Quick Answer
Quick Answer: The calculator treats a Roth conversion as ordinary income stacked on top of your current taxable income. It computes your 2026 federal tax before the conversion, then again with the conversion added, and the difference is the incremental tax you owe. For a single filer with $80,000 of taxable income who converts $50,000, the engine returns $11,486 of federal tax, a 24% marginal rate, a 22.97% effective rate. At a 12% expected retirement rate the conversion never breaks even: it costs $5,486 more in tax now than the same money would cost at 12% later, and growth widens that gap instead of closing it. This page shows the complete math behind every number our calculator produces.
Key Takeaways
- The engine uses four required inputs -- conversion amount, age, filing status, and current taxable income -- plus optional inputs for break-even (expected retirement rate, return, and the years to compare over); the MCP tool takes birth year in place of age
- Tax owed is incremental: your 2026 federal tax with the conversion minus your tax without it
- The marginal rate is the top bracket the conversion reaches; the effective rate is tax owed divided by the conversion amount, and is usually lower
- Break-even is the first year converting is at least even with not converting, compared like with like: right away if your retirement rate is at or above the conversion's effective rate, and never if it is below
- The figure is federal ordinary-income tax only -- state tax, IRMAA surcharges, and the per-conversion 5-year clock are out of scope
Roth Conversions in Plain English
A Roth conversion moves money from a pre-tax Traditional IRA (where you have never paid income tax on it) into a Roth IRA (where future growth and withdrawals are tax-free). The catch is that the converted amount is treated as ordinary income in the year you convert -- so you pay tax now to buy tax-free treatment later.
The calculator walks the same steps every time:
- Take your current taxable income and figure your 2026 federal tax on it.
- Add the conversion amount on top, and figure your federal tax again.
- Subtract the two: the increase is the tax the conversion costs you.
- Report the marginal bracket the conversion reaches, the effective (blended) rate, and -- if you supply an expected retirement rate -- whether and when converting breaks even.
The key idea is bracket stacking. Because federal brackets are progressive, the first dollars of a conversion are taxed at your current marginal rate, and later dollars can spill into the next bracket up. That is why doubling the conversion does not always double the tax -- and why "filling up a bracket" is a common conversion strategy. The IRS Roth conversion guidance(opens in new tab) is the authoritative reference for how conversions are taxed.
The Formula
Here are the exact rules used by our Roth Conversion Calculator. Let I be current taxable income and C the conversion amount. The engine runs a progressive bracket lookup (bracketTax) twice:
taxOwed = bracketTax(I + C) − bracketTax(I)
Where bracketTax(x) walks the 2026 brackets for your filing status: for the top bracket b that x reaches, bracketTax(x) = baseTaxb + (x − minb) × rateb. The engine then derives two rates:
marginalRate = rate of the top bracket that (I + C) reaches
effectiveRate = taxOwed ÷ C
If you supply an expected retirement marginal rate, the engine compares converting with not converting like with like. The conversion tax is paid from savings outside the IRA, so the whole conversion grows in the Roth. Without the conversion, the Traditional balance grows and is taxed at the retirement rate when withdrawn, and the tax money stays invested at the same return. Let f = future (retirement) rate, r = expected return, n = years:
advantage(n) = C(1 + r)n − C(1 + r)n(1 − f) − taxOwed(1 + r)n = (1 + r)n × (C × f − taxOwed)
breakEvenYear = the first whole n from 0 to the horizon with advantage(n) ≥ 0; otherwise never
Because (1 + r)n is always positive, the advantage keeps the same sign in every year. Break-even is therefore immediate (year 0) when f is at or above the effective rate taxOwed ÷ C, and never when it is below: growth makes the gap larger, not smaller. The on-page calculator also adds your state rate to both the tax now and the rate later, and it cancels out of the advantage. The horizon is the calculator's Projection Years, or the tool's horizon_years (default 20).
Two rules the engine applies exactly:
- Tax floored at zero:
taxOwed = max(0, afterTax − beforeTax)-- a conversion never produces a negative tax. - 5-year rule flag: the engine returns
fiveYearRuleApplies = truewhen age is under 59½, because each conversion starts its own 5-year clock: if you withdraw that converted amount before the clock runs out and before age 59½, you may owe the 10% additional tax on early distributions on it (IRS Publication 590-B(opens in new tab)). Earnings follow a separate, account-level rule: they come out tax-free only in a qualified distribution, made after the five-year period that begins with the first tax year for which a contribution was made to a Roth IRA set up for you, and at age 59½ or later (or on disability, death, or a qualifying first-home purchase).
