Tax Considerations After a Spouse Dies

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.

1. "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.


2. "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.