Why Getting to the 0% Tax Bracket isn’t Worth It

There are countless ways to lower your taxes in retirement.

But can any of these strategies get you to $0 in taxes?

And if they could, is the juice worth the squeeze?

How to Get to $0 in Taxes

There are only 2 ways to not pay any federal income taxes:

Have taxable income that is less than the standard deduction every year
Move to a remote cave in Central America where you live off the land and don’t have any income

How The Standard Deduction Works

Every year the government gives everyone a standard amount they can deduct from their taxable income.

Note: You may be able to deduct more than the standard deduction if you are able to itemize your deductions.

Here are the Standard Deductions for 2024:

Single Filers: $14,600
Married Filers: $29,200

So if you are married and make $50,000/year then the federal government will only tax what you made above and beyond the standard deduction.

Example: $50,000 – $29,200 = $20,800 (Taxable Income after Standard Deduction)

So if you want to pay $0 in federal income tax then simply don’t have more than $29,200 (if married) in income.

So simple, right?

But it turns out that very few people want only $29,200/year in retirement.

Blessings and Cursings

Most federal retirees are blessed to have multiple streams of income including:

FERS Pension
FERS Supplement/Social Security
TSP/Investments

And with income comes taxes (most of the time).

For most feds, their fixed income (Pension and Social Security) already puts them over the standard deduction for each year which means that getting to $0 in taxes isn’t happening for them.

Taxes Are Okay

I have a love/hate relationship with taxes.

I’m a huge fan of reducing taxes as much as legally possible but at the same time owing taxes means that you had income.

And I don’t know about you but I like income.

And the more taxes you owe, the more money you made.

So as long as you aren’t making large tax blunders, taxes aren’t all bad.

For most feds who want strong income in retirement, taxes won’t be eliminated but they can be managed and reduced.

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Dallen J. Haws, CFP®, MBA

CEO and Lead Planner

Dallen is one of the most sought after federal retirement experts in the country.

He routinely speaks/consults with thousands of federal employees about their benefits and retirement. He is a self-professed nerd about helping those under FERS to maximize benefits, reduce taxes, and retire confident.

He is a regular contributor to Govexec and FedSmith and many other federal employee new sites.

When he is not perfecting retirement plans, you can find him training for triathlons or going on adventures with his family.

Common Questions

What do you do?

We are the go-to financial planning firm/financial advisors for FERS federal employees all around the country (and the world). We help our clients maximize their benefits, reduce taxes, and retire confident.

Who do you serve?

We serve FERS federal employees everyday, all day, and twice on Sunday. We eat and breath federal benefits and are proud to be the go-to financial planners for FERS federal employees all around the world.

How do you make money?

We are a commission-free (a.k.a. fee-only) financial planning firm for FERS federal employees. Our fees depend on the complexity of your situation but our fees are always very transparent. Some financial advisors are commission-based, which may cause fees to be hidden or create conflicts of interest. Not us. Our goal is to lower your taxes, maximize your benefits, and make sure you can retire without worry. For more info about our fees, click here.

Can you meet virtually and work with people in other locations?

Yep! We work with people from all over the U.S. as well as many federal employees who are stationed overseas.

What areas do you help your clients with?

Great question. Here are the 5 areas that we help our clients with:

-Retirement Planning: Planning for the day when work is optional

-Investment Planning: Building wealth for your future

-Tax Strategy: Taking advantage of opportunities in the tax law

-Insurance Planning: Protecting your loved ones and what you’ve already built

-Estate Planning: Planning for those you leave behind

One thing we found that clients really appreciate is that no other financial advisor is able to help them with their federal benefits as well as the rest of their financial lives like we can.

Disclosures