Variable Definitions
| Variable (engine parameter) | Meaning | Engine units / values | MCP tool argument (evaluate_roth_conversion) | Example (single, $80,000, convert $50,000) |
|---|---|---|---|---|
| C (conversionAmount) | Amount moved from Traditional to Roth | USD | conversion_amount, USD, 0 – 10,000,000 |
$50,000 |
| I (currentTaxableIncome) | Taxable income before the conversion | USD | current_taxable_income, USD, 0 – 10,000,000 |
$80,000 |
| filingStatus | Which 2026 bracket table applies | single / married / marriedSeparate / headOfHousehold | filing_status: single / married_filing_jointly / married_filing_separately / head_of_household (mapped to the engine's four values in that order) |
single |
| age | Drives the 5-year-rule flag (under 59½) | Years | birth_year, 1900 – 2100; the tool derives age = rule year − birth_year and requires it to be 18 – 100 (age 45 in 2026 is birth_year 1981). The tool has no age argument. |
45 |
| f (retirementMarginalRatePercent) | Expected marginal rate in retirement | Percent (optional) | retirement_marginal_rate_percent, 0 – 50 (optional) |
12% |
| r (expectedReturnPercent) | Annual return on both paths (the Roth, the Traditional balance and the tax money) | Percent (default 7) | expected_return_percent, 0 – 20 (optional, default 7) |
7% |
| n (horizonYears) | Years to compare over for break-even | Whole years (default 20) | horizon_years, 1 – 60 (optional, default 20) |
20 |
Valid Input Ranges
The engine function takes age and one of four filing statuses spelled single, married, marriedSeparate or headOfHousehold, and applies no range checks of its own. The bounds above are enforced by the MCP tool evaluate_roth_conversion on its own argument names: a conversion amount and current taxable income from $0 to $10,000,000, a birth_year that gives an age from 18 to 100 in the rule year, a filing_status of single, married_filing_jointly, married_filing_separately or head_of_household, an expected retirement rate from 0% to 50%, an expected return from 0% to 20%, a horizon_years from 1 to 60 (default 20), and an optional rule_year (default 2026). The on-page calculator uses its own form fields and limits (for example, a Current Age field of 18 to 100).
Worked Example: Single Filer, $80,000 Income, Convert $50,000
This section walks through every step for a $50,000 conversion that crosses a bracket boundary. You can follow along and verify the result against our Roth Conversion Calculator. The 2026 single brackets used below are 10% to $12,400, 12% to $50,400, 22% to $105,700, and 24% to $201,775.
Step 1: Federal Tax Before the Conversion
- $80,000 falls in the 22% bracket ($50,400 – $105,700)
- Base tax at $50,400 = $5,800 ($1,240 at 10% + $4,560 at 12%)
- bracketTax($80,000) = $5,800 + ($80,000 − $50,400) × 0.22 = $12,312
Step 2: Federal Tax After Adding the Conversion
Adding $50,000 lifts taxable income to $130,000, which lands in the 24% bracket.
- Base tax at $105,700 = $17,966 ($5,800 + $55,300 at 22%)
- bracketTax($130,000) = $17,966 + ($130,000 − $105,700) × 0.24 = $23,798
Step 3: Incremental Tax Owed
- taxOwed = $23,798 − $12,312
- taxOwed = $11,486
Step 4: Marginal and Effective Rate
- Marginal rate = 24% (the top bracket $130,000 reaches)
- Effective rate = $11,486 ÷ $50,000 = 22.97%
Step 5: Break-Even Year
- f = 12% (retirement), r = 7% (return), effective rate on the conversion = 22.97% (the marginal rate, 24% or 0.24, does not enter)
- Advantage at the start = $50,000 × 0.12 − $11,486 = $6,000 − $11,486 = −$5,486
- After 20 years: −$5,486 × 1.0720 = −$5,486 × 3.86968 = −$21,229.09
- Break-even: never (12% is below the 22.97% effective rate, so the gap only grows); and because age 45 is under 59½, the 5-year rule applies
Read together: this saver pays $11,486 in federal tax to convert $50,000 -- an effective rate of 22.97% -- and if they expect a 12% marginal rate in retirement the conversion never breaks even: not converting stays ahead, by $21,229.09 after 20 years at 7%. At any retirement rate of 22.97% or more it would break even immediately. Every figure above was produced by the calculator's engine with inputs conversionAmount = $50,000, currentTaxableIncome = $80,000, filingStatus = single, age = 45, retirementMarginalRatePercent = 12, expectedReturnPercent = 7 (verified July 5, 2026; break-even re-verified October 4, 2026). Through the MCP tool the same example is conversion_amount 50000, birth_year 1981, filing_status single, current_taxable_income 80000, retirement_marginal_rate_percent 12 and expected_return_percent 7, which returns the same $11,486 and 24%, a break-even of null (never) from contract 2.7.0, and the 5-year-rule flag (break-even checked October 4, 2026).
