Will One More Year Change My Tax Bracket? Myth vs Reality

Old-school tax rules vs. how we plan now

I still hear this at kitchen tables and across conference rooms: “I can’t take that bonus, it’ll kick me into the next bracket.” That old bracket cliff myth refuses to die. It sounds logical, like there’s a trapdoor at each bracket line, but it’s not how the code works. Only the next dollars are taxed at the higher rate. Your prior dollars keep their lower rates. That one sentence saves a lot of stress, and sometimes a lot of bad decisions.

So what are we doing differently now? We plan by marginal rate, year by year, not by fear of a bracket jump. The real question isn’t “will-one-more-year-change-my-tax-bracket” in some grand, life-altering way. It’s: will waiting change the tax on my next dollar in a way that’s worth the delay? That’s a smaller, cleaner decision. And it’s the one that actually maps to how the IRS calculates your bill.

Quick refresher, over-explained on purpose, because this trips up smart people too: your effective rate is your total tax divided by total income. It’s the blended average across brackets. Your marginal rate is the rate on the next dollar you earn (or convert, or realize). Effective moves slowly; marginal can move in steps. So when your income creeps higher, your effective rate barely nudges, while your marginal rate on the incremental dollars can pop. That’s the core tension we’re managing.

And every year the lines move. The IRS inflation-indexes brackets, the standard deduction, and a laundry list of thresholds. In tax year 2024, the IRS moved individual brackets up by roughly 5.4% year over year (see Rev. Proc. 2023-34). That alone erased bracket creep for a lot of W-2 earners with normal raises. For 2025, brackets are again indexed upward. I’m not going to pretend I can recite every threshold from memory on a Friday afternoon, the exact tables are in the IRS’s annual procedure, but the point stands: the target shifts annually, so “waiting a year” often means you get a little more room before crossing the same marginal line.

Why does 2025 feel different? Because the clock runs out on the 2017 tax law after December 31, 2025. If Congress doesn’t act, 2026 likely brings: a higher top rate (back to 39.6% from 37%), smaller standard deductions, the return of personal exemptions, a lower threshold for the 3% itemized deduction phaseout, and the end of the $10k SALT cap as written (yes, that one gets messy fast). Translation: your marginal math in 2025 isn’t just about this year’s brackets; it’s about whether deferring income or Roth conversions into 2026 means a structurally higher rate environment.

And because markets are what they are, cash yields are still respectable compared with pre-2022, equities have been choppy this year, and muni spreads have pockets of value, the tax placement of income matters. If you’re earning 4-5% in cash equivalents, the timing of when that interest lands in a higher or lower marginal year is no longer trivial. Not everything needs a spreadsheet, but some of it does.

Core question for this section: Does waiting one more year meaningfully change your bracket, or just the tax on your next dollar?

Here’s what we’ll cover, straight up, no scare tactics:

• Why the old bracket “cliff” myth still trips people up (and how it even affects bonus and RSU decisions)
• Marginal vs. effective rate: what actually changes when income moves
• How annual IRS indexing shifts the guardrails, so your 2024 plan isn’t your 2025 plan
• What makes 2025 a special case with 2026 law changes on the horizon, and where waiting helps or hurts

If that sounds a bit complex, yeah, it is. I’ve been doing this for two decades and I still double-check the tables before pressing “execute” on a six-figure Roth conversion. We’ll keep it practical, and if we need to say “it depends,” we’ll say it and then pin down exactly what it depends on.

What really bumps you into a higher bracket

Short answer: the mix, the timing, and the phaseouts. 2025 is weird because we’ve got one more year of the TCJA rules before potential 2026 sunsets, so the guardrails look stable but the incentives are twitchy.

Income mix matters, a $30k wage raise doesn’t hit the same way as $30k of long-term gains or a chunky RSU vest:

• W-2 wages and bonuses: fully ordinary income, plus payroll tax. Year-end bonuses can push you into higher marginal brackets and trigger surtaxes even if your effective rate barely moves.
• Equity comp (RSUs/ISOs): RSUs are taxed at vest as wages; ISOs can create AMT if exercised/held. A December vest can pull you across phaseout lines you didn’t know existed. I’ve seen a $50k vest trigger the 3.8% NIIT cascade, fun times.
• Rentals/K-1s: Ordinary income or passive losses depending on participation; real estate professionals can swing this materially.
• Interest/dividends: Ordinary interest bites; qualified dividends ride the capital gains brackets.
• Capital gains: Long-term gains stack on top of ordinary income. One big sale can push the top layer of gains into a higher cap-gains bracket and into NIIT territory.

