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Tax Considerations After a Spouse Dies
The death of a spouse leaves behind emotional grief as well as financial complexity.
While you may not face estate or inheritances tax when a spouse dies, the transition has several tax implications — particularly for people with substantial investment income or retirement account assets.
Whether managing your finances or assisting a parent or family member, here’s a look at what you need to know to preserve wealth and maintain financial stability.
Your Filing Status Will Change
In the year your spouse passes away, you can file a joint return with your deceased spouse, assuming you don’t remarry during the year.
Filing jointly can offer several benefits, such as:1
- Using one spouse’s deductions to offset the other’s income
- Increased IRA contribution limits
- Larger tax credits
However, your filing status will change in subsequent years. This will typically increase your tax burden due to a smaller standard deduction and a shifting of tax brackets at a lower income for those who file as a single. (See more below.)
If you have a dependent child, you may qualify for the qualifying surviving spouse status for up to two tax years following your spouse's death.2 This filing status allows you to continue benefiting from the higher standard deduction and broader tax brackets available to joint filers.
To qualify, you must meet the following criteria:
- Your spouse died in the previous two years. For example, if your spouse passed away in 2024, you may file as a qualifying surviving spouse for the 2025 and 2026 tax years.
- You have a dependent child. The child must live with you for more than half the year and meet IRS dependency requirements.
- You have not remarried. If you remarry, you will no longer be eligible for the qualifying surviving spouse status.
Once the qualifying surviving spouse period ends, or if you no longer meet the requirements for this status, you will file as single (or possibly as head of household, if you still have dependents but no longer qualify as a surviving spouse). Filing as single generally results in higher tax rates and a lower standard deduction compared to filing jointly or as a qualifying surviving spouse.
Your Tax Bracket and Deductions Will Change
One of the most immediate changes after a spouse dies is how it affects your tax bracket and deductions. As a single filer, your standard deduction will be cut in half,3 and the income thresholds for higher tax brackets apply at much lower levels. However, your income may not decrease proportionately, which creates a tax burden you might not expect.
Why? For many surviving spouses, income remains relatively steady due to:
- Inherited investments. When you inherit your spouse’s taxable investment accounts and other income-generating assets, you must report the interest, dividends, capital gains and other earnings on your tax return.
- Required minimum distributions (RMDs). If your spouse had non-Roth retirement accounts, you will likely need to take RMDs from them, adding to your taxable income.
- Social Security survivor benefits. While you may receive reduced Social Security benefits compared to when both of you were alive, this income adds to your tax base.
For many surviving spouses, income remains relatively steady due to inheriting the spouse’s taxable accounts and income-generating assets.
Let’s consider an example:
Your spouse dies in 2024. You can file jointly that year with a combined adjusted gross income (AGI) of $400,000. As a joint filer, you also benefited from a standard deduction of $29,200. This leaves you with a taxable income of $370,800, giving you a top marginal tax rate of 24%.
In 2025, you’re not eligible for qualifying widow(er) status, so you must file a single return. You have the same $400,000 income, but your standard deduction drops to $15,000,4 leaving you with a taxable income of $385,000. Because you’re now using the tax brackets for single filers, you have a top marginal tax rate of 35%. The result? You pay significantly more in taxes on the same income.
Your Withholding May Go Down
Not only may your taxable income increase, but your withholding may decrease, leading to an unwelcome surprise tax bill.
When financial accounts transfer from a deceased spouse to a surviving spouse, automatic withholding of federal and state taxes may not transfer with the account.
To avoid falling short on tax withholdings, check every account that transferred from your spouse or was retitled after their death to see if tax withholdings that were in place on the original account are still on the new account. You may need to complete a new tax withholding form to set up or adjust withholdings.
You may want to increase the amount withheld depending on your new tax bracket and overall financial situation.
What to Do Next
Taking proactive steps after the death of a spouse helps you avoid underpaying your taxes. Here’s what you should focus on to avoid surprise tax bills and hefty IRS underpayment penalties:
Establish withholdings for retitled accounts
Contact each financial institution to ensure you withhold the right amount on investment returns and distributions. If you receive a pension, submit updated tax paperwork reflecting your new filing status to adjust withholdings.
Consider qualified charitable distributions (QCDs)
If you’re required to take RMDs retirement accounts, a QCD can reduce your taxable income. By directing up to $100,000 annually from your RMDs to a qualified charity,5 the distribution doesn’t count as taxable income, so it lowers your overall tax burden.
Decide how to handle retirement accounts
When you are the beneficiary of a spouse's IRA or 401(k), there are two different ways you can move the accounts into your name.
- "Assume" the account. Assuming someone else's retirement account means you simply roll it over into your own retirement account and follow the same contribution and distribution rules that apply to any other IRA or 401(k). This option is only possible if you're the surviving spouse.
- "Inherit" the account. Inheriting a retirement account gives you more flexibility about when you start taking distributions, but the RMD rules when inheriting a spouse's retirement account depend on whether your spouse's death occurred prior to them reaching the required beginning date of RMDs.6
If your spouse wasn’t yet required to take RMDs, you can delay them until your spouse would have turned 72 or start them by December 31 of the year following their death. Then you can take distributions based on your own life expectancy or over ten years.
If your spouse was already required to take RMDs, you can keep it as an inherited account and take distributions based on your own life expectancy.
Your financial advisor, along with your tax advisor, can help you adjust withholdings, plan for estimated payments, and consider tax-saving strategies like tax loss harvesting or QCDs. They can also help you decide whether you should "inherit" or "assume" your spouse's retirement accounts, walk you through any potential impacts on your heirs, and help you plan the best strategy from withdrawing the money if you inherit any accounts.
Taking these steps now can save you — and potentially your heirs — substantial money and stress in the future.
Important disclosure information
Asset allocation and diversifications do not ensure against loss. This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
- Patrick L. Young, “Determining whether to file a joint return in the year of death,” The Tax Advisor, published March 1, 2021, accessed December 12, 2024. Back
- IRS.gov, “Publication 501, Dependents, Standard Deduction, and Filing Information,” updated June 2, 2024, accessed December 12, 2024. Back
- Alex Durante, “2024 Tax Brackets,” published November 9, 2023, accessed December 12, 2024. Back
- IRS.gov, “IRS releases tax inflation adjustments for tax year 2025,” updated October 23, 2024, accessed December 12, 2024. Back
- IRS.gov, “Qualified charitable distributions allow eligible IRA owners up to $100,000 in tax-free gifts to charity,” updated October 15, 2024, accessed December 12, 2024. Back
- IRS.gov, “Retirement topics – Beneficiary,” updated August 26, 2024, accessed December 12, 2024. Back
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