After federal income tax cuts in 2018, Roth conversions became a popular way for people to take advantage of what was expected to be a temporary low-tax environment.
But now, because of the One Big Beautiful Bill, the tax reductions established in 2018 won’t disappear in 2026 as expected. That could affect whether a Roth conversion makes sense in your long-term financial planning.
This article will explain what Roth conversions are, the tax rules that affect them, and what is (or isn’t) changing in 2026. With this information, you can be better prepared to decide if a Roth conversion is right for you.
What Is a Roth Conversion?
A Roth conversion involves moving money from a pre-tax retirement account like a 401(k) or traditional IRA into a Roth retirement account. You pay tax on that money at the time of the conversion, but that amount and the growth associated with it can both be withdrawn tax-free later.
Why Did Roth Conversions Become Popular?
Roth conversions became a way for people to take advantage of tax cuts that became law in 2018 as part of the Tax Cuts and Jobs Act (TCJA). This legislation significantly reduced the amount of federal income tax that most Americans were required to pay.
It accomplished this by reducing the tax brackets, increasing the income required to reach the next bracket, and doubling the standard deduction. This table shows how the TCJA changed personal taxes:
| 2018 under old law | 2018 with TCJA | ||||
| Single | Married | Bracket | Single | Married | Bracket |
| Up to $9,525 | Up to $19,050 | 10% | Up to $9,525 | Up to $19,050 | 10% |
| $9,526–$38,700 | $19,051–$77,400 | 15% | $9,526–$38,700 | $19,051–$77,400 | 12% |
| $38,701–$93,700 | $77,401–$156,150 | 25% | $38,701–$82,500 | $77,401–$165,000 | 22% |
| $93,701–$195,450 | $156,151–$237,950 | 28% | $82,501–$157,500 | $165,001–$315,000 | 24% |
| $195,451–$424,950 | $237,951–$424,950 | 33% | $157,501–$200,000 | $315,001–$400,000 | 32% |
| $424,951–$426,700 | $424,951–$480,050 | 35% | $200,001–$500,000 | $400,001–$600,000 | 35% |
| Over $426,700 | Over $480,050 | 39.6% | Over $500,000 | Over $600,000 | 37% |
In addition to tax bracket changes, the standard deduction, which the vast majority of tax filers use, nearly doubled. Before the TCJA, the standard deduction was $6,500 for single filers and $13,000 for a married couple. The TCJA raised those amounts to $12,000 and $24,000.
However, the Tax Cuts and Jobs Act also included a sunset provision that would have returned taxes to pre-2018 levels in 2026 (probably with inflation adjustments). In other words, the expectation has been that 2026 would see the standard deduction cut in half (reversing the doubling in 2018), tax brackets go back up, and the income range for each bracket go back down.
This made Roth conversions a very useful tool for taking advantage of the temporarily low income tax environment. For a very simplified example using the 2018 numbers from above, suppose a retired couple has $100,000 of income with a standard deduction of $24,000, giving them a taxable income of $76,000. That puts them at the top of the 12% bracket. But that same couple under the old law would have a standard deduction of only $13,000, for a taxable income of $87,000. That would put them squarely in the 25% bracket. This couple could use a Roth conversion to make use of the remaining space in the 12% bracket, and even go through the 22% and 24% brackets. This could potentially save them a lot of tax dollars on their retirement savings.
What’s Changing in 2026?
Although new rules are coming into pay, in practical terms, it may be better to think about what’s not changing. That’s because the new rules essentially maintain the status quo. Here’s how.
The One Big Beautiful Bill, which was signed into law in the summer of 2025, made the provisions above permanent. They will not sunset. The standard deduction and tax brackets will not revert to their previously higher levels. You won’t see taxes go up as you might have expected.
Because tax rates are not going up across the board in 2026, this may take a lot of urgency out of the Roth conversion decision for many people. It may even remove most or all of the tax benefits for some.
Why You Might Still Want to Do a Roth Conversion
In spite of all of this, Roth conversions can still be a useful tool. Here are some reasons you might want to consider one.
- You expect your tax liabilities to be higher in the future, even if the tax brackets themselves aren’t changing. For example, you may have an unexpectedly low income right now. Or you may be retired but not yet claiming Social Security benefits or taking required minimum distributions (RMDs).
- Although tax reduction is a major benefit of Roth conversions, it isn’t the only one. Roth accounts are not subject to RMDs, so they provide you with greater flexibility and control over your retirement withdrawals. Heirs can also withdraw tax-free from inherited Roth IRAs. If you are in a lower tax bracket than you expect your heirs to be at the time they’ll inherit, a Roth conversion could reduce your generational tax liabilities.
- Remember, you don’t have to convert everything. Converting portions of your tax-deferred account each year may allow you to manage your tax brackets more efficiently.
Roth Conversions and Your Financial Future
Whether or not you should do a Roth conversion depends on your personal circumstances. If you anticipate you’ll be in a higher tax bracket later, want greater flexibility, or want to pass assets more tax-efficiently, then now might still be a good time to consider a Roth conversion. Discuss these issues with your tax and financial advisors to make sure you’re making the best moves for your long-term financial plans.
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FAQs
Are Roth conversions still a good idea after the Big Beautiful Bill Made the 2018 tax cuts permanent?
Although the Big Beautiful Bill reduced the value of Roth conversions and eliminated the urgency for many people, they may still be a good idea depending on your personal situation.
What are the benefits of Roth conversions if they won’t reduce my taxes?
Even if you won’t reduce your taxes with a Roth conversion, you may still benefit from greater withdrawal flexibility and greater tax-efficiency for your heirs.
Can I just convert a portion of my tax-deferred IRA or 401k?
Yes. You can convert just a portion of your account. In fact, partial Roth conversions spread out over several years are often much better than converting large balances at once.
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