Deductions and credits that actually move the needle:

• Standard vs. itemizing: SALT is still capped at $10,000 through 2025, which keeps many folks on the standard deduction. That cap alone is why some high-tax-state households can’t “deduct their way” out of a bracket.
• HSA/FSA: For 2025, HSA limits are $4,300 self-only and $8,550 family (plus $1,000 catch-up). Pre-tax dollars here reduce AGI; that can pull you under key thresholds.
• 401(k)/IRA: Pre-tax deferrals lower taxable wages. Roth moves don’t, but they can be smart if you’re harvesting a temporarily low bracket. I know, that’s the tug-of-war.
• Charitable gifts: Itemized only (unless Congress revives above-the-line). Bunching gifts in 2025 with a donor-advised fund can flip you into itemizing for one year.
• Education credits: The American Opportunity Credit phases out at MAGI $80k-$90k single, $160k-$180k MFJ (those thresholds are not indexed). Landing just $1 over doesn’t nuke the credit immediately, but the phaseout works like a stealth bracket.

Phaseouts and threshold “brackets” hiding in plain sight:

• NIIT (3.8% on net investment income): Kicks in at $200k single / $250k MFJ MAGI, unchanged for years. One RSU vest + capital gain and boom, your next dollar of investment income is taxed higher.
• Additional Medicare tax (0.9%): Same thresholds as NIIT for earned income. Payroll systems catch it, but planning doesn’t always.
• Child-related benefits: The Child Tax Credit starts phasing out at $200k single / $400k MFJ MAGI (also not indexed). That phaseout acts like an extra marginal tax rate on that income band.
• QBI (199A) deduction: Still here in 2025; phaseouts for specified service businesses behave like a cliff in practice. And remember, 199A is scheduled to sunset after 2025, which is why some owners are accelerating income now, yep, counterintuitive, but it happens.

Filing status and state mismatches:

• Marriage/divorce/Head of Household: Status flips reset brackets and credit phaseouts. I had a Tuesday call where a client’s HOH eligibility made the difference between capital-gain harvesting in 2025 or waiting; we ended up splitting a sale across December/January and then, I’m getting sidetracked, point is, status pays.
• State taxes: Many states tax capital gains at ordinary rates and don’t mirror federal brackets or credits. Some don’t conform to QBI at all. Your “federal 12% bracket” plan can turn into a state 9% surprise. It ain’t pretty.

Reality check: the thing that “bumps” you is usually a threshold interaction, NIIT, credit phaseouts, or itemizing flips, not just crossing into the next federal bracket.

The punchline? In 2025, watch the non-indexed thresholds (NIIT, CTC, Additional Medicare) and any one-off income events (RSUs, business sales). Those are the levers that change your next dollar’s rate, and sometimes, your overall bracket by accident.

The 2025-to-2026 pivot: why timing suddenly matters

This isn’t theoretical anymore. Under current law, most individual pieces of the Tax Cuts and Jobs Act sunset after 2025. That means the rate table you’re using for Roth conversions, capital-gain harvesting, and bonus payouts in December could be the last year of the “TCJA version” of your tax life. The big picture: the 37% top rate reverts to 39.6% in 2026, and the wider TCJA brackets compress back toward pre-2018 widths. It’s the same income, but the brackets around it move, so timing actually pays, sometimes a lot.

Two line items households feel first: the standard deduction and personal exemptions. TCJA roughly doubled the standard deduction starting in 2018 but suspended personal exemptions. Pre-TCJA, the standard deduction in 2017 was $6,350 for single and $12,700 for MFJ, and the personal exemption was $4,050 per person in 2017 (subject to phaseouts). After 2025, the law points back toward that structure, smaller standard deduction, personal exemptions return (indexed from those older figures). For a family of four, that trade-off can be neutral, positive, or negative depending on income, phaseouts, and whether you itemize. It’s not one-size-fits-all; it’s “run the math for your household.”

Then there’s SALT. The $10,000 cap on state and local tax deductions, hated by high-tax state filers, also sunsets after 2025. If you’re in CA/NY/NJ or, lately, parts of the Midwest with big property tax reassessments, the end of the cap could swing you from taking the standard deduction in 2025 to itemizing in 2026. But, again, itemizing only matters if your totals beat the standard deduction you’ll get in 2026; some folks will be thrilled, others… not so much.

