Here’s how to reduce the survivor penalty after the death of a spouse

After the death of their spouse, some retirees face a costly surprise: higher taxes.

However, couples can reduce the burden by early planningsay financial experts.

The passage of married filing jointly with a single on future tax returns can trigger a “survivor penalty,” depending on whether your income changes.

“Not only is the surviving spouse likely to face higher taxes in the single bracket, but it may also increase their Medicare Part B and D bonuses,” said certified financial planner Judy Brown, principal at SC&H Wealth Advisors, based in the Washington, D.C. and Baltimore metro areas.

For the year of death, a survivor can file a “joint marriage return” with their deceased spouse, unless they remarry before the end of the tax year.

After that, older survivors typically use “single” filing status, which can have higher tax rates, with narrower tax brackets and a smaller standard deduction.

The brackets use “taxable income,” which you calculate by subtracting the greater of the standard or itemized deductions from your adjusted gross income.

For 2024, the standard deduction for married couples is $29,200, but singles can only claim $14,600. The IRS recently revealed higher tax brackets and standard deductions for 2025.

Given these differences, here are some ways to reduce taxes for surviving spouses, according to advisors.

“The first step is to do a tax projection for each spouse” to see how income, deductions and other factors might impact future taxes, depending on which spouse comes first, Brown said. who is also a chartered accountant.

After crunching the numbers, you can choose which tax strategies to use for each spouse, she said.

The survivor’s penalty affects American women more often than men because women are more likely to survive male spouses. In 2022, there was a 5.4-year life expectancy gap between the sexes in the United States, according to the latest data from the Centers for Disease Control and Prevention.

Often, couples benefit from temporarily lower brackets for early retirement, after leaving the workforce but before starting to receive Social Security and required minimum distributions.

“One of the best ways to minimize the survivor penalty is to prioritize paying taxes in lower tax brackets for married individuals filing jointly, especially in cases of early retirement,” said CFP Judson Meinhart, director of financial planning at Modera Wealth Management in Winston-Salem, North. Caroline.

You can do this by making withdrawals earlier from pre-tax retirement accounts or taking advantage of Roth IRA Conversions to “strategically fill the lowest tax brackets” during those lowest-income years, he said.

However, increasing your income may result in other tax consequences, such as increased taxes on Social security, capital gains and more.