Retiring in United States
United States: the tax picture for FIRE
The United States taxes income through seven federal brackets for 2026, running from 10% up to a top rate of 37% on taxable income above $626,350, after a standard deduction of $15,000 (single filer; exact value still to be verified). Investment gains are modelled as a flat 20% with no annual exemption — in practice long-term gains fall into 0/15/20% brackets, a 3.8% net-investment-income tax can apply, short-term gains are taxed as ordinary income, and states add their own capital-gains tax. On death the US applies an estate tax: the estate itself is taxed before distribution, at an effective flat 40% above a $15,000,000 exclusion for 2026, with an unlimited marital deduction for a US-citizen surviving spouse.
A UK private pension is modelled as taxable only in the US: under treaty Article 17(1)(a) the country of residence has the taxing right, and the UK exempts — so it is taxed once, at US rates. Day-to-day costs carry a low-confidence factor of 1.05 against the model's baseline. Coverage is federal-only and single-filer: state income tax, FICA, AMT and the NIIT are not modelled.
Income tax (2026)medium confidence
Tax-free allowance: US$16,100 (then bands apply to income above it).
| Band (above allowance) | Rate |
|---|---|
| US$0 – US$12,400 | 10% |
| US$12,400 – US$50,400 | 12% |
| US$50,400 – US$105,700 | 22% |
| US$105,700 – US$201,775 | 24% |
| US$201,775 – US$256,225 | 32% |
| US$256,225 – US$640,600 | 35% |
| above US$640,600 | 37% |
What this model doesn’t capture (9)
- federal only — state income tax not modelled; under joint filing, state tax is computed per spouse on each spouse's own income with the single-filer schedule — exact for flat/no-tax states, slightly over-states for unequal-earner couples in graduated states whose MFJ brackets are ~2× single (e.g. CA, NY)
- standard deduction and bracket thresholds updated 2026-07-15 to IRS Rev. Proc. 2025-32 2026 figures (2026-07-15 Opus-verified correction)
- FICA (Social Security + Medicare) not modelled
- MFJ modelled via jointFiling table (IRS Rev. Proc. 2025-32, TY2026); MFS and Head-of-Household not modelled; no MFJ income phase-outs modelled; E2 overrides patch the single schedule only, not the MFJ table
- age-65 senior deductions ARE modelled (§63(f) aged additional + OBBBA §151(d)(5) bonus through 2028, MAGI-phased per individual) on residence stacks via the simulator; single-filer dividend stacking DOES see the deduction. Remaining gaps: cgtOnGainStacked's ordinary baseline stays pre-deduction; under MFJ, dividend stacking uses per-owner single-filer breakpoints and does not see the joint senior deduction (conservative); blindness additions and the Qualifying-Surviving-Spouse status are not modelled (a 65+ widow(er) files as unmarried, $2,050); MAGI is approximated as the return's residence-stack taxable income + dividends (§911/§931/§933 foreign-exclusion add-backs unmodelled)
- AMT not modelled
- OASDI wage base 2026 to verify against the SSA figure
- qualified-dividend brackets approximate (single filer); under joint filing each spouse's dividends stack on their OWN ordinary income against single-filer breakpoints, so the QDI/LTCG rate may be mis-estimated in either direction for unequal-earner couples (the true breakpoint is a function of combined taxable income)
- NIIT 3.8% not modelled (MFJ threshold $250k — below 2× single)
Capital gainsmedium confidence
Capital gains are taxed at 0%–20%.
LTCG 0/15/20% + 3.8% NIIT; short-term = ordinary. Plus state CGT.
Inheritance & estate taxhigh confidence
Tax is charged on the estate itself before anything passes to heirs.
Estate regime: unified estate-and-gift tax on the deceased's estate; recipients inherit net. 2026 basic exclusion $15,000,000 (made permanent by OBBBA, inflation-indexed from 2027 — the headline changes for 2027 deaths). Effective flat 40% above the exemption. Unlimited marital deduction (IRC §2056) for a US-citizen surviving spouse (non-citizen needs a QDOT — not modelled). DSUE portability (IRC §2010(c)). Unlimited charitable deduction (IRC §2055) — modelled as a deduction, so charityRatePct is intentionally omitted (NOT a 0% rate). Nonresident aliens get only a $60,000 exclusion on US-situs assets.
When should you claim your United States state pension?high confidence
US Social Security (OASDI)
Normal pension age 67. Deferring adds 0.67% per month (≈8%/yr) to age 70. Claiming early cuts the benefit — about −30% at the earliest age (62).
Delayed-retirement credits stop accruing at 70. WEP/GPO adjustments and spousal/survivor benefits are not modelled in v1.
The best age to claim isn’t just about these factors — it depends on your life expectancy, your other income, and which country you’re tax-resident in when the money lands. Deferring into a lower-tax country can flip the answer entirely. Optimise your claim age →
Cost of living
105%
of a UK baseline (100%) — a rough, illustrative comparison, not a forecast.
UK private pension
Under the UK treaty, a UK-sourced private pension paid to a resident here is generally taxed only where you live (not by the UK).
Common questions
How are capital gains taxed in the United States?
Long-term capital gains fall into 0/15/20% brackets, with a 3.8% net-investment-income tax potentially on top; short-term gains are taxed as ordinary income, and states can levy their own capital-gains tax as well. Ember models this as a flat 20% with no annual exemption, at medium confidence — so state tax, the NIIT and the lower long-term brackets are not reflected in the modelled figure.
Will my UK pension be taxed in the US?
Ember models a UK private pension for a US resident as taxable only in the US: treaty Article 17(1)(a) gives the country of residence the taxing right and the UK exempts, so it is taxed once at US rates. This treaty treatment is illustrative and should be verified for your specific circumstances.
Is there inheritance tax in the United States?
The US runs an estate tax rather than an inheritance tax: the deceased's estate is taxed before anything is distributed, and recipients inherit net. For 2026 the basic exclusion is $15,000,000 (made permanent and inflation-indexed from 2027), with an effective flat 40% above it and an unlimited marital deduction for a US-citizen surviving spouse — a non-citizen spouse needs a QDOT, which isn't modelled. Note that nonresident aliens get only a $60,000 exclusion on US-situs assets.
What does United States do to your FIRE date?
The free calculator compares your number across every covered country; the full planner models your actual accounts, pensions, residency moves and these exact tax rules — with the maths behind every figure shown.