Business owners and independent professionals have another cliff: the §199A Qualified Business Income deduction, up to 20% of qualified pass-through income, also is scheduled to end after 2025 under current law. For a sole proprietor or S corp with $300k of qualified income, that’s a potential $60k deduction vanishing in 2026. That’s not small. High earners in specified service trades who’ve danced around phaseout ranges know exactly what I’m talking about. I had a founder last week who realized that pushing a sale into January could cost them both a wider bracket and the QBI deduction, two hits in one calendar flip. We ended up modeling three timing paths and, sorry, I’m rambling, but it was eye-opening.

What to do with all this? Consider shifting income into 2025 and pushing certain deductions into 2026, when the value of deductions might be higher if rates rise and itemizing returns. Examples:

• Pull into 2025: partial Roth conversions while the 12%/22%/24% bands are wider; realizing long-term gains you’d pay at a lower marginal rate this year; closing a business deal in December if QBI applies in 2025 but won’t in 2026.
• Push into 2026: deductible expenses you control (business expenses, charitable gifts via DAF funding if you’ll itemize more in 2026, property tax timing if SALT cap ends). Charitable bunching can flip from 2025 to 2026 depending on your itemization profile post-sunset.

Quick reality tie-in to markets: equity gains have been lumpy this year, AI leaders up big, small caps choppy, and muni and HY yields are still attractive relative to the last decade. That mix makes the “harvest vs. hold” decision more about your 2025 vs. 2026 bracket math than market timing. I’m not pretending Congress won’t tweak things; it might. But under current law, the clock says 2025 is the last TCJA year for individuals.

Practical takeaway: the calendar flip could change your lifetime tax bill, not just this year’s bracket. If a 20% QBI deduction, a $10,000 SALT cap expiring, and a top rate moving from 37% to 39.6% intersect with your income, the December/January line matters more than usual.

One last human note: sometimes the right move is counterintuitive. Paying tax now to reduce tax later feels annoying, I get it; I’ve written those checks too, but with TCJA sunsetting after 2025, it can be the cheapest tax you’ll ever pay.

Year-end moves that shift which year taxes your dollars

This is the part of Q4 where the calendar gets as important as your portfolio. The goal isn’t to get cute with the IRS; it’s to decide which side of December 31 your income and deductions live. With markets uneven this year (AI leaders still carrying the cap-weighted indexes, small caps sputtering, and bond yields elevated versus the 2010s), the tactics below can move real money.

• Compensation timing: If your employer allows it, you can ask to receive a year-end bonus in January rather than December, or pull it into December if 2025 is a lower-income year than 2026. Same idea with commissions and, in some orgs, cashing out PTO. Just remember the constructive receipt rule: income you can access without restrictions in December is generally taxable this year, even if you “pick it up” in January.
• Equity comp calendar check:
  • RSUs: Taxed as W-2 income at vest. If a tranche is scheduled near year-end and your plan allows a deferral program or an alternate vest date (rare, but some plans do), that can flip which year gets the W-2 hit. Most folks can’t change RSU dates at the last minute, flag it earlier next year.
  • Stock options: Exercising NSOs creates ordinary income on the bargain element at exercise. ISOs don’t create regular-tax income at exercise, but the bargain element is an AMT preference. Do an AMT dry-run before a December ISO exercise. I’ve seen people accidentally trigger AMT with a “small” exercise, not fun.
  • 83(b) elections: Only for restricted stock (not RSUs). You must file within 30 days of grant, no exceptions. Electing in December vs. January flips the tax year of the income recognition if/when it vests (and starts your capital-gains clock earlier).
• Capital gains and losses: Harvest losses to offset gains and up to $3,000 of ordinary income each year under current law. Watch the 30-day wash-sale window for stocks and funds. As of 2025, the statutory wash-sale rule doesn’t apply to crypto, but don’t play games with economic substance. On the flip side, consider harvesting gains in low-income years. For reference, the IRS’s 2024 tables put the 0% long-term capital-gains bracket up to $47,025 taxable income (single) and $94,050 (married filing jointly). 2025 thresholds will be inflation-adjusted, check the final IRS release, but the planning idea is the same.
• Roth vs. traditional timing: Roth conversions hit ordinary income the year you convert (deadline: Dec 31). That’s attractive in a low-income 2025 if you expect higher brackets in 2026 when parts of TCJA sunset. Flip side: in high-income years, push pre-tax 401(k)/IRA contributions to reduce 2025 AGI. Quick reminder: you can fund IRAs for 2025 up to the April 2026 tax filing date, but conversions must be done this year, and you can’t recharacterize a conversion under post-2017 rules.
• Charitable “bunching”: Stack multiple years of giving into one year to itemize now, then take the standard deduction next year. A donor-advised fund lets you take the deduction in 2025 and grant later. Deduction limits matter: cash gifts to public charities are generally deductible up to 60% of AGI; gifts of long-term appreciated stock are generally up to 30% of AGI, with 5-year carryforwards (IRS rules in effect as of 2024-2025). If equities ran on you this year, donating appreciated shares avoids capital gains and still gets the deduction, just get it done before Dec 31.
• Small-business levers (talk to your CPA first):
  • Cash-basis businesses can push invoices into January or accelerate billing in December to choose the tax year of revenue. Accrual-basis rules are different, don’t assume.
  • Equipment: Under current law, bonus depreciation continues its phase-down to 40% in 2025 (was 60% in 2024). Section 179 expensing is still there; the 2024 limit was $1.22 million with a phase-out beginning at $3.05 million of placed-in-service property (these index annually, check the 2025 published amounts). Timing a purchase in late December vs. early January can swing your deduction into the year you prefer.
  • Retirement plans: Solo 401(k) employee deferrals require the plan to be established by Dec 31 of the tax year; employer contributions can go in by the tax filing deadline. SEP IRAs can usually be opened and funded by the filing deadline (including extensions).

