First Glimpse at Your Tax Bracket in 2026 (And What It Will Cost You)
Release Date: 05/08/2024
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This episode of The Power of Zero Show revolves around a recent Ray Dalio video in which he issued warnings about the U.S. debt crisis. In the clip, Dalio appears to be giving America three years to get their act together and to right the fiscal ship of state. Dalio mentions the draft of his new book that goes through the mechanics of the debt – and highlights the supply-demand problem he believes will occur if the deficit doesn’t go from the current 7.2% of GDP to about 3% of GDP. Dalio touches upon what people should do when there isn’t an adequate supply-demand balance. He believes...
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The 8 Taxes You Could Pay When Doing a Roth Conversion (Is it worth it?)
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Debunking Doug Andrew’s Roth IRA Hit Job Video
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What Percentage of Your Retirement Savings Should You Have in Traditional IRA vs. Roth?
The Power Of Zero Show
What percentage of your retirement savings should you allocate toward traditional IRAs and 401(k)s vs. Roth IRAs and Roth 401(k)s? That’s what this episode explores. Traditional financial guru advice says that it’s impossible to predict where tax rates are going down the road. Therefore, you may hear that your best bet is to simply have 50% of your money in tax-deferred and 50% of your money tax-free. David is somehow perplexed by the guru’s point of view about the future of tax rates being an unknown. However, signs that things won’t be the same appear to be evident. The current...
info_outlineDavid talks about what tax brackets will look like starting from January 1st 2026.
One of the things that will change in 2026 are the actual tax rates – with an increased percentage of tax attached to a given range of income.
In 2026, tax rates will return to what they were in 2017.
David points out that some people online mistakenly believe that, in 2026, things will simply revert back to the same tax rates of 2017, with the same income ranges attached to those rates.
An important thing to note is the federal government will index the 2017 tax brackets for inflation, treating your 2026 tax bracket as if the tax cut had never happened.
David shares a fairly accurate way of determining what your tax brackets are likely to be and what it will end up costing you.
Those in the 24% tax bracket or lower will see a slight uptick in their taxes in 2026 – not because of tax bracket compression but due to their tax rate increasing.
David sees doing a Roth conversion as a huge planning opportunity to protect yourself.
The idea is to take advantage of the Trump tax cuts while they’re still around so that, by the time they expire, you’ll have safely transferred a portion of your retirement savings to Roth IRAs.
David believes that, even though tax rates will go up in 2026, they’ll increase even further in 2030 and 2031 to pay for interest on the national debt in Social Security, Medicare, and Medicaid.
Mentioned in this episode:
David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free 3-part video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com