The “Widow’s Penalty Tax” and How to Avoid It

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The “Widow’s Penalty Tax” and How to Avoid It

by Bob Carlson
Editor, Retirement Watch

06/14/2026

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Bob CarlsonThe widow’s penalty tax is one of the least known yet most onerous of the retirement Stealth Taxes. 

Since few people are aware of it, few retirement plans defend against the widow’s penalty. 

I frequently warn people about the “solo” years. 

Those are the years after one spouse has passed away. 

The surviving spouse must maintain the household with one less Social Security benefit and perhaps a decline in other income. 

In addition, expenses are likely to increase because the surviving spouse needs help the deceased spouse used to provide. 

Perhaps what’s least known about the solo years is that income taxes are likely to be substantially higher for the surviving spouse. 

The solo years often are when retirement plans fall apart and the surviving spouse struggles. 

The widow’s penalty tax is a major reason… 

Here’s How the Widow’s Penalty Works

When both spouses are alive, the couple’s tax return filing status is “married filing jointly.” 

But after one spouse passes away, the surviving spouse’s filing status changes to single. 

The married filing jointly status is the most beneficial while the single filing status is unfavorable. 

Taxpayers who are married filing jointly stayed in the 12% tax bracket until their taxable income exceeded $80,250 in 2020. 

But a single taxpayer stays in the 12% bracket only until taxable income exceeds $40,125. 

The 22% tax bracket applies to a married couple filing jointly until taxable income exceeds $171,050… but for a single taxpayer the ceiling is taxable income of $85,525. 

A surviving spouse is allowed to use the married filing jointly status only for the year in which the other spouse died. 

The special surviving spouse status can be used for a few years – but only if there is a dependent child in the household. 

You can see the surviving spouse is hit with a double whammy. 

First, as I mentioned earlier, income is likely to decline.

The household begins receiving only one Social Security check instead of two. 

Other sources of income also might decline. 

For example, the deceased spouse might have been receiving a pension or annuity that upon his or her death either ends or pays a reduced amount to the surviving spouse. 

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The income usually doesn’t decline enough to keep the surviving spouse in the same tax bracket as a single taxpayer. 

That would require the income to be cut in half. 

Instead, the surviving spouse loses some income but also pays a higher income tax rate on the remaining income because of the change in filing status. 

Income declines, but income taxes increase. 

There can be a third hit to the surviving spouse.

Higher-income Medicare beneficiaries are subject to the Medicare premium surtax, also known as income-related monthly adjustment amount (IRMAA). 

As with income taxes, the Medicare premium surtax changes with marital status. 

A single taxpayer with the same income as a married couple will pay twice the Medicare surtax as the couple. 

A newly widowed taxpayer who retained a high percentage of the couple’s previous income could pay as much or more in the Medicare premium surtax as the couple paid jointly. 

In next week’s Retirement Watch Weekly, I’ll share a fourth negative effect of the solo years – and how to plan for the Widow’s Penalty Tax.To a better retirement,
Bob Carlson
Bob Carlson
Editor, Retirement Watch WeeklyEditor’s Note: Studies show many Americans make costly mistakes when claiming Social Security. In fact, the average household can lose up to $111,000 in benefits. Some lose out on even more. 

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Want More Retirement Advice?

Check out my website, RetirementWatch.com, where you’ll find hundreds of free articles covering every aspect of retirement planning.

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New to the Retirement Watch Community: SeniorResource.com

Retirement is often viewed as a period of life filled with relaxation, leisure, and the freedom to pursue passions and hobbies. However, transitioning into retirement also brings about a new set of financial challenges. While you may no longer face the daily grind of commuting or work-related expenses, there are several costs that can suddenly appear, potentially disrupting your financial stability. Understanding these costs and planning for them can help ensure a smoother and more enjoyable retirement. Here are 10 costs that can unexpectedly arise in retirement.

About Bob Carlson:

Bob CarlsonRobert C. Carlson is the author of the books The New Rules of Retirementand Retirement Tax Guide, editor and investment director of the popular retirement newsletter, Retirement Watch, and editor of the free weekly e-letter, Retirement Watch Weekly.  Bob is a frequent speaker at investment conferences around the country, and you can also hear Bob as a featured guest on nationally-syndicated radio shows, such as The Retirement Hour, Dateline Washington, Family News in Focus, The Michael Reagan Show, Money Matters and The Stock Doctor.

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Published by RJ Hamster

I was born on 6 August 1956 in San Francisco, California to Janet and (the late) Richard Hovis. I grew up in Santa Monica, California where I attended elementary, junior high school, and high school (graduating in 1974), in addition to involvement in sports and recreation (Little League +, the Boy’s Club ++). Further, it was in elementary school – St. Augustine’s By-the -Sea Parish School that I found, and made the choice to truly journey with God. I attended Arizona State University from 1974 to 1977 – seeking to become an architect, however, I was not accepted, and, as such, I graduated with a Liberal Arts degree. Upon graduation from Arizona State University, I attended Cal Poly San Luis Obispo and studied City and Regional Planning at the Master’s level. I successfully completed one (1) year in a two (2) year program – I did not complete the Master’s degree in City and Regional Planning – due to personal reasons. I returned to Santa Monica where I started (October 1979) my career as graphic designer with Exxon Company, USA. I spent five years with Exxon Company, USA. While working with Exxon Company, USA I was accepted into architectural school – Sci-Arc in Southern California, however, I did not attend preferring to stay with Exxon.. In 1982 I married Laura Flosi and in April 1983 we had our one and only child – Lauren Alain Hovis – a gift from God. We moved to Phoenix, Arizona in 1984 from Los Angeles, where I went to work as a graphic designer with Kitchell CEM (from 1985 -1987). From 1987 – 1995 I was an independent contractor, and a registered representative in mortgage finance, financial management, graphic design, and drafting. Further, I attended the University of Phoenix and successfully obtained a Master’s in Business Administration (MBA) in 1982. I was also a member of the Scottsdale Jaycees, where I became very involved in community events and projects. In 1994, I accepted a cartography position with the Defense Mapping Agency in Reston, Virginia. As such, I relocated from Phoenix to Reston. In 1998, I was accepted and worked as a Visual Information Officer with the Central Intelligence Agency. In 2002, I worked as a Support Officer until my retirement (due to a need for shoulder surgery) in September 2018. Away from my Federal Government service, I have been involved in various organizations and activities in Northern Virginia. In November of 2011, I married Rebecca Ouellette in Santa Monica, California. I reside in San Tan Valley, AZ with my two hamster - Jess and Timothy, our fish, our lizard - RJ Lizard., and our cats - Pearl and Grey. As to hobbies, I enjoy playing sports, attending sporting events, mentoring individuals from financial management to hamsters, building models, photography, travel, multimedia design, managing partner for RJ Hamster, and jazz – smooth jazz to a samba or a bossa nova. Love and God Bless, Peter – aka RJ Hamster Jo hi

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