Tax Torpedo Detector

1. The Social Security taxation hump. Up to 85% of your SS benefit can become taxable depending on your “provisional income” (AGI + tax-exempt interest + half of SS). The phase-in zones create marginal rates of 22% × 1.85 = ~40% even in the 22% federal bracket. Some retirees in the 12% bracket see effective rates above 22%.

2. IRMAA Medicare cliffs. Modified AGI crosses a threshold by $1, your Medicare Part B + D premiums jump $700–$3,500 for the year. Tier hops are pure cliffs — the surcharge applies to ALL income that year, not just the dollar above the threshold. Trips up retirees doing big Roth conversions or selling a home.

3. ACA subsidy cliff. Pre-Medicare retirees (62-64) on ACA marketplace plans lose subsidies as income rises. The IRA-era cap (8.5% of income for benchmark premiums) softened the original 400% FPL cliff — but at higher incomes the loss can still be five-figures annually.

4. Capital gains bracket bump. Long-term capital gains have a 0% bracket up to certain taxable-income thresholds. Adding ordinary income (Trad IRA distributions, Roth conversions) pushes those gains from 0% to 15% — meaning ordinary income silently taxes the capital gains too. The classic compound torpedo.

Most retirement calculators show your tax bill at a single income point and stop. Sagery surfaces the cliff structure so you can plan distributions around the zones — typically saving five-figures over a 25-year retirement.