In this segment, CFP® Craig Wear explains how a surviving spouse’s tax situation changes when the other spouse dies. He contrasts married‑filing‑joint status, which has wide tax brackets, with the widow/widower single filing status that is roughly half as wide. While the surviving spouse’s income and assets (Social Security, IRA, brokerage accounts) generally remain the same, the narrower brackets push the same income into a higher tax rate. Wear illustrates this with a concrete example: a combined income of $215,000 places a married couple in the 24% bracket, but after one spouse’s death the identical $215,000 falls into the 32% bracket, resulting in higher taxes for the survivor.
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If something happens to you, let me ask you a question. What happens to your spouse's tax situation? Have you thought about that? Have you thought about it in detail? Do the taxes go down or do they go up? You know, most people we talk to, they say, well, the taxes go down because there's only one of us there. So let's get into phase one. You're married in retirement or married retirement. So you got two taxpayers. The income is split across two Social Security recipients. So there's two people. So now you have married filing joint tax brackets, which are wide. When I say wide, what I mean is there's a lot of dollars between the low end of the bracket and the high end of the bracket. In fact, they're almost twice as wide as a single filer. So that when either you or your spouse passes, now you move into the widow or widower's years and your IRA goes with you, right? So you got one taxpayer, your filing status drops immediately to single taxpayer. You got the same income for the most part. You may lose some Social Security benefit or part of a pension or however your life is structured, but the income doesn't shrink dramatically just because a spouse dies. The IRA stays around, the spouse inherits most of the time. The brokerage account stays around, nothing significant changes, and you end up with the same income, same assets, but smaller tax brackets. In fact, about half as wide. So you have the same income, but higher rates. And so let me show you kind of a dramatic example of what happens. Let's say between all your pensions and your dividends and your gains and your required distributions, let's say at your married filing joint on one day, and it's $215,000. Well, in today's tax bracket in married filing joint, that puts you at the 24% tax bracket. But if, like that, tomorrow one of the spouses is gone, then now that you have the same income of, let's say, $215,000, but now that $215,000 is at the 32% bracket for the remaining spouse. Same income, higher taxes.
