-income years. The gap between retiring and starting Social Security or RMDs is often the cheapest time to withdraw or convert to Roth.
- Mix account types. Roth money and taxable savings can cover big expenses without adding to your income.
- Never cash out to move money. A direct rollover to an IRA or new plan is not taxed and has nothing withheld.
The bottom line
A 401(k) withdrawal is taxed like salary, so the real question is how much income you already have that year. Keep withdrawals inside your current bracket when you can, check whether the 20% or 10% withholding matches your bill, and spread large amounts across tax years. Roth money and a no-tax state can cut the bill further.