Quick gut-check: If 2025 is your lower-income year and you expect higher rates in 2026, it can make sense to accelerate income (Roth conversions, ISO exercises) into 2025 and push deductions into 2026. Feels backwards, but the math can be right. I’ve had to talk myself into it too.

If any of this feels borderline complicated, that’s because it is. Pick two or three moves that actually fit your situation, run a back-of-the-envelope with the brackets you’re likely to hit, and lock them in before the ball drops.

Retire one more year? The bracket math behind the lifestyle choice

The “one more year” question isn’t just about paycheck vs. freedom. It’s about where your next dollar lands on the tax return. For near-retirees and early retirees, the bridge years, after you stop W‑2 work but before Social Security and Required Minimum Distributions (RMDs) kick in, often sit in unusually low brackets. That gap is prime territory for Roth conversions, harvesting capital gains, and cleaning up your future RMD problem. And yeah, I’ve talked clients and myself out of working one more bonus year because the after-tax comp didn’t beat the long-term tax savings.

RMDs and the Roth window: SECURE 2.0 set the RMD age at 73 (effective 2023). If you retire at, say, 62-67, you might have 5-10 years where your ordinary income is just dividends and maybe small withdrawals. Converting traditional IRA dollars to Roth in those years can fill the 12% or 22% brackets on your terms, before RMDs at 73 force higher taxable income. Qualified Charitable Distributions (QCDs) from IRAs still start at 70½ and can satisfy part or all of your RMD once you hit 73, so planning conversions and future QCDs together still makes sense.

Social Security tax, the unindexed trap: The thresholds that determine how much of your benefit is taxable haven’t been indexed since the 1980s. The law still uses $25,000 of “provisional income” for singles and $32,000 for married filing jointly (1984 thresholds). That’s why additional income can make up to 85% of your Social Security benefits taxable. If you work one more year and also start benefits, that paycheck can turn a mostly nontaxable benefit into a largely taxable one. Not fun.

Medicare IRMAA is on a 2‑year delay: Medicare uses a two-year lookback for income. Your 2025 Part B/D premiums are based on 2023 MAGI. Work another year in 2025? That higher MAGI can hit your 2027 premiums. For reference, the 2024 IRMAA brackets begin at $103,000 MAGI for singles and $206,000 for married filing jointly (CMS, 2024). Go above a bracket by even $1 and you’re in the next surcharge tier. This is where a late-year RSU vest or big Roth conversion can be surprisingly expensive two years later.

ACA credits if you’re pre‑Medicare: If you retire before 65 and rely on the ACA marketplace, taxable income is king. For plan year 2025, premium tax credits are based on 2024 Federal Poverty Guidelines: in the 48 states, that’s $15,060 for a household of 1 and $31,200 for a household of 4 (HHS, 2024). The enhanced subsidies (extended through 2025) cap benchmark premiums at about 0%-8.5% of income depending on your FPL percentage; as income rises, the credit falls. One more year of W‑2 can push you far above, shrinking or eliminating your credit. I’ve seen a $20-30k job “net” almost nothing after lost ACA subsidies and extra taxes. It happens.

