By Brent Matthew
You’ve heard the adage: The only certainties in life are death and taxes. After retirement, many people are surprised to see just how much taxes still impact their lives. You might not be able to escape taxes entirely, but you can take advantage of strategies for tax-free retirement income.
If you want to reduce taxes in retirement, consider working with a financial advisor to create a customized plan. In the meantime, take a look at some proven (and legal) strategies for generating tax-free retirement income.
Roth IRA Withdrawals
Unlike traditional IRAs, Roth IRAs are funded with post-tax dollars. This means that qualifying withdrawals are not taxed.
A Roth IRA can be a reliable strategy for tax-free retirement income. However, if you’re like many of my clients, you may be barred from directly contributing to a Roth IRA. For 2026, you may only make a full contribution to a Roth account if your modified adjusted gross income (MAGI) is less than $153,000 (or less than $242,000 for married taxpayers filing jointly).
If you’re a high earner, you could still benefit from this tax-free retirement income strategy with a backdoor Roth IRA. With a backdoor Roth, you fund a traditional IRA and then convert it to a Roth account.
Qualified Charitable Distributions
If you have tax-deferred retirement accounts, you must start taking required minimum distributions (RMDs) after a certain age. As you might have discovered already, RMDs can come with significant tax consequences.
These distributions are taxed as income, and depending on other income sources you may have, RMDs could bump you into a higher tax bracket and increase your tax liability. If you have to start taking RMDs but don’t need the money in order to fund your lifestyle, you might consider qualified charitable distributions (QCDs).
With a QCD, you transfer funds directly from a traditional IRA to an approved charitable organization. The QCD counts toward your required minimum distribution for the year, but you don’t pay income taxes on it. For 2026, the maximum annual QCD is $111,000 for individuals and $222,000 for married couples filing jointly.
HSA Withdrawals
Not all insurance plans offer health savings accounts (HSAs). However, if you have access to one, you should take advantage of it. HSAs offer a remarkable triple tax advantage:
- Your contributions to the account are tax-deductible.
- Funds in the account grow tax-free.
- Withdrawals for qualified health expenses are tax-free.
With a well-funded HSA, you might be able to pay for your healthcare costs with tax-free retirement income.
Municipal Bonds
Municipal bonds offer you a way to generate tax-free retirement income while supporting local infrastructure projects. After you purchase a municipal bond, the government gradually pays you back with interest.
If you’re an Arizona resident, interest earned from in-state municipal bonds is tax-free. However, if you’ve purchased municipal bonds in other states, you may owe taxes on any interest you earn.
No investments are completely risk-free, but for many investors, municipal bonds offer a relatively stable, low-risk way to access tax-free retirement income.
Want to Learn More About Tax-Free Retirement Income?
Tax-free retirement income might sound too good to be true. It takes some planning, but with the help of our advisory team, you may be able to reduce taxes in retirement and get more out of your money.
As a fiduciary retirement planning firm, Scottsdale Wealth Advisory puts your interests first. If you want to learn more about how we work, contact us today. To schedule your complimentary financial coaching session, call (480) 247-9090, email info@SWAFirm.com, or book directly at calendly.com/BrentMatthew.
Frequently Asked Questions
What is tax-free retirement income?
Tax-free retirement income refers to money you can withdraw in retirement without owing federal income taxes, as long as certain rules are followed. Common sources include Roth IRA withdrawals, qualified charitable distributions, health savings account withdrawals for medical expenses, and some municipal bond interest. Looking for a financial partner to help you identify which strategies may apply to your situation and how to use them effectively? The Scottsdale Wealth Advisory team is here to help.
How can I create tax-free retirement income?
Creating tax-free retirement income typically involves using a combination of strategies, such as contributing to Roth accounts, planning qualified charitable distributions, leveraging HSAs, and investing in municipal bonds. The right mix depends on your income, tax bracket, and long-term goals. Scottsdale Wealth Advisory can help you build a coordinated plan to incorporate these strategies into your retirement income approach.
Is tax-free retirement income really possible?
While it’s difficult to eliminate taxes entirely, it is possible to reduce or even avoid taxes on certain portions of your retirement income with proper planning. The key is understanding the rules and timing withdrawals strategically across different account types. If you’re looking to develop a tax-efficient withdrawal strategy to maximize your retirement income, we at Scottsdale Wealth Advisory are here to help.
About Brent
Brent Matthew is the founder and CEO of Scottsdale Wealth Advisory, a full-service fiduciary retirement planning firm serving pre-retirees and retirees across Arizona and multiple states. With a strong commitment to always putting clients first, Brent leads the firm in developing comprehensive, tax-efficient financial plans tailored to each family’s unique goals. He is responsible for researching investment, annuity, and life insurance strategies and building smart asset allocations that reflect both long-term growth and risk management.
Brent is driven by a core belief: “The success of this firm will be measured by the success of the families it represents.” That client-first approach has guided his work since the beginning. He is currently enrolled at the College for Financial Planning and is on track to earn his CERTIFIED FINANCIAL PLANNER® designation. He also holds his Series 65 license and Arizona Life and Health Insurance Producers License.
Outside the office, Brent embraces the Arizona outdoors with “lil B” and their two pomskies, Heimo and Kota. Whether he’s hiking, fishing, dirt biking, skiing, golfing, kayaking, or skeet shooting, Brent finds balance and joy in staying active. He’s also a fan of CrossFit, brunching, and cruising the Phoenix canal system on his beach cruiser—usually with classic tunes from the Marshall Tucker Band, Gordon Lightfoot, or Crosby, Stills & Nash playing in the background. To learn more about Brent, connect with him on LinkedIn.
Advisory services are offered by Scottsdale Wealth Advisory, LLC, an Investment Advisor in the State of Arizona. Insurance products and services are offered through Scottsdale Wealth Advisory, LLC. Scottsdale Wealth Advisory, LLC is not affiliated with or endorsed by the Social Security Administration or any government agency, and is not engaged in the practice of law. Be sure to consult with a licensed financial professional to confirm the accuracy of the insurance product you are considering.
