How to Calculate Roth Conversion Tax: Step-by-Step 2026

What a Roth conversion tax is

Moving money from a traditional IRA to a Roth IRA is a Roth conversion, and the taxman treats it as income. The amount you convert is added to your other income for the year and taxed at your ordinary rates — not at a flat or capital-gains rate. The bill is the tax on your income with the conversion, minus the tax on your income without it. On a $25,000 conversion with $60,000 of other income, the federal tax is $5,500.00, the state tax $1,250.00 at 5%, and the total $6,750.00.

Step 1: Add the conversion to your other income

The conversion sits on top of your other income. Add the two together: $60,000 of other income plus a $25,000 conversion is $85,000 of total income. That is the key idea — the conversion does not get its own rate. It is taxed in the brackets it lands in, on top of everything else you earned. A conversion in a low-income year is cheap; in a high-income year it is dear.

Step 2: Work out the tax on the total and on the income alone

Run the 2026 brackets twice. First, the tax on your other income alone: on $60,000, single, it is $7,912.00 — 10% of the first $12,400 ($1,240.00), 12% of the next $38,000 to $50,400 ($4,560.00), and 22% of the remaining $9,600 ($2,112.00). Second, the tax on the total: on $85,000 the tax is $13,412.00 — the same $5,800.00 on the first $50,400, then 22% of the remaining $34,600 ($7,612.00). The single brackets run 10% to $12,400, 12% to $50,400, 22% to $105,700, then 24%, 32%, 35% and 37%.

Step 3: Subtract to find the federal tax on the conversion

Subtract: $13,412.00 minus $7,912.00 is $5,500.00 — the federal tax on the conversion. Every dollar of this conversion lands in the 22% bracket, so the federal tax is simply 22% of $25,000 — though a bigger conversion spills into higher brackets, and one on low income starts lower. At $30,000 of other income the federal tax is $3,460.00, because the conversion starts in the 12% bracket. At $200,000 of other income it is $7,858.00, because most of it lands in the 32% bracket.

Step 4: Add the state tax

Most states tax a conversion too. Multiply the conversion by your state rate: $25,000 times 5% is $1,250.00. Add it to the federal tax for the total bill: $5,500.00 plus $1,250.00 is $6,750.00. The state rate is a flat simplification — most states have brackets of their own. With no state income tax the bill is $5,500.00 alone; at 9.3% the state tax is $2,325.00 and the total is $7,825.00.

Step 5: Work out the effective and marginal rates

Two rates describe the bill. The effective rate is the total divided by the conversion: $6,750.00 divided by $25,000 is 27.00%. The marginal rate is the bracket of the last dollar: the last dollar of $85,000 sits in the 22% bracket, so the marginal rate is 22%. The effective rate is the average cost; the marginal rate is the cost of the next dollar. Filing jointly it is $4,250.00 in total — the joint brackets are twice as wide and the conversion lands mostly in the 12% bracket.

The worked example

$25,000 conversion, $60,000 of other income, single, 5% state rate, tax paid from outside funds. The tax on $60,000 alone is $7,912.00 and the tax on $85,000 is $13,412.00, so the federal tax on the conversion is $5,500.00. The state tax is $1,250.00, the total tax is $6,750.00, the effective rate is 27.00% and the marginal rate is 22%. The after-tax value is $25,000.00 (outside funds) or $18,250.00 (from the conversion). Totals are computed from unrounded values, so rounded parts may differ by a cent from their rounded sum.

Working backwards

The conversion for a $10,000.00 total tax is $37,037.04 (exact 37037.0370); at $37,037.04 the total is $10,000.0008, at $37,037.03 it is $9,999.9981. The conversion for a $6,000.00 federal tax is $27,272.73 (exact 27272.7273); at $27,272.73 the federal tax is $6,000.0006, at $27,272.72 it is $5,999.9984. The conversion for a $20,000.00 after-tax value (tax paid from the conversion) is $27,397.26 (exact 27397.2603); at $27,397.26 the after-tax value is $19,999.9998, at $27,397.25 it is $19,999.9925. The other income for a $5,000.00 total tax is $32,900.00: $3,750.00 federal, $5,000.00 total at $32,900.00; $3,749.90, $4,999.90 at $32,899.00. The state rate for a $7,500.00 total tax is 8.00% (exact 8.0000%); at 8.00% the total is $7,500.00, at 7.99% it is $7,497.50. The conversion for a $10,000.00 federal tax at $100,000 of other income is $42,141.67 (exact 42141.6667); at $42,141.67 the federal tax is $10,000.0008, at $42,141.66 it is $9,999.9984.

Paying from outside vs from the conversion

Paying the tax from outside funds keeps the full $25,000.00 growing tax-free in the Roth. Paying it from the conversion leaves only $18,250.00 — the $6,750.00 that pays the tax never grows tax-free. At a $250,000 conversion the total tax is $81,857.25 and paying from the conversion leaves $168,142.75, while paying from outside keeps the full $250,000.00.

Mistakes that overstate your bill

Do not apply your average tax rate to the conversion: the average rate on $60,000 is about 13%, but the conversion is taxed at the marginal 22%, so the federal tax is $5,500.00, not about $3,300. Do not forget the state tax: at 5% it adds $1,250.00, at 9.3% it adds $2,325.00. Do not convert the whole balance in one year without checking the next bracket: a $250,000 conversion pushes the last dollar into the 35% bracket and the total is $81,857.25. And do not convert money you will need soon — the Roth earnings are only tax-free after the five-year rule.

How this connects

Run your own numbers with the Roth conversion tax calculator; for whether converting pays off, see the Roth conversion vs no conversion calculator; for the brackets, see the 2026 federal tax brackets page.