State taxes matter, sometimes a lot: Don’t ignore them in the move-or-stay decision. A few quick examples (check the latest state rules before acting): Illinois does not tax most retirement income; Pennsylvania exempts retirement distributions from IRAs and pensions if from qualifying retirement plans; New York excludes up to $20,000 per person of pension/IRA income after age 59½. Some states give no break at all and fully tax IRA withdrawals. The same Roth conversion that costs 12% federal could cost 0% in one state or 5%+ in another.

Putting numbers to “one more year”:

• If you skip W‑2 income in 2025, your bridge-year taxable income might sit low enough to do a $30-$80k Roth conversion without touching higher brackets (depends on your deductions and filing status). That reduces future RMDs and might preserve lower IRMAA tiers later.
• If you work 2025, you may crowd out conversion space, increase 2027 IRMAA, and, if you’re pre‑65, wipe out ACA credits. On the Social Security side, extra income can make up to 85% of benefits taxable at surprisingly low provisional income levels.

What I’d sanity-check this month (yep, it’s Q4):

1. Map 2025 AGI with and without your job. Run a “fill the bracket” Roth conversion for the no-job case.
2. Check IRMAA exposure. Remember: 2025 income hits 2027 premiums. Use 2024 CMS brackets as a guide and leave a cushion.
3. Estimate ACA credits using 2024 FPL ($15,060 single; $31,200 family of 4). See how much a salary pushes you up the scale.
4. Layer Social Security timing. Delaying benefits one year can reduce taxable income now, and raise lifetime benefits; but if you must claim, watch those unindexed thresholds.
5. Price your state tax. Would a conversion be cheaper before or after a move? Or after age 59½ in a state with exclusions?

Quick gut-check: if 2025 is your bridge year with low income, using it for conversions and ACA-friendly withdrawals can beat an extra salary. Not always, but often; and the IRMAA/SS tax gotchas usually show up two years later when it’s too late to fix.

And if this feels like juggling chainsaws, you’re not wrong. Pick the variable that bites hardest, IRMAA, ACA, or RMDs, and improve around that. The cleanest answer usually wins.

Okay, what do I do this week? A quick Q4 2025 checklist

This is the “make a call” part. If you’re weighing one more salary year, don’t guess. I’ve done the back-of-envelope thing on a plane at 11pm. It always misses a phaseout or a Medicare bracket. Here’s the fast, practical pass.

• Run a 2025-2026 two-year projection. Include marginal brackets, credits, and phaseouts, not just your average rate. My take: build two scenarios (with and without another salary year) and compare after-tax net worth on 12/31/2026. Flag common thresholds: the 3.8% NIIT kicks in at $200k MAGI (single) / $250k (MFJ), those dollar amounts are not indexed and still apply in 2025. ACA premium credits tie to FPL; earlier we used 2024 FPL figures ($15,060 single; $31,200 family of 4) as a proxy. It’s clunky, but it works for planning.
• Check withholding and safe-harbor estimates now. Avoid penalties while you shift income. The federal safe harbors still apply: pay at least 90% of your 2025 tax or 100% of your 2024 tax (110% if your 2024 AGI was over $150k). If you’re short, nudge W-4 withholding on your last 2025 paychecks, withholding counts as paid ratably through the year; Q4 estimates don’t.
• Map equity-comp dates and AMT exposure. ISOs can trigger AMT via the bargain element on exercise; NQSOs don’t, RSUs are ordinary income at vest. Put the actual vest/exercise/sale dates on a calendar. If AMT is close on your 2025 projection, consider partial ISO exercise or waiting for 2026. Yes, it’s nerdy, but one poorly timed ISO batch can swing five figures of AMT.
• Decide on Roth conversions and capital gains before Dec 31. Conversions settle in-year. Keep your eye on the 0%/15%/20% LTCG bands and the NIIT threshold. If markets gave you gains, pair with real loss harvesting (watch the 30-day wash sale). And if another salary year pushes you into NIIT territory, you may prefer harvesting in 2025’s lower-income window, if you have one.
• Pre-fund charities via DAF or appreciated shares

1. Appreciated stock held >1 year gets you a deduction at fair market value, avoids the capital gain, and typically follows the 30% of AGI limit to public charities.
2. Cash gifts typically follow a 60% of AGI limit. But confirm whether you’ll itemize for 2025. If not, bunch gifts into a DAF this year and grant over time.