How Conversion Size Changes the Tax
Because the brackets are progressive, the effective rate on a conversion climbs as more of it crosses into the next bracket up. The table below holds the filer fixed (single, $80,000 taxable income) and varies only the conversion amount. Every row was computed by the engine.
| Conversion Amount | Federal Tax Owed | Marginal Rate | Effective Rate |
|---|---|---|---|
| $10,000 | $2,200 | 22% | 22.00% |
| $25,000 | $5,500 | 22% | 22.00% |
| $50,000 (worked example) | $11,486 | 24% | 22.97% |
| $75,000 | $17,486 | 24% | 23.31% |
| $100,000 | $23,486 | 24% | 23.49% |
The first $25,700 of conversion room (from $80,000 up to the $105,700 bracket edge) is taxed entirely at 22%, so the $10,000 and $25,000 conversions carry a flat 22.00% effective rate. Once the conversion crosses $105,700, each additional dollar is taxed at 24%, dragging the blended effective rate upward toward that ceiling.
Filling Up a Bracket
A common strategy is to convert only enough to "fill" your current bracket without spilling into the next. For this filer, converting up to $25,700 keeps every dollar at 22%; the next dollar is taxed at 24%. The engine's marginal-rate output tells you exactly where that line sits for your income and filing status.
The Break-Even Year and the 5-Year Rule
Two levers sit outside the worked example: your expected retirement rate, which decides break-even, and the 5-year rule, which the engine flags. Both are encoded in the tool.
How the Expected Retirement Rate Decides Break-Even
Break-even compares the tax the conversion costs now with the tax the same money would cost later at your retirement rate, with both sides growing at the same return. The table holds the conversion fixed (single, $80,000 income, convert $50,000, 7% return, 20 years; effective rate 22.97%, marginal rate 24%) and varies only the expected retirement rate. Every row is engine-computed.
| Expected Retirement Rate | Converting Ahead By (20 Years) | Break-Even |
|---|---|---|
| 10% | −$25,098.77 | Never |
| 12% (worked example) | −$21,229.09 | Never |
| 22% | −$1,880.67 | Never |
| 23% | $54.18 | Immediate (year 0) |
| 24% (equals the marginal rate) | $1,989.02 | Immediate (year 0) |
| 32% | $17,467.76 | Immediate (year 0) |
The line sits at the effective rate, 22.97% here, not at the 24% marginal rate. At 23% the conversion costs $11,486 now against $11,500 the same money would owe later, so converting is ahead from the start. At 22% it costs $486 more now than later, and that gap grows with the money; at 10% it reaches $25,098.77 after 20 years. Before October 4, 2026 this calculator used a shortcut that compared the retirement rate with the marginal rate and left out the growth of the tax money, so it could show a break-even of a few years where, under these constant-rate assumptions, converting does not catch up.
The 5-Year Rule Flag
For any saver under age 59½, the engine sets fiveYearRuleApplies = true. Each Roth conversion starts its own five-year clock: withdraw the converted principal before five years and before age 59½ and you may owe a 10% penalty on that amount. The engine reports whether the rule is in play based on age, but it does not model the per-conversion clock timing -- that is a planning detail to track separately.
Data Sources and Methodology Notes
Calculation Engine and API Access
The same conversion-tax logic runs in the browser and in our public calculator API / MCP server (tool: evaluate_roth_conversion, the renamed roth_conversion_tax_impact — full input/output schema in the API reference), so a result is identical wherever you access it. The engine returns the incremental tax owed, the marginal rate on the conversion, the effective rate, the 5-year-rule flag, and the optional break-even year. As a reproducibility check, the worked example and every table figure on this page were generated by that engine (verified July 5, 2026).
