Do I Have to Pay Taxes on My Pension if I’m Over 70?

Many retirees wonder whether reaching a certain age exempts them from paying taxes. If you’re over 70, you may be asking: Do I have to pay taxes on my pension? The answer isn’t always straightforward. Several factors—such as your income level, the type of pension you receive, and where you live—determine your tax liability.

Let’s break it down in a simple and clear way so you can better understand your retirement income tax obligations.

Is Pension Income Taxable After 70?

Yes, in most cases, pension income is still taxable even after the age of 70. The IRS considers most pension and annuity payments as ordinary income. Whether you’re 60, 70, or 80, if your income exceeds a certain threshold, you’re likely required to pay federal income taxes on your pension.

This applies to:

  • Employer-sponsored pension plans
  • Traditional IRAs
  • 401(k) withdrawals
  • Annuities
  • Other retirement benefits (excluding Roth accounts)

What About Social Security?

If you’re over 70 and also receiving Social Security benefits, a portion of those benefits may be taxable depending on your combined income. If your combined income (adjusted gross income + nontaxable interest + half of your Social Security benefits) exceeds:

  • $25,000 (for individuals)
  • $32,000 (for married couples filing jointly)

…then up to 85% of your Social Security benefits could be taxable.

At What Age Do You Stop Paying Taxes on Your Pension?

There’s no specific age where you automatically stop paying taxes on your pension. Some people believe that turning 70 or even 72 might exempt them, but that’s a myth. Your age doesn’t eliminate your tax responsibility—your income and deductions do.

However, after age 73 (previously 72), you are required to start taking Required Minimum Distributions (RMDs) from retirement accounts like traditional IRAs and 401(k)s, which are also taxable.

How Much Can a 70-Year-Old Earn Without Paying Taxes?

Your standard deduction increases after age 65, which can reduce your taxable income. For the 2024 tax year:

  • If you’re single and over 65, your standard deduction is $15,700.
  • If you’re married filing jointly and both spouses are over 65, it’s $30,700.

This means you could potentially earn up to these amounts without owing federal income tax, depending on your specific deductions and credits. But remember, retirement income is not tax-free by default.

For a clearer estimate, you can try this free online pension tax calculator to check how much tax you might owe based on your retirement income.

Taxes on Retirement Income: What to Know

The taxes you pay on your pension and other retirement income depend on a few key variables:

  • Total income including other sources (Social Security, investments)
  • Filing status
  • State tax laws – some states do not tax pensions at all
  • Type of retirement account – Roth vs. Traditional

For example, taxes on retirement income from a traditional IRA are typically higher than Roth IRAs, which offer tax-free withdrawals if conditions are met.

Tips to Reduce Taxes in Retirement

While you may not be able to avoid taxes completely, here are some smart ways to reduce your tax burden:

  • Delay Social Security until age 70 for higher benefits
  • Consider Roth conversions before RMD age
  • Use tax-free income from Roth IRAs or municipal bonds
  • Optimize itemized deductions or take advantage of senior-specific credits

Final Thoughts

To sum up: being over 70 does not exempt you from paying taxes on your pension. Whether or not you owe taxes depends on the type and amount of income you receive. It’s essential to plan wisely and understand how each stream of income is treated by the IRS.

For a deeper dive into taxes on retirement income, check out our UK pension tax rules which covers income types, tax thresholds, and planning strategies.