• Business owners: time the levers on purpose. Shift invoices/expenses if cash-basis. For equipment, know your tools: Section 179 expensing (subject to annual limits and phaseout) and bonus depreciation. Under current law, 2025 bonus depreciation is 40% (it stepped down from 80% in 2023, 60% in 2024). That’s still meaningful for one-more-year decisions.
• Document your plan and set reminders. Put dates on your calendar: final payroll change, ISO decision window, DAF transfer cutoff, last TLH review the week of Dec 23, final estimate by Jan 15. January-you will thank October-you. Promise.

Quick sanity check: if another salary year nudges you over $200k/$250k MAGI (NIIT) and trims ACA credits based on those 2024 FPL guideposts, the after-tax math can turn fast. Not every time, but often enough that I triple-check it. And yeah, this is a lot. If it’s getting too complex, pick the biggest cliff and plan around that.

One last take from the trenches: markets are still giving us plenty of volatility into year-end, and cash yields remain decent. That mix makes tax location and timing worth real dollars. Make the calls this week while you still have the calendar, waiting until December 30th is how people end up paying penalties they didn’t need to.

Frequently Asked Questions

Q: Should I worry about a year-end bonus kicking me into a higher tax bracket?

A: Short answer: no. There’s no trapdoor. Only the extra dollars from the bonus get the higher marginal rate; everything below keeps its lower rates. Practical moves: make sure withholding on the bonus is adequate so you don’t get an April surprise; consider boosting pre-tax 401(k) contributions, HSA, or FSA before year-end to lower taxable wages; and watch phase-ins like the 0.9% Additional Medicare Tax and the 3.8% NIIT, those start when wages or MAGI cross roughly $200k single/$250k married filing jointly. If the bonus is big, ask payroll if they can split it across periods this year vs. January, it doesn’t change the rate structure, but it can help with cash flow and withholding accuracy.

Q: What’s the difference between my effective tax rate and my marginal tax rate, and which one should I plan around?

A: Effective rate = total tax divided by total income (your blended average). Marginal rate = the tax rate on your next dollar of income (or conversion, or capital gain). You measure progress with the effective rate, but you make decisions with the marginal rate. Quick way to get a handle on it: run a draft return, then add $1,000 of hypothetical income and see how much tax increases, that ratio is your marginal. That’s the number to use when deciding on Roth conversions, capital gain harvesting, exercising ISOs/NSOs, or taking a consulting gig.

Q: Is it better to take income this year or wait until next year if brackets moved up again?

A: It depends, sorry, but this is where the nuance actually matters. In 2024, individual brackets moved up about 5.4% (Rev. Proc. 2023-34). For 2025, brackets are indexed upward again, so a normal raise often keeps your real bracket roughly steady. But here’s the kicker: current law has many TCJA provisions set to sunset in 2026, which likely means higher marginal rates then. So, if you’re choosing between recognizing income in 2025 vs. 2026+, taking more in 2025 can be smarter. Practical checklist: 1) Run a two-year pro forma with your CPA or tax software. 2) If your 2025 marginal is at or below the 22%-24% tiers, consider pulling income forward (Roth conversions, exercising options, realizing gains). 3) If pushing income into 2025 jeopardizes ACA subsidies, triggers IRMAA for Medicare, or trips NIIT thresholds, slow down. 4) Remember state taxes, they don’t index the same way, and some have cliffs. I’ve moved plenty of income “left” into a known lower-rate year and been glad I didn’t wait.

Q: How do I decide between doing a big Roth conversion this year or spreading smaller ones over several years?

A: Both can work. If your 2025 marginal rate is comfortably in the 22%-24% brackets and you expect higher rates after 2025 (very plausible with the 2026 sunset), front-loading more conversion this year can make sense. If you’re near phaseouts, ACA premium credits, education credits, or IRMAA for Medicare, smaller, bracket-filling conversions over multiple years are safer. My rule of thumb: fill your target bracket but don’t cross pain points. Tactics: set a ceiling (e.g., top of your chosen bracket), convert up to that line now, revisit in December with updated income to top off; coordinate with capital gains, harvest losses if you need room, or realize gains in a low year and convert less. And yeah, keep an eye on withholding or make a Q4 estimated payment so you don’t get underpayment penalties.

@article{will-one-more-year-change-my-tax-bracket-myth-vs-reality,
    title   = {Will One More Year Change My Tax Bracket? Myth vs Reality},
    author  = {Beeri Sparks},
    year    = {2025},
    journal = {Bankpointe},
    url     = {https://bankpointe.com/articles/one-more-year-tax-bracket/}
}