Reference Data
- The 2026 federal ordinary-income brackets used by the engine are set by IRS Revenue Procedure 2025-32 (2026 inflation adjustments)(opens in new tab). For a single filer these are 10% to $12,400, 12% to $50,400, 22% to $105,700, 24% to $201,775, 32% to $256,225, 35% to $640,600, and 37% above.
- Conversion taxation, the ordinary-income treatment, and the 5-year rule follow IRS guidance on rollovers and Roth conversions(opens in new tab) (see also Publication 590-A for conversions and Publication 590-B for the 5-year rules on distributions).
Assumptions and Scope Limits
- This tool models a single conversion only. Multi-year conversion "laddering" or optimization is a separate, future feature.
- Federal ordinary-income tax only. State income tax on the conversion and Medicare IRMAA premium surcharges are not modeled -- add them separately.
- The 5-year rule is reported as a flag (age under 59½); the engine does not model the per-conversion clock timing.
- Break-even compares converting with not converting like with like at constant rates: the tax is paid from savings outside the IRA, and without a conversion that money stays invested at the same return. Taxes on that outside growth are not modeled (they would tilt the result slightly toward converting).
- Figures are 2026 values. Brackets are re-indexed annually, so verify the current year before relying on any number.
Frequently Asked Questions
The calculator treats the conversion as ordinary income stacked on top of your existing taxable income. It computes your 2026 federal tax at your income before the conversion, then again with the conversion added, and the difference is the incremental tax you owe. For a single filer with $80,000 of taxable income converting $50,000, the engine returns $11,486 of federal tax -- because the conversion fills the rest of the 22% bracket and spills into the 24% bracket.
The marginal rate is the top bracket the conversion pushes you into -- 24% in the worked example, because $80,000 + $50,000 = $130,000 lands in the 2026 single 24% bracket. The effective rate is the total tax divided by the conversion amount: $11,486 ÷ $50,000 = 22.97%. The effective rate is lower than the marginal rate because part of the conversion is still taxed at 22% before the rest crosses into 24%.
Break-even is the first whole year in which converting is at least even with not converting, compared like with like: the Roth balance against the Traditional balance after tax at your expected retirement rate, plus the conversion tax kept invested at the same return. That advantage is (1 + return)years × (conversion × retirement rate − tax owed), so it keeps one sign in every year. Break-even is immediate when your retirement rate is at or above the effective rate on the conversion, and never when it is below. In the worked example (22.97% effective, 24% marginal, 7% return) a 12% retirement rate never breaks even; 23% or more breaks even immediately. State tax and IRMAA are not modeled in this figure.
No. By design the evaluate_roth_conversion engine models federal ordinary-income tax only. State income tax on the conversion, Medicare IRMAA premium surcharges, and the per-conversion 5-year-rule clock are explicitly out of scope -- the tool reports whether the 5-year rule applies (age under 59½) but does not model the timing. Add your state's rate and check IRMAA thresholds separately.
Because the federal brackets are progressive. A $10,000 or $25,000 conversion on top of $80,000 stays inside the 22% bracket, so its effective rate is 22.00%. A $50,000 conversion pushes into the 24% bracket, raising the blended effective rate to 22.97%; a $100,000 conversion pushes further, reaching 23.49%. Each additional dollar above the $105,700 bracket edge is taxed at 24%, so the average rate on the whole conversion climbs toward that ceiling.
Sources
- Internal Revenue Service -- Revenue Procedure 2025-32 (2026 federal tax brackets and inflation adjustments)(opens in new tab)
- IRS -- Retirement Plans FAQs Regarding IRAs(opens in new tab)
- IRS Publication 590-A -- Contributions to Individual Retirement Arrangements (conversions)(opens in new tab)
- IRS Publication 590-B -- Distributions from Individual Retirement Arrangements (the per-conversion 5-year period and qualified distributions)(opens in new tab)
Important Disclaimer
Disclaimer: This content is for educational and informational purposes only and does not constitute financial, tax, or legal advice. Individual circumstances vary, and you should consult with a qualified tax or financial professional before making conversion decisions. A Roth conversion is generally irreversible and can affect your state taxes, Medicare IRMAA premiums, and other income-based benefits that this tool does not model. Federal tax brackets are set by the IRS and change from year to year; the figures here are 2026 values. While we strive for accuracy, laws and regulations change over time. Data current as of July 2026.
Content reviewed by Mark at Markco Labs. Learn more about our accuracy standards.